When you're in winter's favorite town, the snow-covered mountains surround you, a historic main street charms you, and every day brings a new adventure. Welcome to Park City, Utah. Naturally, winter's favorite town. Today on Radical Personal Finance, it's live Q&A. Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now, and making a plan for financial freedom in 10 years or less.

My name is Joshua, I am your host, and it is Friday, which means today, live Q&A. These calls are open to patrons at the show, if you'd like to become a patron. I was going to say go to radicalpersonalfinance.com/patron, but that link doesn't work. Go to Patreon, look up Radical Personal Finance, you'll find me.

In the next couple of days, there are a lot of links that aren't working, so I'll have to arrange a complete and total reorganization of the website. There's more coming on that in the future. But I guess what I should rather say is these shows are usually reserved for patrons, but I am actually going to be hosting a couple of public shows this next week.

So if you're listening to this show and you would like to join me, please join me this coming week for a Q&A call recording on Monday, February 4, 2019. Monday, February 4, 2019. Tuesday, February 5, 2019. And Wednesday, February 6, 2019. At 1 o'clock p.m. Eastern Time for a call.

If you would like to join a call like this, and the way that you join is on the phone at 561-440-7462. Again, that number is 561-440-7362. Look at the written notes on your phone. 561-440-7362 if you'd like to join for one of those calls. I'm recording again another series here of live Q&A calls.

I would love to speak with you. Today, though, we first go to Taylor in South Carolina. Taylor, welcome to the show. How can I serve you today, sir? Hey, Joshua. Thanks for doing these calls. I'm listening to all your Life Insurance podcasts. I kind of want to give you a summary of where I'm at now and see if you have any recommended next steps to take.

I'm recently married. Probably this next year, we're going to try to get pregnant. The plan is I will be a stay-at-home dad. I'd like to be at home as much as I can, but I'm a chief physician and want to get back into that work. I want to see what life insurance you might have to recommend.

I've listened to all your shows, and I know a lot of different things. I probably want to start out with a term, but I want to see if you have any recommendations. How old are you and how old is your wife? We're both 29. The place to start is always fairly simple.

With life insurance, the rule is this. You always solve death benefit need first with term life insurance. You calculate how much life insurance you need, and then you make sure that you purchase that amount of life insurance with term life insurance. That's the simplest place to start. Term life insurance is going to be your cheapest way to own lots of death benefit.

In your initial stages of life insurance planning, you are concerned with death benefit. How do we protect one another in case we die? You solve death benefit need that's temporary with term life insurance. Once you have term life insurance and you have it locked in, then you can go on and try to figure out, do we want anything else?

Do we need anything else? Figure out if some variation of a permanent life insurance product is helpful to you at all. But you always start with term life insurance because that gives you the maximum bang for the buck. Okay. Yeah, that's what I'm going to start with. I guess maybe I'm feeling a little financial.

About 500 grand net worth right now. I'm pretty heavy in cash right now. I've heard a little bit about this infinite banking, bank on yourself. That sounds interesting. It's a little confusing to me, but I know I'll just start with term life, but I'm curious to see where I might investigate next.

If you are interested in a concept like the infinite banking concept, which basically involves the use of large overfunded cash value life insurance policies to provide you with a safe place to store money and a source of personal financing for the expenses of your life, then what you'll do in your strategic planning is you will make sure that strategically you purchase your life insurance policies, your term life insurance with a company that will have the type of permanent life insurance product that will fit your personal infinite banking goals.

That's where you start. If you're going to use company XYZ, and that's the company that your infinite banking consultant is going to recommend for you, then you just simply make sure you purchase your term life insurance in that scenario with that same company. What I would recommend, what I always recommend to young people, and by young people I mean anybody under the age of about 45, excuse me, anyone under the age of 40s, especially people who are in your phase of life where you are looking forward to the arrival of children, but you don't currently have those children, you want to have the most flexible term life insurance that you can.

That flexibility is going to come by purchasing a type of term life insurance that's called annual renewable term life insurance versus level term life insurance. Most people recommend level term life insurance, which has its place and it's especially fine for people who are a little bit down the life cycle, but in your case, with just purchasing life insurance, you would want to start with annual renewable term, because that will give you a very long period of convertibility where you can convert your term life insurance to permanent life insurance products.

Any other questions? Do you want to go further with anything or is that enough to get you started? I think that's enough for now. Thank you. Okay, very good. We go on now to Justin in Colorado. Justin, welcome to Radical Personal Finance. How can I serve you today, sir?

Hey, Joshua. Thanks for taking my call. I had two questions. I think they'll both be relatively quick. The first one is I was interested in your perspective. I think it's technically possible, but I wanted to kick the tires on it with you. I have a certain amount of money in a traditional IRA.

I would like to make a backdoor Roth contribution this year as well, and I'd like to do so without being subject to the pro rata rule and having to pay income on some portion of that. My question is, if I roll that IRA into my 401(k) and then subsequently do a backdoor Roth conversion, does that seem like a reasonable way to avoid the pro rata rule?

Do you have any wrinkles with that? I can't, off the top of my head, without having the details on the pro rata rule, I can't summon that data up. Explain to me the rule and explain to me how your plan avoids that, please. My understanding of this is probably somewhat tenuous.

My understanding is if I make a contribution into my traditional IRA with the intent of rolling that into a Roth IRA afterwards, say I have $5,000 in my traditional IRA currently, and then I make another $5,000 contribution, and then I roll that $5,000 into the Roth, my understanding is I'd have to pay income on 50% of that, I'd basically pay a fee or income on 50% of that.

I'd have to essentially realize $5,000 as income in order to do that conversion. So my question is if I, previous to making that contribution, if I roll the entire contents of my traditional IRA into my 401k, and then at that point I would have a zero balance in my traditional IRA, and then at that point I could do a backdoor conversion and there would be no balance to contend with the pro rata rule.

I don't know if that approach made sense to you. Short answer is I'm not entirely sure. I would need to sit down, chart this out on paper and study through the rules, and I am not current on those rules in order to answer that off the cuff like this.

But I can tell you how to approach it. If you look at the rules and you can arrange your accounts in such a way that your accounts are not in violation of the rules, then yes, your plan will work. And so what I would just simply do is if you've read through the rules and said, "Okay, if I put all of this account here, so therefore I don't have the other account outstanding, then that means I only have this one account," yeah, go for it.

Realistically, as long as you can check that box based upon your reading of those rules and you have found your workaround through reading those rules, check the box, move on with it, and you'll be fine. Good chance as long as you can make sure that the custodians who are involved in the recharacterizations of money aren't reporting something that would cause you to be subject to those pro rata rules.

Chances of you facing a problem, as long as things aren't reported, chances of you facing an IRS audit or a problem there are very, very low. If you can satisfy the letter of the law in the maneuvers that you've accomplished there, then legally you're in good shape. And so I don't see any problem with it.

As long as the plan that you've described follows the rules, then you'll be in good shape. And hey, if you're not, then maybe we can name a new rule and a new tax case after you. It could be the Justin modification of pro rata rules for backdoor Roth IRAs.

That's certainly something I'd prefer to avoid, all things being equal. Agreed. Go with your second question, please. I'm sorry, I didn't know the answer specifically to that one. No, no, no, that's fine. It's kind of a complicated deal. So just a kind of a quick follow up. Do you know off the top kind of where you would go to view those rules?

I'm not a tax expert. It just seemed to me like a workaround. So start with a web search, obviously. I would go to DuckDuckGo and search for pro rata rule and backdoor Roth IRAs. Read through the analysis. That's what I did while you were talking here. And I found a half a dozen articles here.

The key is read those articles where somebody is trying to answer the question. And then just look for the source. Go and search the IRS website, irs.gov, and search their website for pro rata rule and see what you find. Usually what you will find is you'll find the data on the IRS website, which will explain what you need to answer your question.

Sometimes it will be buried in a specific publication, a tax publication, or sometimes it'll be listed as an FAQ or some article on the IRS website. But I would read the popular market articles first and then go directly to irs.gov and search it out there. If you don't have an answer there, then you should call a tax attorney and ask a tax attorney to solicit their legal opinion on the subject.

If it's something that you've researched and the web is not answering your question, just go and pay a tax attorney a couple hundred bucks for their answer to the question and get specific legal advice for that specific maneuver that you're planning. Yeah, okay. Sounds good. I appreciate it. The other question is more general and it's kind of asset protection themed, but it's both me and my spouse are sitting on a reasonable amount of money in taxable brokerage accounts, which are, I don't know, in my understanding, relatively vulnerable to the claims of would-be creditors.

I was going to see if you had any kind of general rule of thumb if we wanted to gain some kind of asset protection benefits on brokerage accounts, what your strategy is. How much money is currently in those brokerage accounts? Something like $200,000. And outside of that $200,000, are the balance of your assets in other exempt or protected accounts?

Yeah, I mean, essentially everything else is in 401(k)s, IRAs, and our home. And about how much is the balance of those 401(k)s and your home? About the same, about $200,000. Okay. So what do you plan to do with the money that's in those brokerage accounts? It's essentially our retirement savings.

I'm somewhat attracted to the kind of early retirement financial independence movement. Absolutely. And do you face any unique liability exposure? I run a company and I don't think anything in particular is interesting. I'm not doing anything particularly risky or anything like that. But is the company public in terms of your involvement with it?

Somebody knows that you own a company, you run a company, you are perceived to be a highly compensated person? Yes. So that's a significant risk. Well, there are a number of different approaches that you can do. So the first thing is, you always think about, "What am I going to do with the money?" So if you're let's say you have the money here in a temporary taxable account and you're investing it into those mutual funds and they're just sitting there, but you're going to use it in two years, then obviously you want to be very careful about putting additional making additional moves that are going to encumber the assets in some way.

You wouldn't want to put it into an annuity, for example. You would gain some protection in putting it into an annuity, but well, hold on, you're a Colorado resident, right? No, I'm not a VPN. Okay, great. I applaud you. What state would the IRS think or what state would a creditor be suing you in that they think you're a resident?

New Mexico. Okay. So New Mexico, we'll have to look at the New Mexico laws in here in just a second. The point is, you wouldn't want to encumber $200,000 in your you wouldn't want to encumber $200,000 in an annuity if you were going to take the money out in one or two years and then go on and spend it.

So that would be a problem. So what are your options? Well, option number one is to move the asset into some kind of exempt account that would help you. So let's check. I have a chart. It's not perfect, but in New Mexico you have a, if you're a resident of New Mexico, you have a $60,000 homestead exemption.

So from an asset protection perspective you would want to maintain about $60,000 of equity in your homestead. New Mexico doesn't allow tenancy by the entirety, so that's out as a strategy. New Mexico does protect IRAs and Roth IRAs, so we've already talked about the fact that you're maximizing those accounts.

Let's assume that you can't put any more money into those. Life insurance cash values in New Mexico are protected from the claims of creditors, as are life insurance proceeds and annuity values. So 529 plans are not protected in the state of New Mexico. So that's your easy checklist of exempt assets in New Mexico.

You would say well, do I want to put the money into a homestead up to about $60,000? Can I get the money into a qualified plan like my 401k or an IRA or a Roth IRA? Do I want to put the money into a life insurance policy and/or an annuity?

And that may or may not serve your interests. For example, the annuity, especially if you're interested in early retirement, the annuity is an interesting option. You could find potentially an annuity that would allow you to invest similar to the way that you're investing those funds now, depending on your investment strategy.

You could find an annuity with relatively low costs and you could just slide that $200,000 into an annuity contract. When you want to spend the money in retirement, you would just make that particular annuity contract the foundation of your long-term retirement distribution plans. Now you would face a minor tax problem there if you retire early because annuity taxation will subject you to the same rules as IRAs and Roth IRAs.

Prior to age 59.5, you'll pay a 10% penalty on any profits that are taken out. But you could, anyway, there are ways that you could work with that. So that would be a simple solution. About one of the few other options then is, do I want to put this into some other private investment?

If you just simply want to keep the money as mutual funds, then you will have to move it into a legal structure wherein those assets are protected. And so there you'll sit down with an asset protection attorney or you'll draw up a trust. You'll have to decide about what kind of trust to do.

But that's your only other option as far as protecting the assets if you want to keep it just simply in mutual fund shares. Okay, excellent. And then I know that in terms of asset protection, it's important to have some kind of a legitimate non-asset protection reason for doing things.

And so the version of that would be estate planning if we were to work with a trust or that kind of thing. Yeah, absolutely. I think you're probably a little bit, your fees with $200,000 of assets, your fees are going to be challenging because with that relatively small amount of assets compared to the costs of maintaining many trusts, you'll have to assess the cost of forming an appropriate trust, citing it, putting it in the proper location, etc.

I wouldn't jump immediately to doing that. But I would say that if the numbers start to grow beyond that, it's going to go beyond. So what I would be doing right now is I would interview, I would be educating myself, I would be interviewing some experts and then go from there.

But yes, to answer your specific question, yes, estate planning is always a perfectly relevant thing to do. And there is nothing wrong with, even if you're moving money into an offshore asset protection trust, there's nothing wrong with doing that. And the business purpose will be, your attorney will walk you through the business purpose and part of it can be, part of it will be reflected in estate planning.

Yes. Awesome, well thank you so much. So I feel like I'm not giving you a very good answer and the reason I'm not giving you a very good answer is because the question is fairly general. It all is going to come down to what do you want to spend the money on and what will you do with the money.

In short, if your plan is to keep working at your company, earning an income, and this money and additional money is going to be invested into mutual funds and you don't want to purchase an insurance contract, then your natural answer to that question is to establish an entity, a trust, an asset protection trust to hold those assets in it.

Because there's not a lot you can do if you want to invest using mutual funds. Now, what I would look at, for example, and the reason that's a general answer is the first thing I would look at would be to say, are there any other asset classes that you might want to own other than mutual funds.

If you want to own gold, then this is the money that I would use to buy gold. Or if you want to purchase real estate, then this is the money that I would use to purchase real estate. Or if you want to start a business, then this is the money that I would use to start a business.

And so if you are keeping your investment plan extremely simple, and you're saying, I'm going to work my job, build my company, do my work there, and I'm going to make sure that I, and all my investing is just going to be mutual funds, there's absolutely nothing wrong with that plan.

It's a great plan. But what it means is your options for protecting this money are simpler. And I would be remiss also in saying, just make sure that you minimize liability and that you protect yourself with proper amounts of insurance. But if you want to protect the assets, you have to move them into an exempt class or you have to put some new covering around them.

That's the rule. Excellent. I always appreciate your perspective. Thanks so much for unpacking that for me. My pleasure. Thank you for calling in. And I'm proud of you for calling in with, and masking your location. Good for you. We're going out to John in Bermuda. John, welcome to the show.

How can I serve you today, sir? Hi, Joshua. Long time, well, short time listener, but big fan. My question is pretty general. I feel like I've got a lot of these sorts of things, the boxes checked and maxing out my 401(k), saving a pretty high percentage of my income, increasing my income.

But I'm trying to figure out if I'm missing anything. Oh, yeah, and we have a young son and I have a pretty substantial life insurance policy to cover him in the event of anything bad happening. So I'm trying to think of any other basic or maybe even not so basic things that maybe I should be considering or thinking of on either the asset protection or taxation, something like that.

What are your thoughts there? I know it's pretty general. What do you think you're missing? I don't know. I mean, I'm investing for, you know, on the investment side and the saving side, I feel like I'm doing pretty well. I don't know if maybe there's, I'm exposing myself to liability that, you know, there's a way I could protect myself better.

That's kind of my thought. Are you worried about something specific? I mean, I guess getting sued or, in Bermuda, the legal liability theories aren't so bad. But at some point, my family and I plan on returning to the United States. So I'm just trying to think if there's ways to kind of set money aside and be protected for, you know, my son or my wife or myself, you know, just when we return.

Because I know you had mentioned in some of your podcasts setting up some of these structures well in advance might be a good idea. Right. So how much money do you have? About a million. Okay. Well, it's so it's hard to answer the question being a general question. So let me talk through our five part framework and ask you a couple of additional questions.

Because short answer is I don't know if there's anything that you're missing. We could go through the extremes. You know, do you have, do you own long term care or insurance? Well, you have to say do I need it or do I not? Do you have health insurance? Do you have liability insurance?

Do you have life insurance? Do you have disability insurance? Are, those would be good questions. We can go through your full complement of insurance portfolios on your investments. You look at it and you have to look at it and say am I on track with my own personal goals for investing?

How's my overall investment portfolio? And then you can go from beginning to extreme with that. Do I own mutual funds? Do I have low expenses? Am I getting good financial planning advice? Do I have a good tax plan? Am I paying minimal costs? Do I have a bank account with gold coins and second passports for me and the kids on the other side of the world in case I gotta run away?

Do I, yeah, I live on an island. So do I have a boat to get away or have I, have a private airplane to get me away in case we face a hurricane? Is my house hurricane proof? I mean there are about a gazillion ways that you could take the question and those are up to you based upon your interests and based upon the things that you think about and that you are concerned about.

What I would go through is let's talk about optimizing lifestyle. Let's start with your income. Are you satisfied with your income, your career, your job, your business? Yeah, pretty much. I mean, you know, you can always do better but so far it seems to be on a solid upward trajectory.

So analyze your career in terms of optimization and say, am I doing what I want to be doing? Am I getting joy, satisfaction, meaning out of my daily activities? Am I earning appropriately? That's one entire area of income optimization that really needs to be thought through. What about on your expenses?

Are you and your family living where you want to live? Are you satisfied with how you're living, the amount of money that you're spending? Yeah, yeah, I mean, I think Bermuda's a wonderful place to raise a family and has some nice tax advantages but less so for US citizens so that helps.

Yeah, I'm happy here. So you are a US citizen and you are living in Bermuda. Do you work for a US based corporation or a foreign company? A Bermuda based company. So are you and how much is your income? How much is your salary? Roughly half a million a year but that's relatively recent.

So working at, being an employee of a Bermuda based company, do you qualify for the foreign earned income exemption? I do. And the foreign housing exemption? Yep, yeah, that's true. And you're also exempt from social security contributions, right? That's correct. So in your case, you basically then have the problem of I'm paying a lot of income tax on my income from a hundred to five hundred thousand dollars, is that right?

Yeah, that's an issue. Now, you said that you, do you intend to return to the United States? Have you thought about expatriating fully and renouncing your citizenship at some point? I have. The problem is we don't have a second passport and all of our family lives in the US so we're probably, that's probably not an option for us unfortunately.

Have you explored the paths of obtaining a second passport? I know there are places where you can buy them. I think St. Kitts I've heard, but. So let me walk you through. I mean we're both. Go ahead. Sorry, go ahead. No, no, finish please. I mean we're both, my wife and I are both I'm probably seventh generation American, she's fourth so I don't know how, we don't really have a ton of birthright options.

Okay. Or, you know, historical legacy options. How old are your children? I have a son who's a little bit under a year. And did you register him? Is he a US citizen? He is. Bermuda doesn't allow birthright citizenship. Okay. So with passports, so let's talk that through because it's certainly an interesting area of optimization.

Do you think that your income is going to continue at the half a million dollar per year number and above going forward? Yeah, most likely. And your estimated federal, US federal income tax bill on that income is about how much? I think like 50, 50,000 if I'm right. I might be wrong on that.

Seems a little bit light to me. Is this going to be your first year earning half a million? Yeah, that's fair. Yeah, this will be this year. Basically everything kind of got, happened in January. So I'm thinking about last year's last year's tax numbers. Right, right. So remember this about the foreign earned income exemption.

Your first about $100,000, I think it's about $104,000 something. Let's just say $100,000. Your first $100,000 of income is exempt from US federal income tax. But my understanding of the tax code is your next $100,000 of income is taxed as though it were, it's not taxed as though it's your first $100,000.

It's taxed as though it's your second $100,000. So you can avoid all of the tax on the first about $100,000 of income. But from $200,000 to $500,000 you're going to be paying US federal income tax at that bracket at those higher marginal brackets. And so certainly when you get up there to $500,000 your highest tax dollars are going to be sorry, that top $100,000 of $400,000 to $500,000 is going to be taxed at pretty close to 40%.

So depending on any extenuating circumstances you know, it's your accountant's job. The point is you are in the highest you're going to be in those very high brackets. And so $50,000 doesn't sound in any way accurate to me. But I would encourage you to sit down with your accountant or sit down with an accountant and talk it through with them.

Now I'm not sure that you should expatriate fully and renounce your citizenship just to save on taxes. But I do think that you should carefully count the cost and you should consider what the best move is with the money. First, do you qualify for citizenship by naturalization in Bermuda or are you on track to qualify for citizenship by naturalization?

Do they offer that in Bermuda? They did but that had closed. They always kind of every 10 years consider reopening it but then they typically shut it down. So there are four basic ways of qualifying for a second nationality, a second citizenship. Those four basic ways are number one, just the special way.

So the government says, "Hey, this person is uniquely interesting to us and we want to confer upon them citizenship." Usually this happens if you are a celebrity or if you're a highly ranked business person or you're some kind of well-known entertainer, things like that. Peter Thiel was granted New Zealand citizenship famously a few years ago after I think having spent something like nine days in the country.

Why did that happen? The government of New Zealand said, "Hey, we like Peter Thiel. We'd be happy to grant this citizenship on him." So sometimes countries do that for somebody who's an outstanding entertainer or a famous singer or somebody who they want to somebody who would be perhaps a, what's it called when there's somebody who's fleeing, an asylum seeker of some kind.

And they just by an act of the president of the parliament or the legislative body, they confer this citizenship upon somebody. That's the least useful way for most of us who are mere mortals. So let's ignore that, but that is the first way. Beyond that, there are three basic ways that you can qualify for and earn a second citizenship.

You can live somewhere for a long time and qualify for citizenship by naturalization. And that time period can range from really as short as one or two years in some places. Three years is very frequent. Up to some countries 25 or 30 years is the process it takes. But citizenship by naturalization.

The second way is citizenship by history, by family history. You have some kind of family history from a nation that will grant citizenship based upon that family history, that family tree. And then the third way is economic citizenship where you simply purchase the citizenship and you pay for it.

And there are a bunch of options there. Some of these are fast. Some of them are easy. Some of them are cheap. There's kind of that tri-effect, which is like you go to your mechanic and they say you can have this fast, cheap, or good. In citizenship you basically have this realm of fast, easy, or cheap.

So you mentioned about your ethnic history. You don't have on all of your wife's lineage basically you're US Americans for many generations. Is that right? Yeah, that's right. So let's ignore that. Many people do have, if you sort through your family tree and you think about my grandparents or my great-grandparents, many people do have some kind of ethnicity where they can apply for citizenship based upon their family tree.

And that I think most people should if they qualify for that. Then the next thing would be citizenship by naturalization. You're currently living in Bermuda and you're not sure of the Bermuda laws. But what I would say is you should carefully look at the laws and speak to somebody knowledgeable and see if you can become a citizen of Bermuda while you are living there.

Most countries in the world, with just a few exceptions, most countries in the world have a path to citizenship for those who live in that country for an extended period of time. How long have you lived in Bermuda? About seven years. So I don't know, I'm not familiar with the laws of Bermuda, but I would encourage you to investigate that.

And it's hard for me to think that there wouldn't be by the time you have there wouldn't be a way for you to start, be on that process towards citizenship in Bermuda. Your fastest options then would be, but you can, just because you're living in Bermuda doesn't mean that you can't also start the process of doing citizenship by naturalization in another place.

Do you think that you'll be, you plan to keep working in Bermuda at this current job? Yeah, at this job or a similar one, yeah. And is this company global? Is there any way for you to move to another place? They mainly have operations in the United States. They might have, they may get something in the UK though.

Okay. So for, just the reason I pointed out is there may be ways if you wanted to if you wanted to pull up the details and look for different places. There are other countries that you can go live in, but there are a number of countries where you can start the process of a citizenship by naturalization without being there full time.

Now these rules have changed. There are a number of countries in the world that are well known for the fact that you can go there, you can apply to be a resident of that country, you can get a resident visa and you can start the clock ticking towards a status of citizenship.

There are only a couple of those out there and I would refer you to your own research to know the specific ones. But they're not always guaranteed. You can, for example, I'll just go with one of the more popular ones. A country like Panama, Panama has something they call the friendly nations visa, where if you want to become a resident of Panama, you can go to Panama you can deposit I think it's about 5,000 bucks in a Panamanian bank account and then apply for a friendly nations visa and they'll give you a resident visa for Panama.

Now if you have that resident visa, the idea is once you've had that visa for I think it's five years then once you've had that visa, you're in a situation where you can apply for citizenship. Now there's no guarantee of getting this and there are other countries you can do this as well.

There are a couple of countries in South America, etc. There's no guarantee that you can get this and it's not easy, especially if you're not going to actually spend time in the country. For any residency by naturalization process to work, even if the letter of the law doesn't say a specific amount of time that you can be a resident in that situation, you still need to sorry I'm getting tongue tied, even if the law doesn't say you have to be there, you need to be there for most of the time, but you could pursue something like that.

The third option, so that's a qualification for citizenship by naturalization with some of those countries. The third option is economic citizenship and your fastest way to get a passport if you need one is just to simply go and buy one. And so there are a number of countries that sell citizenships.

They range from inexpensive, they're in the Caribbean where you are you've got St. Kitts and Nevis has one, I think Granada has one, Dominica has one. The prices for those range from about, I think there's one that's $50,000, most of them are about $100,000 for a citizenship for one person and then some of them have different family connections as well.

There are also higher end citizenships. The cream of the crop is Malta. It costs you, I think it's about a million and a half bucks if you want to pursue citizenship with the island of Malta but there you get an EU passport, access to the Schengen area, Europe, etc.

So there are at least a dozen around the world places where you can simply go and buy economic citizenship. If you're not already doing that, I would consider it because if you're happy living outside the United States and you continue on this current earnings trajectory, it's kind of frustrating to live in a country like Bermuda which has no income tax and still be sending hundreds of thousands of dollars per year back to the United States.

Now you may not want to renounce your citizenship right away but you should at least know what's necessary to do it and you should at least be on that path. By the way, I looked up with Bermuda, the rules for Bermuda and here's what they say. You can apply for Bermudian status, I assume that means citizenship, if you possess a qualifying Bermudian connection, so you have to have some kind of qualifying connection and/or, and then it goes on, and if you've been a resident in Bermuda for 10 continuous years prior to the date of application.

So they have a couple other things as well but if you should research that and see if you can work that out since you've been there 7 years, if you're going to be there 10 years, work hard to see if you can stay there in Bermuda. What I would do, do you and your wife what I would recommend, do you and your wife plan to have any more children?

Yeah, we do. Okay, so what I would do is when you are pregnant with your next baby, I would consider birth tourism if I were you. I would encourage you to consider birth tourism. Consider having the baby in a country that grants citizenship birthright citizenship to that baby and also consider doing it in a country where that birthright citizenship for the baby will provide certain benefits for you and your wife.

So birthright citizenship, there are about 30 countries in the world that offer birthright citizenship where any baby born in the physical territory of that country will provide, will confer upon you citizenship. Most of them are in the Americas and the Caribbean. So all throughout the Americas, Canada, the United States, Mexico, Guatemala, Honduras, Costa Rica, Panama, down through South America, Colombia, Brazil, Uruguay, Paraguay, Chile, basically almost all of the Americas with a few exceptions and then several of the islands in the Caribbean.

So for example, islands such as Dominica. Dominica offers birthright citizenship in addition to selling citizenship. And so if you go and have a child in one of those countries, your child will automatically be a dual citizen. A citizen of that country as well as a citizen of the United States if you register them with the US State Department for a US passport.

But one of the benefits though is as the parents of those children you'll automatically qualify for permanent residency with you'll automatically qualify for permanent residency with being the parent. So countries like Costa Rica or Panama or Colombia, I think Colombia, Mexico. If you're the parent of a Mexican baby or you're the parent of a Costa Rican baby, you can automatically go and be in that country.

One of the fastest ones is Brazil. Brazil has a program where if you have a baby in Brazil, your baby automatically is a citizen of Brazil. And then if you are the parent or the minor sibling of a Brazilian baby, you automatically qualify for a permanent resident visa. So you can live, work in Brazil permanently.

And then Brazil actually has the fastest program in the world that I'm aware of where if you are a permanent resident of Brazil in as little as one year of living there as a permanent resident, if you are the parent of a Brazilian baby in as little as one year, you can apply to the Brazilian government for citizenship by naturalization.

Now of course in Brazil there's no guarantee that you're going to have it in a year, but you can apply. So the point is, if I were you, you have the money you should search out some of the people who consult in that business. You should seriously consider that plan.

Because if you do the math, let's say you're going to pay a hundred I mean, you're going to pay a hundred and fifty thousand dollars of tax unnecessarily each year for the next decade. Is that a conservative assumption? That sounds about right. When you say it like that, it's pretty painful to hear, but yeah, that sounds about right.

So you're going to pay 1.5 million dollars in the next decade on tax. That's unnecessary because you're living and working in Bermuda. Now in that situation, that's a lot of money. Now think, how old are you now? Mid-thirties. Okay, so let's just say you invested a million and a half dollars at the age of 45, and let's say that you're doing that for your children.

I mean, you're a financial guy obviously if you're living in Bermuda. So, you know, present value let's invest for 40 years at 8% interest, no payments. That million and a half dollars could potentially be 32 million dollars of legacy that if you invested at 8% lump sum, if you legacy of what you could leave behind for children or whomever based upon your citizenship.

So your US citizenship is costing you potentially 32 million dollars if you followed that route that I went. So if it were me, if I were in your shoes, I would certainly be very willing to go and purchase an economic citizenship, you know, go and get one of the decent ones, but they're perfectly adequate of Caribbean citizenship.

Don't necessarily renounce your US citizenship right off the bat, but get an economic citizenship so you have something right away. Consider the birthright tourism so you can put yourself on track for a second citizenship by naturalization process and then think carefully and see what if you need anything else.

Sorry, see if you still need that US passport because that US passport is going to wind up costing you multiple six figures per year going forward over the coming decade. Now obviously if your whole family is based in the United States, obviously that's going to be tough to figure out how do I, you know, there's going to be a lot of connections, a lot of emotion to it, but if I were you, you should go and search out, I would say go and search out some good advice to help you solve that problem.

That would be what I would say. Go to my recommendation. A long, long time ago I interviewed Andrew Henderson from Nomad Capitalist here on the podcast. Go and look at, consult with him, tell him I sent you, but go and consult with Andrew. He is the expert at this stuff and he knows far more than I do and he would be able to help you put together a plan that could work if you wanted it to because there's certainly in your case you have a compelling financial interest to at least investigate it.

That's a great point. No, when you really laid it out like that, that's the thing that I'm missing. Good. You could send me a fee on your 30 million bucks we just saved your family. I mean, in all seriousness, the biggest thing that US persons face, US persons don't generally want to do what I'm describing to you.

Usually because they're living in the US, they're constantly in the US and that's what they do, they're living in the US. But there's no reason, since you're already living outside of the US, then you've already crossed that hurdle. So, I want to just it's hard for me because what you have to be careful of is you're in the income bracket where you can't get rid of US tax without renouncing citizenship and the risk you face if you ultimately go all the way to renouncing citizenship, and by the way, one warning for you, renouncing citizenship, is your net worth currently in excess of 2 million dollars?

Actually, no. Okay. So, there is, in the renunciation process, so if you want to renounce citizenship, there's a whole process to it, I'll skip most of the details. The important thing for you to know is the 2 million dollar number. If your net worth is more than 2 million dollars, then not only do you have to pay the US fees for renouncing citizenship, which I think are 2,000 or 2,600 dollars, something like that, about 2 grand, but in addition to paying those fees, you actually have to pay an exit tax on your wealth over 2 million dollars.

If you have a net worth of under 2 million dollars, you don't have to pay an exit tax, and the requirements of the past where you had to pay kind of that, what do they call it, I don't know, the ghost tax or whatever, like 10 or 12 years of tax payments, that's all gone and in the past now, but the point is, once your net worth starts to approach that number, it's going to become continually expensive for you to renounce if you wind up going in that direction.

Now, back on track with what I was saying. The risk you're always concerned is, "All my family's in the US, I'm multi generations in the US, etc. What should I do?" Well, if you, you've got to be careful because if you really need access to the US, then you're going to need to make sure that you have a passport that will give you access to the US relatively simply, and your solution there is going to be, there are only a handful of countries that have visa-free access to the United States.

Beyond that, you have to apply for a visa to get into the United States if you ultimately renounce citizenship. So I would be very careful, given your long-standing ties with the US, etc., I would be very careful if I were you. Again, you need somebody far more knowledgeable than I am on this particular topic, and you need to give it a lot of time, do a lot of serious thinking, do some calculations, really think about it.

But you have an advantage in the fact that you've already been abroad, you're already used to living in Bermuda, you've already put that in place, and so there's a heavy price tag every single year, especially with these new and growth increases in income. You're going to be stroking multi-six-figure checks each year for reasons that are probably largely emotional.

So it might take you some time to work it through, but you should at least seriously consider it. And even if you're not ready to renounce, start the wheels turning on getting new citizenships so that if you ultimately do renounce, you're ready to go. Because it's going to take years, unless you're ready to go and buy an economic citizenship and renounce on that one single citizenship, it's going to take you years to get all the wheels turning to get full citizenships done.

The economic ones are fast, you can have those in a few months. Or they can be fast. Otherwise, it's going to take you a lot of time to really have those citizenships in hand, and you'll probably want a portfolio of citizenships instead of just a single one. It's going to take you some time, take you some work, but that gives you time to think about it and decide if you really want to ultimately renounce or not.

That's the best optimization I got for you today. That's a good one. Thanks a lot, Joshua. My pleasure, sir. Alright, next, got a couple questions that listeners, patrons of the show wrote in because they couldn't call in. A couple of patrons here and a couple non-patrons. Mike writes in and says, "Joshua, I've got a question that might help you sleep by tomorrow, given the fact that I live in the People's Republic of China." Don't feel bad if you don't answer this.

I'm sure real callers are better off for your show. "I've been working here in saving, and I'm in the process of sending $10,000 back to the United States and will be moving back to join a program which works with low-income students in Catholic schools. I have a small stock portfolio, a small Fundrise account, and a small 401k, altogether, totally, around $9,000 US.

I also have an emergency fund of around $5,000 and student debt of around $20,000. I've been doing well on returns over the past two years. Everyone has. My question is, what should I do with this money? Housing is provided by the program, so I'm not concerned about that or about transportation.

Thank you for reading this and thank you for your time. God bless." Well, Mike, it's a good question, and what I would say is you need to think about your lifestyle, what you would like to have happen with your lifestyle going forward. Now, the great news is the only debt that you have is your student loan debt.

So my first question is, are you planning to pay that off yourself or are you trying to pursue some program of income-based repayment and/or debt forgiveness? Sometimes with teachers, and it sounds like you're going to be doing some teaching, sometimes with teachers, teachers are seeking to participate in a program where there will be student debt cancellation.

If you're pursuing one of those programs, you will have to work that through yourself. If you're not pursuing one of those programs, what I would encourage you to do is keep your emergency fund. I would say maybe keep about $10,000 and then work as quickly as you can to pay off those student loans.

Now, the question we always face is should you pay off debt or invest based upon interest rates? There's a good chance your student loan debt is at a modest interest rate. But given the circumstances you're in, about traveling around the world, living in China, now coming back to the United States, I think you probably would get more benefit from the lifestyle considerations of being completely debt free and of having all of your future completely open to you without having to make any mandatory payments of any kind, such as student loan payments.

So, given what you've said, if you're not pursuing one of those student debt cancellation programs, especially consider you plan to go back and work in Catholic schools. I don't know if those would qualify. But if you're not pursuing a student loan cancellation program, then what I would encourage you to do, maybe amp up your emergency fund around $10,000.

That way you have a little bit more flexibility. You can do a few more things if you want to change things around and then just simply pay off the student loans. And then from there, keep saving money and work out your longer term plans. See if there's a longer term thing that you'd like to pursue.

I just think your biggest benefits are going to come from not having any payments because that'll ultimately free you up mentally and it'll free you up in reality for any future, any change of life course that comes in the future. Joseph writes in, says, "Josh, I won't be able to get away from work to get on today's call.

I thought I'd email my question instead. Background. My wife and I are 24 years old. We have a four-month-old daughter. I made $63,000 per year and my wife is a commission-based cosmetologist and makes between $30,000 and $35,000 working three days a week. We own our house valued at $80,000 and we owe $50,000 left on the mortgage, about $500 a month payment.

We have around $9,000 in retirement accounts, $2,000 in an emergency fund, about $1,500 of extra disposable income monthly. You were my first financial podcast and then I soon found Dave Ramsey. Don't agree with everything he says, but I've taken a few bits of his advice. We owe $9,000 on one car, nothing on our second.

We have $10,000 on a 0% credit card. We also have $43,780 in student loan debt. I've completed my degree and am working in my field of study. We would like one day to own land and live off of it as much as possible within reason. We're planning on a minimum of 20 acres.

We also want to own rental property. Rich Dad, Poor Dad, Bigger Pocket, Stacking Benjamins, Afford Anything, Fire Drill, and a few more have all helped me decide that real estate is meant for me. In your opinion, should we pay the minimum on everything and stack cash until we can afford the down payment on the property we want and then save for the building of our dream home on it?

Or should we pay off all of our debt with gazelle intensity? Or should we start with the rental property? I know it's a lot, maybe there's some things I've forgotten, but any advice would be greatly appreciated. Best regards, Joseph. So in summary, Joseph and his wife together make about just under $100,000.

They own a house with an $80,000 value, $30,000 of equity, the loans of $50,000 on it. Have some money in retirement accounts, some debt, etc. So Joseph, here's what I would say. First, it's important that you differentiate between consumption and investments. There is a huge difference between planning to buy a minimum of 20 acres and build a dream home versus buying rental properties.

The purchase of 20 acres and a dream home, you can spend your money on that, but it will suck up everything you've got and it will probably mean that you won't be very wealthy. Now if you're going to pursue rental property, then the 20 acres and the dream home is nothing but an impediment for you, given your plans of building a real estate portfolio.

If your needs are met in your current house, I would encourage you not to pursue the dream home at this stage of life. You're only 24 years old, you have one new baby, this is not the time to go out and start spending money on a dream home. You're not yet rich.

You're richer than most people, but you're not yet rich. You're not yet financially independent. And so the first thing you have to do is get rich, then go and buy a dream home. Now, what's your plan to get rich? Depends on how serious you are with your investment activities and it depends on what your opportunities are for your career.

You're currently making $63,000 a year, your wife is working making $30,000 to $35,000, so you've got a good healthy income. So with that, the question is, do you have the biggest opportunities in your career or do you have the biggest opportunities in your investments? Let me foil two different examples.

You might be making $63,000 a year driving trucks, making deliveries in your local area, you don't say what you do for work. That's fine, it's an adequate income. Perfectly fine. But there's no opportunity for advancement and there's no possibility that your career is going to take off. Earning $63,000 a year doesn't mean, at driving trucks, there's no chance that 10 years from now you're going to be driving trucks and making $630,000 a year.

Now, compare that to somebody who's making $63,000 a year and they are selling life insurance. You could be making $63,000 a year selling life insurance and there's no reason in the world why 10 years from now you shouldn't be making $630,000 per year selling life insurance. So the first thing to analyze is your career.

Have you chosen or developed a career that has a massive growth potential or have you chosen or developed a career that pays your bills? If you've chosen a career that pays your bills, then you need to focus on your investment plan. If you've chosen a career that has massive career potential, you need to focus on investing in your career.

If I were selling life insurance, making $63,000 a year, I would not whatsoever be messing around with real estate. The reason is you have too much upside in life insurance and the real estate takes too long and it's too much of a hassle and it's too expensive for you to go and learn that business.

So if you're making $63,000 a year selling life insurance, don't worry about real estate. Focus on your life insurance business. Grow that $63,000 income to a $263,000 income to a $630,000 income and along the way, pay off all your debt, save lots of money, and just simply invest slowly.

There'd be no problem at all if you're making $630,000 a year for you to own that 20 acres and a dream house and for it to be an expensive house, but you're not investing in real estate to do that. Now if you're a truck driver or an equivalent in terms of your career potential, then in your case what you need to do is you need to massively increase your investment returns and your income.

And that's only going to happen through focused investment. And so if you're in that situation, what I would do is I would focus first on real estate investing. Because if you've decided that real estate investing is going to be your ticket to more income, you've got to make more than $63,000.

If you've decided real estate investing is your most practical way to do that, you've got some work to do. If that's the path that you're pursuing, then your best solution is stack aside as much cash as possible, and then you'll want to make sure that you have every bit of liquid cash available, find good deals, learn how to invest in real estate, be very, very careful as you go, but make sure the real estate portfolio grows, that it cash flows, whatever your particular real estate strategy is, it can take you a while to figure that out, but in that situation you want to stack cash.

And so if I wanted to pursue real estate, would I pay off debt as quickly as possible? Not if I were sure that that was my aggressive plan. I would keep as much money around as possible, and I wouldn't pay debts that were high interest rates. So I wouldn't, you know, if I'm paying 0% on a credit card, I would just keep that at 0%, stack up some more money.

If the student loan debt is relatively low, I'd be careful with that, but the $9,000 on the car, I would probably just pay minimum payments and stack up as much money as possible to pursue real estate. Now, how do I answer that? I don't know how to give you any more than that.

It's not that paying off the debt wouldn't be good, but if real estate is what you're going to do, then get busy, but you need the cash more than you need to be out of debt right now. So, basically the major concept I want to leave you with is, what's going to be your economic engine?

You need an economic engine to get rich. And so that economic engine, what's it going to be? Is it going to be your job, or is it going to be real estate? Whatever your choice is, you need to make sure that you first, whatever your choice is, you need to make sure that you're focusing on building that economic engine first.

That's my point. Now, back to your dream property. Walk away from anything that sounds like a dream home until you're rich. The biggest problem, especially that US Americans have with their finances, is they buy things like dream homes when they're not rich. And this is very alluring. This world is very seductive.

You start going out, looking at houses, you're looking around, you're seeing opportunities and options that come your way, and you look at it and you say, "Ah, we would be so happy here." Look at the view. Look at the space. Listen to the quiet. And if you start looking at that stuff when you're not rich, you will convince yourself to buy it, and you'll figure out how to convince yourself a way to pay for it.

And you will be stuck, because you cannot get rich if you're consuming all your income. And that's what dream homes do. They consume your income. And you don't have enough of a financial base or enough of an income yet to be thinking about buying dream homes. But, is there a way that you could get this better?

Don't be scared to think creatively. Now, I don't know what's available to you where you are. But if I were sure that I wanted to own a lot of land, I'll tell you what I would do in your situation. I don't know what your job is, etc. But I would think, "Is there a way that I can move to the land and my wife and I earn some of our income from the land while also maintaining our job while also setting ourselves up in a place for purchasing real estate?" So, the first thing to do is, I would look around and say, "How much does land cost where you are, and could you find a deal?" If you could find a deal on your own land, and you didn't want to help somebody else with their land, what I would consider doing is I would take the house that I'm living in, I would rent it out, hopefully at a profit, I would buy 20 acres, hopefully that 20 acres has an old barn on it.

You got one kid, and you and your wife are young, you shouldn't have a lot of stuff yet, get an old fifth wheel, a nice big comfortable one, get an old fifth wheel, park it inside the barn, and make that where you live. That cuts your expenses down, puts more income coming in, you should be able to do that and still work and earn an income.

You don't have enough children where you can't fit in a fifth wheel. And then buy the land and live there while you're building your real estate portfolio. Enjoy being on the land, but walk away from the $400,000 house at this point in time. Enjoy the land and build your empire.

If you can't do that, look around and see, is there somebody who has 20 acres of land that would allow me to work out something with them? Does somebody need a caretaker? Is there a farmer who needs help and a farm hand? Is there a wealthy property owner who would love to have a young reliable couple living on their property with them?

You know, you've got to put a single wide mobile home on the property on the backside and you watch the property for them. You may be able to find an option like that if you look around. And that's the kind of thing that at this phase of your life you should be doing.

The goal should be, how can I keep my living expenses at the bare minimum so that I can maximize my choices in life and so that I can maximize my investment dollars? And so, yes, it's great that your house isn't expensive, but if you can swap out that $500 a month payment in exchange for an $800 a month rental income payment and then go and find a place and buy, again, a fifth wheel for $4,000 and have it hauled to the property or buy a single wide mobile home somewhere, have it put on somebody's 20 acres and you're the property caretaker, you can make a profound change and free up a couple thousand dollars a month net by the time you make those changes to be able to now have extra money to invest in your real estate empire.

So, think about that. And then finally, back to your income. If you're serious about real estate, you're going to need to do a couple of things. Number one, if you're going to borrow money, you're going to need to either learn how to borrow it from the people that you're doing business with, not from a bank.

If you're going to borrow money from a bank, you're going to need to keep an income visible on paper with a good W-2 income would be your easiest way to get traditional financing. You're also going to need some flexibility in your schedule. You're going to need time to go and look at properties.

You're going to need to plan. So, invest in your education. Read the books. If I were you, I'd encourage you to start with John Reed's books, johntreed.com. Buy all his real estate books. He's one of the best no-nonsense guys out there and you will find a much better return on investment buying those books and reading them than going to real estate seminars at this phase of your knowledge.

So, start with that. Those are my thoughts. Hope that sends you in the right direction. I'm going to take one more question here on today's show because the second part of it is certainly timely in terms of the national conversation. The first part is financial. The second part is, it is financial, but it's one of those more tangential ones.

Chloe writes in and says, "Hi, Josh. I really enjoy your podcasts and have been listening for a few years now. I have a lot of respect for you and your advice. Thank you for providing this resource." My pleasure, Chloe. "I have a 15-month-old daughter and I can't seem to find a helpful list of ways to invest for her other than the generic advice of a 529 plan.

I have a whole life insurance policy in her name through Northwestern Mutual and of course term as well, but it seems the biggest recommendation is the 529 plans. I'm not convinced this is for us because I don't know what learning institutions will be like in 18 years and I don't want the money to be hindered.

I've heard you mention on a recent podcast that an option could be for a grandparent to open a Roth IRA with the child as a beneficiary and then convert it to a stretch IRA. That seems to be a good route to me, but I was wondering why it needs to be a grandparent rather than me." Chloe, she goes on with this part too, which I'll get to in a moment.

Chloe, it's a good question and I need to write that course. I need to. I've been working so hard to fix all the problems in the infrastructure of my business so I can write that course for you. And so hopefully I'll get that one done soon. But let me just give you a short answer to it first with regard to your specific question of Roth IRA and why can't you do it.

You can do it and you should do it. But in general, the reason I talked about a grandparent specifically the idea that I alluded to was you're giving money to a grandparent for the grandparent to fund an IRA or Roth IRA in the grandparent's name with the child as a beneficiary of that so that the child could inherit it as a stretch IRA.

That particular idea was simply the circumstances were the facts that I assumed in giving that idea was number one, the parent is already funding an IRA whereas the grandparent is not funding a Roth IRA. Excuse me, Roth IRA all throughout. So I'm assuming the parent is already funding a Roth IRA or is prohibited from funding a Roth IRA due to income restrictions and the grandparent is able to contribute to a Roth IRA but is not currently doing it because of not having the income.

It doesn't have to be a grandparent. It can be an uncle. It could be your brother. It could be any person who has earned income. Any person who has earned income, you can fund a Roth IRA for them. The idea is simply it's a shame to waste a person's earned income if they have earned income and aren't making a Roth IRA contribution.

It's a shame to waste that contribution and not have it go for the benefit of somebody. The problem is in what I described, that's an informal relationship that doesn't protect you legally. So if your brother has earned income, so he qualifies for a Roth IRA but he's not contributing to a Roth IRA you could go and give him $6,000 and say, "Hey, put this in a Roth IRA and make my daughter as the beneficiary." The problem is once you give him that money, you can't force him to put it into the Roth IRA nor do you have any legal control over the money whatsoever.

He could take it and run and he would be entirely within his legal right to do so. Now it would obviously spoil Thanksgiving Day dinner, but he would be within his legal right to do so. And so the reason I suggested a grandparent was simply most grandparents are not going to steal money from their grandchildren.

They're not. And if you suspect that they will, don't give it to them. But yes, you could do it yourself, but the better thing is just you invest in a Roth IRA for your own benefit and then plan to leave that behind as a beneficiary. Your daughter is a beneficiary anyway.

The point is if you have extra money that you can't fit into your Roth IRA what do you do with that? So let me answer that question. Don't think that you have to invest in a certain type of account to invest effectively. It's perfectly fine if your daughter is receiving birthday money for her one year birthday or two year birthday it's perfectly fine to put those dollar bills in an envelope and stick them under the mattress.

It's also perfectly fine for you to simply open a bank account and put it in for her. Not everything has to be done in an account. And you are right to be suspicious of 529 accounts. Now there's nothing wrong with 529 accounts. They can be very useful. They might save you a little bit of money.

There are many situations in which I would recommend them, but they're not a panacea. And what I share your annoyance with the fact that if you go to a web search, you go to DuckDuckGo.com and you type in how to invest in your children's for your children, the only answer you're going to get is basically a 529 account.

And that's because financial advisors sell 529 accounts. So the majority of the US American financial advice industry is oriented around products that can be sold. That's just the way the business works. Nobody says, "Well, just go put the money in a bank account." Because how does a financial advisor earn commissions on money that you put in a bank account?

We earn commissions on 529 accounts. Not much, because people don't put much money in them. But I think I would rather most people who save $1,000 here and $1,000 there and put the money for a 529 account, I'd much rather they just spend it on the kid. Spend it on the kid with extracurricular activities.

Spend it on tutoring to help the child do better in school. Spend it on books. Spend it on hobby material. Spend it on tools for the child to develop their skills and their interests. Spend it on a car for the child. Or spend it on sending the child to Spain for the summer to practice Spanish.

I think I would rather, in almost every circumstance, I would rather the people who are only saving $1,000 or $2,000 here and there just spend it on the child. Because your return on investment will be far higher if you spend it on the education of the child. And I'm completely serious with that recommendation.

I think it will do your daughter much more good for you and she when she's 13 years old to go to buy plane tickets to South America and spend 6 months or 3 months or whatever you can do to get away. I would rather you spend $6,000 on 3 months traveling around South America together, riding the buses, staying in the hostel, taking some Spanish lessons, surfing at the beach, climbing the volcanoes.

That to me seems like a much better use for $6,000 than spending it and putting it in some 529 account to go to some overpriced educational institution that doesn't need the money and... I'll try not to rant. The point is spend it on your child. If you'll adjust your brain to spending the money on your child and recognize that that's a perfectly legitimate investment, I think you'll start to see more options.

Now, if you've got $50,000 and you're trying to figure out what to do with it, a 529 account is perfectly fine for some of that money. It's hard to spend $50,000 on a 15 month old. But if you're spending a couple hundred dollars here and there, spend it. Spend it now.

I think you'll get a better bang for your buck. Next, even if you are going to invest the money, don't think that you have to invest it through some plan that brings problems or brings certain options. If you want to invest the money in stocks, fine. Recognize though that you don't have to invest the money in stocks.

You could go buy a rental house and mentally note, "This is my daughter's rental house. Buy one rental house for each of your children. Have a plan to pay it off by the time they're adults and then give it to them." I'll talk about how to do that effectively another time.

So you could do that if that was what you wanted to do. But what most people want to do is just buy some stocks. Recognize this. You can just simply go and buy a mutual fund. You can go to Vanguard and buy an index fund and put the money into that index fund.

It can be an account in your name or it can be a custodial account for your child. And there's no problem with it. There's no problem whatsoever. What would you give up if you just simply went to Vanguard, bought an index fund for your daughter? Well, you would incur a little bit of taxation.

The risk is if you start to get into kitty tax if she earns more than a couple thousand dollars a year on unearned income, interest payments then she's going to pay kitty tax. But the first couple thousand dollars, about $1800 a year there's no tax due on that. But even if she is subject to kitty tax, there's not much taxation on a stable index fund.

It's not traded much. It's a capital gains. Most of it is going to be capital gains taxes. There's just not much taxation on an index fund. It's not that big of a problem. You can put any amount of money into it and then when you're ready to spend it you can take it out and spend it on anything.

So what benefit do you get from a 529 plan? You don't get a tax deduction for the 529 plan now. The only thing you get from a 529 plan is tax-deferred growth and you don't pay tax on the growth if you use the money for qualified educational expenses. Most people are not going to put much money in a 529 plan where it becomes worth it.

So, free yourself from those constraints. Look at your daughter and just think, "What do I think would be in the best interest of my daughter? Based upon our situation, what would be the best way for me to invest in my daughter? How can I do that? How can I invest it in her now?" My guess would be, based upon your writing me this email, you're investing in her by being with her.

That's the thing that I would dearly love to see every mom in the world do, is be with your babies. Because you could have all the money in the world but if you're not with your baby for those first few years, she will forever be behind. No matter how much money you save for college, be with your baby in those first few years.

The first five years are so formative in her life. If it costs you money, if you can't put money in a Roth IRA because you're with your baby, fine. You're investing in your daughter. Now, if that doesn't work, hire a grandma, hire a family member, a trusted family member, so that she can be in that family environment instead of in an institutional environment.

That'll pay off much bigger dividends than being institutionalized at an early age. Go down the list. Meet her educational needs. Hired, again, I don't need to repeat. At some point I'll get that course done. But those are some thoughts to cover. I'm going to answer part two of Chloe's question.

This will be a part where this is not strictly going to be financial although I'm going to cover finances a little bit in my answer. But those of you who get annoyed when I dig into non-financial topics, this is a time for you to tune out. Chloe continues her question.

It says this, "I also have a spiritual question, but I'm not sure if you take questions like that. It seems you're a Christian and possibly a pastor. Your take on things reminds me a lot of my father, and he passed away from cancer 10 years ago. I'd really like some guidance on this particular topic.

I've been extremely hurt by the abortion laws and the expansion and acceptance of abortions by women in the United States. I can't even think about the new law in New York without crying and the utter disbelief that I live in a country where it is allowed. I never ever thought we as a society would allow such a thing.

I'm so disappointed in women's hearts that we have fought for this right. There has been a heart change in young women in our country that I can't understand. I'm 34, and almost every woman I know is in favor of abortions. What puts me over the edge is when my husband overheard two young women talking in a cafe, and one said to the other, "Ugh, I hooked up with this guy and now I'm pregnant.

I have to get an abortion ASAP." The casual approach just blows me away. I just don't know how to deal with this. I'm so hurt about it and can't understand why God allows this to go on. I was just interested in your point of view and advice. Thanks Joshua.

Best to you and your family. Chloe. Chloe, it is certainly an extremely challenging question and a challenging time. I'm going to just discuss it briefly for a moment in a non-financial context and in a financial context. I share your sadness over the recent changes in legislation in New York.

When you watch the video of the New York legislators standing and clapping, and you see the Freedom Tower lit up in pink celebrating abortion, it makes me cry. It really does. And I share your frustration at that being the state of the country of which I'm a citizen. It's funny, I was talking with the caller earlier about talking about other citizenship options.

I have no, very little pride these days in carrying a US American passport. So I share your emotions on the subject. But a couple of things for you to consider that I hope will be encouraging. I personally am optimistic that someday in the United States of America abortion can be fully abolished.

I am an abolitionist. I seek the abolition of human abortion. There's an interesting philosophical debate there. You can search out the arguments between the pro-lifers and the abolitionists. But I'm happy to identify as an abolitionist. I wish to see human abortion fully and completely abolished. And I think that it is possible.

It's not something that you should give up hope. The reason I think it's possible is what I see happening is a clarifying of the issues. Now where the United States eventually goes is unknown. The United States of America has the most radical, the most liberal abortion laws of any country on the planet.

They are far more radical and far more liberal than European laws in various European countries and most other places. And it comes with a cost. But I don't think that the argument is not unwinnable. For example, I come from a religious perspective as I would guess you at least do some from your perspective.

But I don't think that the issue of abortion only has to be solved religiously. I used to argue about abortion online and it was interesting on Facebook. I used to debate with people and go through the various issues. And I would usually use non-religious language. I usually would use non-religious arguments, more philosophical arguments.

And I was very gratified one time I had two of my friends on Facebook who separately, privately, they never interacted with me in the arguments, but privately two of my friends on Facebook wrote to me separately and both of them are libertarian atheists. And they both privately said, "I don't share your religious presuppositions." But they both privately said to me "I've come to see what you're talking about philosophically and philosophically I believe that you are right and I've changed my position to defend the lives of the pre-born, the most innocent among us." And I was really encouraged by that because I see that happening.

I don't think that there's no ability for people to come together or there's no ability for people to adopt all the same worldview on this particular issue. And I think that the difference, if you were to go back to 1970 '73 right? Roe v. Wade, the difference between then and now is a difference of clarification.

Where back in 1970, you could say "We don't know much what happens in the womb." Or "We don't know much about a baby until it comes out." No one can say that today. And so whether you look at it from a scientific perspective or from a philosophical perspective the issues are being clarified.

Even the latest kerfuffle with the debate over the Governor of Virginia's comments. The issues are being clarified. It's been very rare that infanticide has come into play in the modern debate. The debate was always "Oh, abortion." Something magical happens when the baby comes through the birth canal. And it's been remarkable to me this week to see how even the question of infanticide has come up into the debate.

Now, I don't yet see people publicly debating whether or not we should engage in infanticide, but I do think that's the debate that's going to be necessary. The best philosopher on this subject is the philosopher Peter Singer, who is a secular philosopher and a professor at... I can't remember where he's a professor now, I think Northwestern University or something like that.

But he's a professor. And he's a prominent secular ethicist. And basically he wrote a great book, a well-known book on animal rights, which is very influential in the animal rights advocacy space. And on the subject of abortion his secular approach to the question is that it should be perfectly, it's morally permissible to kill babies because babies lack human agency.

They lack personhood. And so that was his argument. And I think ultimately it comes down to understanding the ethics. Of course, the Christian, the Jewish, the Islamic understanding generally, debate of course among certain sectors of those Abrahamic religions. But usually... I'm getting too deep into the weeds. The point is that even the debate I think is helpful because it's clarifying to certain people.

Now, just because a debate is clear, just because something seems morally clear to you doesn't mean that you can change another person's heart. Years ago I was down in Central America and I was at one of the, I guess it was the Aztec temples, one of the Indian tribes down there where they would practice human sacrifice.

And I was sitting there just clear as day, sitting there on the shrine, the thing that they built where they would do the sacrifices. I looked at all the... looked at all of the signs showing the history of the culture and all of that. And I was just sitting there thinking, like, how can a people do that?

How can a people engage in human sacrifice? And it was mystifying to me because I couldn't get myself there emotionally. Today I can understand. And I would just say, look around you. When people will put their...it's not hard. We have millions of examples in human history where people will put their ideology, their money, their career in the modern world of mothers who abort their babies, put their crops or whatever over the lives of their children and the Aztecs.

It's just not hard to see. And what I would encourage you is read your Bible. If you want to see the evil and the sin of mankind, go read your Bible. And when I started reading the New Testament more, sorry, the Old Testament more, I started to see, you can just see how through the course of human history you have a reliable collection of historical work that spans thousands of years and talks with absolute candor about the changes in people.

And you can just see how it gets there. Now, what do you do about it? Here are my recommendations. There is a lot that you can do. You don't have to just get upset about it. You don't have to just get that. I think it's valuable to do that.

But first is you can reach out to people. And you can reach out to people that you know. One of the things that I've tried to do is I've tried to talk to people, to young couples. I haven't done it much, but just when I could see there was a place, if there was somebody that I thought would possibly abort their baby, if it were conceived, I'd try to say, "Hey, listen, if you ever need somebody to adopt your child, I just want to let you know that my wife and I are here." And I feel like that's something that a lot of us could do a much better job of.

I even say it publicly. If you're listening to my voice right now and you are faced with you're considering aborting your child, murdering your baby. Because for whatever reason that you think, if that's the choice, call me. Find a way to get in touch with me. Because there are millions of people just like me who, if we were given the chance, we would absolutely far rather dedicate our lives to caring for your baby than to see that baby killed.

And so I think that's one thing that you can do. I don't know many people that do that, but I think you should do it. If you're interacting with people, if you have a personal relationship with somebody, you should let somebody know, "Listen, husband and I, we want you to know, not prying, but if you ever need us to, just know that we would be happy to adopt your baby." Now, is that a financial cost for you?

You bet it is. Is that the best thing you could spend your money on? Absolutely. Drain your Roth IRA and take care of the baby. It's a better investment than anything else. So I think that's one step that you could take. And is there a cost to it? Yes.

But just think of how gratifying that would be to be able to save a life if you have the chance. Number two, you can advocate for the pre-born with people that you know who are... Sorry, you can advocate for the lives of the pre-born, even if you're not doing it in person.

I've come across, in my research on the subject, I've come across a number of moms who work together, and they primarily work together using social media. And what they do is they're coordinated together, they go to Facebook groups where women are talking about their forthcoming abortion, and they start reaching out to the women.

And they don't hold back, which I really appreciate. I think that people have, especially well-meaning pro-life ministries, have taken the tack that somehow if you're just nice we can stop somebody from killing their child. Not going to happen if you're just nice about it. But the reality is not everybody's conscience is seared.

Not every mother is as cavalier. And even the mother that your husband heard, "I just hooked up with this guy, now I'm pregnant, I have to get an abortion ASAP." Even her conscience, she's probably braver in word than she is in reality. It might just... It's very hard, it would be very hard for a young woman today to publicly be against abortion.

And so most people feel the peer pressure to say, "Well, you know, no abortion, no big thing, just a clump of cells, nobody cares." But you're a mother, Chloe, you know that that's not the case. You know, it's not possible. It's not possible to be a mother and not recognize just the life within you.

If it is possible, it's somebody who has completely seared their conscience. So the point is, I've found mothers who are very diligent. They find mothers, they interact with them, they reach out to them, they call them, they help them if they need resources, if they're poor, if they don't have money, they work with them, but they don't hold back and they confront the mothers directly.

They don't always save the babies, but they have saved dozens and dozens and dozens and dozens of babies. So there's something that you could do. Look for that. I think that's really effective. If you're able, I think there's a place for you to go and advocate with mothers in person.

There's a man in Orlando, John somebody or other, but I searched out his story and I wanted to go and interview him and find out. He's an older man, I think he's a retired pastor. And for the last, forgive me if I'm botching the details, basically for more than a decade, he goes to one of the abortion mills in Orlando every day.

And he intercedes with the mothers who are coming there, the mothers and the fathers who are going there for abortions. And all day, every day, of course, people walk past him. And he reaches out to them, he preaches at them, he encourages them, he confronts them. Just all day, every day he's there.

And usually he's alone. And that's the thing, is that people who are diligent in this work, there aren't many. For all of the millions of people around the United States who are supposedly pro-life, there are very few of us who are ready to go out and actually get involved.

And yet, I think it's John Barrios or something is his name, you know, John has saved dozens of lives over the years. Dozens of lives. I think that kind of work is appropriate. I would love to see retirees, especially Christian retirees, stop this pursuit of constant hedonism and pleasure and use those retirement years for something that builds.

It's not like you've got to go into work all the time, but there's so much need in the world, so many areas to serve. And that service can be done effectively by somebody who doesn't have so many financial pressures. It's tough for a young mother, a young father with young children to say, "Well, my work is I'm going to go down and I'm going to go down and spend 15 hours a week standing in front of the abortion mill preaching." But with all the millions of retired Christians all throughout the United States of America, you're telling me that we're letting, you know, the one by me, how many I looked at the statistics, but dozens per day.

It's incredible. And yet, you know, a couple times a year at my local abortion mill, a couple times a year, some of the Catholic groups come out and stage a silent protest and that's about it. So there can be no solution legislatively until there's a change in the hearts of the people.

There's no possibility for legislative change until there's a change in the hearts of the people. And that's the work, what I would say at this stage. I think abolition can be accomplished. I hope it happens in my lifetime but there's a whole lot of work that has to happen before legislation matters.

Next to legislation though, the problem with legislation, the legislators aren't serious about it. Pro-lifism and being pro-life is a flag that Republican politicians wave because it gets them votes. They don't mean it. The biggest opposition to abolition, I'm increasingly convinced is in pro-lifers. While we were traveling around the country we were in another state and I met with a guy who was a former state representative in his state and had run for governor of his state in a very pro-life state.

And while I was talking to him, I had a chance just privately off the record, I'd always run, questioned this. I'd always said, "No, it can't be that the pro-life people and the pro-life organizations and the politicians, they can't be the problem." And I just had a hard time believing that.

How can it be? How can it be that these politicians are the problem? And one of the things that was so frustrating is you watch what would the Republicans say? "Oh, we need to cancel abortion." "Well, we need a Republican..." It's always one more thing. "Oh, we need a Republican president." "We need a Republican House of Representatives." "We need a Republican Senate." Well, what do you do?

In 2016, the voters go to the polls and they deliver a Republican House, a Republican Senate, and a Republican president. What promises did the Republicans actually fulfill? They didn't repeal Obamacare. They didn't defund Planned Parenthood, at the very least, not let alone talking about abolishing abortion. They didn't defund Planned Parenthood.

They don't do anything. They're either cowards or they're liars, the vast majority of them. I think it's good to recognize that to be the case. They're either cowards or they're liars. Because they don't do anything. Even now, what was the vote today or yesterday? They won't withdraw the United States out of the Middle East.

You've got to keep endless wars to keep all the money flowing right into the pockets of the people who own the companies, the big war companies. I mean, it's absurd. I guess I just say all that to say this. Don't worry about the politics of it. You can't change the politics.

What you can do is you can reach out to your neighbor. You can go to those young women. And if your husband has a chance next time, maybe just say, "Listen, you don't have to kill your baby. You don't have to live your life with that on your conscience." It will help.

Beyond that, I don't know. I guess there are many other things that could be done. Obviously, I would encourage you to think about adopting some of the unwanted babies. I think one of the great shame that U.S. Americans should feel in general and specifically U.S. Americans that identify as Christians should feel is there are tens of thousands of children stuck in orphanages, stuck in the foster care system without anybody ready to adopt them.

And I think that should be to our shame. With all the millions and millions of us who identify as Christians, who are supposed to love the unlovable, and yet our orphanages are not cleared out, I think that should be to our shame. We could not handle. If abortion were abolished today, and all of the babies that are currently aborted with chemical abortion, with surgical abortion, if abortion were abolished today, it would just be absolutely there would be babies everywhere in the system.

And that would be the worst thing that could happen. But that would be a huge problem. Remember, go back and if you're not familiar with it, go back and study the history of the early Christians and understand where things happened from. Why has abortion been opposed throughout the Western world when child sacrifice was a central hallmark of the world previously.

Child sacrifice, what eradicated child sacrifice? A lot of it is Christianity is responsible for a lot of it. But that started with the Roman Empire. You had the temple prostitutes. The local religious temples where the act of worship was to have sexual relations with a temple prostitute. That was the pagan religions of those days.

And so of course, if a temple prostitute is having sexual relationships with men for her job there were lots and lots of babies conceived in an era before birth control. Lots and lots of babies conceived. And those babies were unwanted. They were taken out to the trash pile and they were left to die.

And then in the night the Christians would sneak in, they would find the babies, they would take them home and they would care for them. That's our heritage. And yet today, most of us are more concerned about the boat payment and how we're going to make the boat payment than about the children who are being left on the trash bin of history.

We should be ashamed of ourselves. And we should work to change it. But it can't start with legislation. It can't happen with legislation. First, voting for current politicians is worthless. All they want to do is change the terms a little bit. I'm not aware of a single mainstream Republican politician who is willing to open their mouth and stand up and say, "I want to see abortion abolished." And the reason why the state of New York made that change?

Because they're worried about Roe v. Wade being overturned. That was why the state of New York made that legislative change. If Roe v. Wade were overturned at the federal level by the Supreme Court, they said, "We want to make sure that we have the strongest abortion law so that when things go back to states' rights, then we can do it." It's not about...

Don't pay attention. It's too much. But anyway, I just want you to say, "Chloe, you're not alone. There are millions of people who work just like you." What I would just say is this. Ask the Lord for one specific place that you can labor. One specific mother that you can encourage.

One specific mother that you can confront. One religious leader who's not speaking out clearly for the abolition of abortion. One politician that you can influence. Just one. And then be faithful with that. But to close, by answering your question, you say, "I don't know. I can't understand why God allows this to go on." A couple answers for that.

There's the philosophical answer, but skip that. The answer is because God is patient. He's kind. He's merciful. He doesn't want anyone to perish. He's also an orderly God who set up an orderly world that functions according to orderly laws. And we will in the future bear the consequences of the great public sin.

Think back to the stain of slavery on the US American system. Black chattel slavery. Today, we are still experiencing the consequences of that great sin. In the book of Numbers, the Bible says, "The Lord is slow to anger and abundant in loving kindness, forgiving iniquity and transgression. But he will by no means clear the guilty, visiting the iniquity of the fathers on the children to the third and the fourth generations." So, on a national basis, the United States of America will continue to reap that.

The Bible says the wages of sin is death. And as you see it work out, what you see is you see death spreading all throughout our culture. Death at the beginning of life, death in the middle of life, death at the end of life. Why are life spans across the United States shortening up?

Death. Why are suicide rates launching up? It's death. Why are so many families... I could go on. You're not alone, Chloe. There are many of us who feel the same way. Time will tell how things work out. The good thing is this. You can trust God. He has all things in control.

There's nothing that's a surprise to God. He controls all things. And why he allows evil to continue in the world, the only possible solution to that is it serves his purposes. And you and I may not be able to see it at this point. Usually we can't. We look at the disaster, we look at the suffering, we look at the death, and we say, "God, how can you let this go?

If you're good and you're all-powerful, how can you let this go?" We don't always get an answer to that question. Sometimes we do. Sometimes, as time goes by, you can see some of those answers. Some of those answers will be veiled until eternity. But love God. Love your husband.

Love your children. Love your neighbor. If God gives you a platform to preach from, preach from that and be faithful where you are. And don't think it doesn't matter. Tell you this, the thing I'm most happy about? Your love in your little baby girl. And the thing that confronts death is life.

One of the things that weighs on aborted mothers' consciences very heavily is that they see another mother with all of her children intact. They see a mother with three, four, five children. They think about the ones that they've aborted. It's heart-wrenching for them. It's heart-wrenching for them. Now, thank God He can provide forgiveness for them.

And I pray that you would have the chance to do that. Unfortunately, I don't often have a chance to be there. As a woman, you'll much more likely be opened up to about it than I will ever be opened up to. But be faithful in those things there. Love your children.

Love your husband. Use whatever opportunity God gives you to reach out to others, to confront others, and trust Him with the results. When you're in winter's favorite town, the snow-covered mountains surround you. A historic main street charms you. And every day brings a new adventure. Welcome to Park City, Utah.

Naturally, winter's favorite town. Join the experience at Visit ParkCity.com.