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That's FijiAirways.com. From here to happy. Flying direct with Fiji Airways. It's Friday and today that means 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 while building a plan for financial freedom in 10 years or less.

My name is Joshua. I am your host. I am your guide. I am your advisor. I am your fellow journeyer on this pathway of financial freedom. And today, as we do any day that I can arrange the technology, we have live Q&A. As we begin this show, we've got three callers waiting on the line and I've got two written in questions from patrons of the show.

So we're going to be doing with those. Before I begin the live calls, just one quick thing, a little bit different. I would love to get your feedback on a few things. I've got a lot of big plans for the next months. I feel like I'm always saying I've got a lot of big plans, but I do have a lot of big plans and I'm making progress on many things.

You know, the constant travel and new children and what has been really challenging for the last year and a half. But I am making really good progress and expanding the business and doing a lot. So I've got a lot of things that I'm going to be announcing to you.

I'm working on the infrastructure for a new membership site, which will be launching in January, which will help me to fulfill the mission that I lead every show with. You've noticed that the podcasts have been more consistent every Monday, Wednesday, and Friday is the current podcasting schedule. I've been reengaging with social media.

So if you haven't been there, come on by Facebook and it's facebook.com/groups/radicalpersonalfinance. Join our Radical Personal Finance Facebook group. I was out of that group for about a year and a half, but I am back now interacting there. Also make sure to like the page at radicalpersonalfinance.com, whatever the page is.

Search for Radical Personal Finance. You'll find me on Facebook. I'm doing a lot more video there on Facebook as well. Find me on Twitter, doing a lot more work on Twitter, twitter.com/joshuasheats. If you want to just get quick interaction with me, see some of the things that I'm thinking about, you can do that on Twitter.

But those are all preamble to simply this. I would like to host a live event at some point and I'll either do it this coming spring or January, February, kind of the new year, or possibly wait till next year. But what I'm working on is one of the things that I really believe is the future for most of us in most of what we're doing is to bring together a better mix of the online world and the offline world.

I think that is the ideal. As so much of our lives have gone digital, we've gained a lot of really great benefits and advantages from that work. For example, I'm speaking to you right now, right on your phone, right on your computer. And that's great. It allows us to have a relationship that previously was not possible.

I have listeners, tens of thousands of listeners all around the world, which is such a blessing. I'm doing this call-in show and there's people, looks like all the numbers on my screen right now are US-American numbers, but you can call into this show from no matter where you are.

So it brings us tremendous opportunities. But what's hard is to keep the same strength of interpersonal relationships when all the communication is digital. And I've noticed this over the years as I've gone to conferences and I've interacted with more and more people who are remote virtual workers, is I've come to be really convinced that the best thing is to do a lot of interaction digitally, but there has to be in-person interaction.

And I think so many people gain from that. I've just gotten back from FinCon in Washington, DC a couple of weeks ago. And the FinCon community is financial bloggers and people like me, podcasters and YouTube people and financial advisors who love to come together. And those relationships are so strengthened there in person.

And one of the things I've done, I've done a couple of big public meetups in Toronto and in Washington, DC in the last few weeks. And I had such a great turnout for those. I so thoroughly enjoyed meeting the listeners, talking, hearing the great stories, et cetera. And so what I'd like to do is I'd like to, or I'm thinking about doing, let me say, I would like to, yes, and I'm thinking about it.

I'm thinking about organizing an event of my own. And what I'm imagining doing is I think that the best way for me to serve people who are just getting started is through this type of digital content, through the free podcast, through the new membership site that I'll be launching in January, which will have everything organized in a way that this podcast has never been able to accomplish, of all the things that you need to do to actually accomplish reaching that goal of financial freedom in 10 years or less.

But I'd still like to do something in person. I'd like to arrange some kind of in-person event. Now I've got a number of different ideas of some ways that I'd like to do it. I could just do it as meetups, right? That's always an opportunity. And we had a lot of people come out to the meetups, but the problem with a meetup is, you know, the last one I showed up in Washington, DC and now it's my own fault.

I was late to the meetup because I got detained at the airport and detained with the airlines and detained with customs. Anyway, so I was late, but still there were probably, I would say, 40 people there at the meetup and I had, you know, 10 minutes max with each person.

So I'd like to do something that's multi-day and I can structure it as, so I'm thinking about something like a three-day event. And then what I'd like to do is I can structure it in the form of lectures, possibly, or doing all the lecturing myself on a number of topics in kind of an organized way.

We can go into some topics that I don't cover on the show very much. That would depend, for example, on the financial profile of the attendees. I try to keep the show largely at kind of entry level to intermediate content, but we could go deep into some advanced stuff in an in-person seminar.

I could also bring other lecturers. There are other people in this space or other professional people that I could bring together. And most importantly, I'd love to just spend several days with you and then arrange an opportunity for you to meet some other listeners and to spend several days with those other listeners.

And so my vision right now is something like a three-day event at a location that would arrange where you just simply go there and it's a perfect location to simply be together. Now right now I could do it in the United States, but I think it's more interesting to do things outside of the United States and I don't love spending a ton of time in the United States myself.

If you guys really, really want something in the United States, I'm willing to do that because I'm going to go wherever you are and serve you however I can. But also at the moment I've thought about doing something either in Colombia, Costa Rica, Mexico, or Nicaragua. And there are advantages and disadvantages to each of those.

Colombia, I've thought about trying to figure out if there's some way that I could host an event in one of the border cities where we could do some work and help in some of the refugee camps with the Venezuelan refugees. That's really hard for me to figure out the solution right now, but that's the reason why I like the idea of having something in Colombia.

Colombia is just a wonderful country. It's absolutely on the upswing. There are tremendous opportunities left and right in Colombia right now. So if you've never been to Colombia, it's a really good time to go. I love Colombia. Costa Rica is a really good option. People like to go to Costa Rica.

Costa Rica has the benefit of being really easy to get to. It's cheap to get to from all over the United States. It has tremendous tourist infrastructure, so we can do a really good integration of fun stuff and great tourist stuff. Anyway, Costa Rica has a lot to go for.

Mexico I think has a lot of good things to go for. There are lots of resorts and things in Mexico. It's cheap to fly to. It's easy to get into. Some people may drive to that if you're in the southern United States. That can be helpful. And then there's opportunities in Nicaragua.

If I do it in Nicaragua, what I would do is I would do it at Mark Ford at his resort that he developed with some of his friends. They're on the Pacific Coast in Nicaragua, which is a wonderful place. Frankly, it's the perfect place. It's probably my number one spot right now.

It's got tremendous places to stay. It's got a perfect conference room that can handle up to 60 people or so, which I'd like to keep the total number of people 50 to 60, something like that. It's all inclusive. Everything is there. It's really high end. And it's in Nicaragua.

And Nicaragua is an interesting place because Nicaragua is really having a lot of challenges over the last year and a half. A bunch of people, I'll just skip those challenges. If you don't know about them, you can research them, but had a lot of challenges, but it's totally fine for the kind of thing that I'm talking about.

And it's also a lot of opportunities. It's behind Costa Rica in terms of development. But there are a lot of opportunities in a place like Nicaragua. So anyway, those are kind of my four options. And I think that it would be fun for those of you who are in the snowy north, we do something in probably February.

It would be a good option to do that. So here's what I would like. That's just what I'm thinking about. I haven't booked any place. I haven't made any commitments. I've worked through some basic budgets. What I'm guessing at right now is to, what I'm guessing at is a fee, a tuition, not tuition, charge, cost, whatever, of something like $3,000 for the, and that would include everything, include lodging, include activities, include food, basically just show up in a certain city and everything is taken care of from there.

So I'd like to keep it a high end event. And so that's basically what I'm thinking. So here's what I would like to know from you. Is that the kind of thing that you'd be interested in? If so, email me, joshua@radicalpersonalfinance.com. Send me an email, let me know your thoughts and see if that might be something that you would enjoy.

Multiple benefits, again, the lecturing, the fun, you could bring your family and get out of the wintry north. You can arrange this so it can be part of your business expenses is always a good idea. And then the interaction with other people who are in a similar, who are part of the radical personal finance community.

I have just so enjoyed the meetups and things that I've done recently, and I'd like to do more of that. So I'm not 100% sure whether it'll be early 2020 or whether we'll pick that up in early 2021. That would depend on the response. So if that interests you, send me an email and let me know.

Let's go first to the phones. We go to Anne in Maryland. Anne, welcome to the show. How can I serve you today? Hi, Joshua. Thank you so much for taking my call. I have a question about healthcare and getting healthcare. And I am conflicted because I am concerned about the healthcare in the United States and for two major reasons.

So first of all, of course, financial toxicity that it can bring unexpectedly. And then also I personally do not, cannot tell the quality of care. And I don't know how to tell the quality of care because it's so kind of a black box sometimes. And so I was thinking, what can I do to make the best decision?

And I wanted to hear your practical advice. And just to give you kind of dimensions across which I'm thinking. So first one is the quality of care and safety. I was thinking there are reviews online, but I don't particularly trust patients' reviews because I don't believe they know what they're talking about.

What I would ideally want to see is a survey of, let's say, nurses who work at the institution and ask them, would you want to have your own healthcare problem solved in that institution or not? But this information is obviously not available. Then things like I would want to know if that, which institutions are notorious for suing patients, which I consider in the majority of cases immoral.

And so I would want to know how toxic that is. And of course, I want to know the prices. Like everyone wants to know whether they're competitive, where they're going to be transparent. If I pay cash, can I do it? Will they, will that be enticing? So those different aspects that I'm thinking about, and I want to know if you've ever wrestled with any of this and what solutions you found for yourself and for your friends and for your family.

Are you currently facing some kind of ongoing chronic medical condition that you're concerned about? Or is this a hypothetical, if in the future I need more healthcare? What would be the best way to do it? It's hypothetical and I'm thinking it's exactly the time when I need to do this because I'm imagining if any emergency strikes, I will have to just to take what comes my way.

And now I feel I'm wasting my time if I'm not using this time when I'm not facing anything like this. Do you have health insurance now? Yes, I do. So you're not concerned about the financial components of healthcare. You're more thinking about how can I get quality care, is that right?

That's true, but I actually personally want to get quality of care for the, with the right price. So let's say, yes, I do have insurance and it's quite comprehensive, but I don't believe it's morally right to go and do a procedure or go to a healthcare institution which charges huge prices to my insurance because that trickles back to everyone else's premiums and I just want to be a contributor to that toxic system.

So even though I am okay, but I want to do the right thing. Okay, I understand. Well here would be, so I, so you asked a lot of good questions about how to get reviews on physicians and things like that. I'm not competent to answer that. I would assume that some people out there are trying to work on a system like that.

If not, maybe there's a way that you or any, some other listener can develop a system where somehow you screen the opinions of people on certain medical providers and try to figure out how to get the nurses to leave the reviews. But I have no information on that, so I'm not competent to answer that question.

I'm also not competent to judge the quality of care in any kind of way outside of personal subjective experience. I think one thing that we can and should do is to just simply recognize how each of us feels, how each of us feels about the quality of care. I think we still have, and especially if we continue to hone our abilities, we still have the ability to recognize when we're getting treated well and when we're not getting treated well.

And I'm a big fan of the fact that now there are so many groups and public resources available for people who are experiencing certain medical conditions because those groups and online resources, et cetera, allow people to check out their doctor's opinions. And I know some doctors don't like that.

Many doctors don't like that because there's been a loss of respect. But I personally think it's a good thing, and I come from a world of being a financial advisor. And financial advisors, probably many of us would have liked to go back to the world where there weren't so many online resources and reviews and everything.

But the reality is it's good. It's good for us to be held to account. It's good for us to face that market competition. And so I'm happy for it. I like the market. So I would say the first thing is probably the only practical thing I could offer would be to make sure that you become the best student of whatever health condition that you have.

I have observed so many people, and I've observed that there seem to be kind of two different kinds of people. People who just simply take what they're told and then don't fight, or other people who say I'm going to become the expert at this certain thing. And there's the old joke that what do you do if your doctor comes to you and tells you that your disease is incurable?

You fire him and go find another doctor. So you find somebody who will tell you, yeah, here's what you can try. And I think what I see serving that is all the support groups for different kinds of illnesses, different kinds of conditions, and then the dissemination of information through YouTube, through Facebook, through blogs, et cetera.

Now obviously we have problems because most of us don't have the expertise in a certain issue to know what's true and what's not. And that's really challenging. But it's better than just everything being hidden behind a wall. Financially, to your specific question about insurance, I don't know that there's a great answer to it.

Because the prices that you are paying are the prices the insurance company is going to pay. And it's not necessarily your responsibility to adjust those prices. It's the insurance company's responsibility to negotiate those prices. The medical system in the United States is broken, and probably irreparably broken. I don't know of—I had some optimism a number of years ago when high deductible health insurance policies first came out and were being promoted.

And I thought, well, maybe this could help. Maybe this would help individuals to start negotiating with doctors. But I haven't seen any evidence presented to me that shows how somehow that's made a big difference. You have a major political conflict right now. You have the failure of the Republicans to repeal the Affordable Care Act.

You have a major press by the Democrats to move past the Affordable Care Act to move into a single-payer health care system of some kind. In many ways—I was talking with a friend of mine—in many ways that kind of thing seems almost inevitable. Because very few people are happy with the way things are right now.

And I don't know the solution. I don't have the solution for that. So I don't know that it's necessarily your responsibility to do that. But if you do want to do it, here are a few things you can do. Number one, if you simply adjust your insurance policy to have a very high deductible, then you would be the one to benefit from your cost shopping, from your negotiations, from paying cash, etc.

Because then you're just simply saving the insurance company money, and you're actually saving yourself money because you have the high deductible, and you're wanting to make sure that you don't trigger that deductible. So that would be the first thing. The best thing is, if you wanted to or if it were appropriate, to move to one of the health care sharing organizations.

Now, I wouldn't go there unless you had other reasons to do it, but that is one of the benefits of the health care sharing organizations. I always feel like I'm with my team, I'm with my people, and so when I negotiate a discount or if I get something cheaper, then I have that option.

I'm benefiting all of us, and I'm keeping all of our rates down. That's one thing I like about using Samaritan Ministries, which is what I use with the health care sharing operations. Beyond that, how do you get prices? Well, I think there are some... How do you get prices made in advance?

I think there are some good market solutions that are starting to come out. Walmart recently launched Walmart Health, and they're launching this at some of their big super centers, where you go into Walmart Health and you can get clearly priced vision care, clearly priced medical care, nutrition, weight loss consulting, etc.

And all the pricing is up front, it's all flat pricing. I think that's really good. The urgent care marketplace has really made a major impact. Most people, I myself am included in this, but most people would just choose, rather than going to the emergency room where they don't know if they're going to be there for eight hours and walk out the door with a $20,000 bill, they go to an urgent care facility and get care there where prices are much more reasonable and discounted in advance.

There is a growing... I don't know that it's having a big impact yet, but there's a growing movement for concierge medicine where you just simply have your doctor and you pay a fee and they don't take insurance, it's just simply done with cash. Those things don't really help you because you do have insurance.

So my answer is I probably wouldn't worry about it since you do have insurance. If you were thinking about dropping insurance, then some of these other things come into play. You could also investigate medical tourism. I think that's one of the growth areas that'll be in the future. There's a listener of the show, he blogs at a blog called Be Unconstrained, but he just shared the story of how he went to Mexico for major shoulder surgery and had a great result.

I can't remember the exact numbers, but he was quoted tens of thousands of dollars for his shoulder surgery in the United States, but he got it done in Guadalajara for something like six or eight thousand dollars. I think many of those options are there, are going to grow in the future.

So I can't necessarily solve the ethical problem. I would say it's probably not necessarily your responsibility to worry about saving the insurance company money. That's their responsibility and I appreciate the sentiment. I think that's very noble of you, but I would just focus on making sure that you are getting the care that you need and that your finances are adjusted so that care that you get isn't going to bankrupt you.

These are great ideas. I actually don't know about Walmart and I kind of never paid attention to urgent care facilities and whether they're different from other things. So I'm just going to Google those things around me. I have a question. Whether you ever paid cash up front or right after an appointment for any medical non-dental work and how did it work for you?

If you ever done it. I've had minimal interaction with the medical system and part of that is by design. I'm scared of doctors and hospitals because people die in hospitals. One of the major leading causes of death in the United States after a few of the big ones like cancer and heart disease.

I think it's number four or something is medical errors. So I think being in a hospital is an extremely dangerous place to be. And so if I actually have an acute life-threatening disease, I've actually been in a car accident and my pelvis is broken in 27 places, then I want to be in a hospital.

I think the US medical system is fantastic at that dire surgical intervention to save people's lives. I think that's wonderful. But in terms of, but I've personally never been in a situation, whether that's by any influence of mine or just simply the circumstances that they've been ordained for me.

I don't know. I always try to be careful. I try to think ahead. I try to make sure that I drive safely and I wear protective gear at all times and things like that to minimize any risks of having personal injury. But I've always been, I've been fortunate and blessed never to need acute care.

I have a very low opinion of the US medical system's ability to actually make people healthy. It seems as though we are not good at helping people be healthy. We have a population that is sicker than ever, is fatter than ever, and is dumber than ever. And I don't know why that is.

I have opinions, but I don't know why it is, but I don't have much confidence in talking to most physicians, unless there's a physician who's really tackled that subject head on. So I personally try to minimize interaction with the medical system. That said, I'm acknowledging that all of that was just simply to say that I'm not an expert in this.

I try to minimize my exposure for the reasons stated. But that said, I've always paid cash for everything. I've never had a $500,000 hospital bill, which of course would be handled through the normal circumstances. But when I go and get something, I pay cash. And especially as I've tried to, I pay cash.

That's very simple. And it's not hard to do. You just pull out money and you pay them. And then you use the fact that you're standing there with money in your hand to negotiate a discount. And usually if you'll do things in advance and you'll negotiate it in advance, you'll get discounts in and of itself.

So to me it's easy. I don't have anything to add. It's simple to do. Use the power of cash. Ask the price in advance. One of the best things that you can always do is just simply be the person who asks for prices in advance. Very few patients do that.

And so as a result, you're often surprised. But you would be surprised if you just simply ask people, "How much is this going to cost? Is this really necessary?" Then go from there. So that's my answer. Anything else, Anne? I've got a bunch of callers. I'll move on unless you've got another final question.

Thank you very much. My pleasure. Thank you for calling in. We go now to Nam in New Jersey. Nam, welcome to the show. How can I serve you today? Hi. Good afternoon, Joshua. I'm glad that you're back on social media. I've recently seen that you put up some new content on Facebook.

Nam, I'm sacrificing all my principles for you because I care about you. So I'm glad that you're appreciating it. Go ahead. Thank you. Thank you. All right. So I've been fortunate, just came with the news that I am exempt from a property tax. And throughout some research that the real estate tax, I'll be exempt on my property if I were to live in Pennsylvania or New Jersey.

Currently me and my wife, we own our first home for about a year now in Pennsylvania. And with this news coming in, now that we will be exempt as of next year, we were thinking of moving to also to New Jersey. Now one episode I've listened to you that you stressed about also was about state income tax.

Moving to New Jersey, there will be about a 2.2% increase in state income tax because at of earning as a household, we fell at about 5.2% state income tax where in Pennsylvania currently we are only doing, we only pay 3.07 where they only have a flat fixed rate on state income tax.

So besides running the numbers, and we are planning to have a first born within the next two years, I just want some sort of school of thoughts or guidance besides me just running the state income numbers because that's probably something else I'm not taking into consideration. I try to run the numbers just to see if it makes sense or not for us to relocate to New Jersey.

Tell me about other considerations such as your work, can you live equally and earn the same in both locations? Yes, commute wise it would still be about the same expense. Moving to New Jersey it will increase, besides the state income tax of course, but with commute there will be another $2,000 increase due to the tolls that we have.

Why is it that you would be exempt from property tax living in New Jersey? As a veteran, I just got this news that I'll be exempt from, and there's only a few taxes, I mean a few states, not every state, you know, are doing this. However in Pennsylvania there are income limits where New Jersey there is not.

And you're over the income limits in Pennsylvania? In three years, yes, due to promotions, locality, maybe go to state law will change, it will adjust based on the cost of living, but at the rate that I'm going and I'm earning, we're both still somewhat a junior level in our career.

We're seeing about 25 more years of employment in our lifetime, we're only in our late 20s. You mentioned that you and your wife are hoping to have a baby in the next two years, would she have any inclination towards staying home with the baby, and would that drop your income in two years?

Yes, she did talk that she will like to take some time off to take care of that. As far as child care goes, the only close relative that we have would be her father who's no longer working, and he's already taking Social Security, and he's not doing it, so mostly he will be helping with child care.

But yes, she did say she would like to take off at least half a year to help to take care of the baby. So you can consider that, if your income is below Pennsylvania numbers right now, but in two years you might have a baby and then her income would go down, then that might be something that would factor into your planning.

So you're obviously a detail-oriented person with regard to the finances. You've calculated an additional $2,000 worth of tolls. So let's talk first about the, we'll talk first about things that are more important in my opinion than finances, and then we'll come back to finances. Recognize that in general, finances are not the key driving factor that's going to affect your lifestyle or your happiness in any one location.

Usually it's going to be things like your family and your friends. Now you said, sounds like minimal family interaction, but that for most of us is the single driving factor that makes a difference in our quality of life. Are we close to the people that we love? Are we close to the people that we enjoy spending time with?

Are we in a compatible culture, some place that's culturally comfortable for us? Now if we assume that your situation is the same either way, that New Jersey or Pennsylvania both have the same exposure to family and friends, then we can move on. The second big thing to consider would be career and career opportunities.

Now it sounds like you're going to be working the same job either way. It's just you come in from the east or from the west. Well that's up to you. But if there's a difference in terms of your networking opportunities, for example, if you live, I don't know this to be the fact, but let's just make it up.

Let's say if you live in the boonies of Pennsylvania and then you just go to the same job, but that doesn't give you the opportunity to go down and be part of the local Rotary Club or to be part of the Toastmasters group or to be part of the networking organization for your industry.

But if you moved to New Jersey and you lived in the suburbs or in the city where you could do those things easily, that would be worth considering. Think about which would be better for your career. In general, taxes matter a lot, but you can always earn more money to pay for taxes.

So if you're in a career that you like, then think about how that impacts your career, educational options. Think about the growing economy in a place. If you live in a certain place and think about how that's going to affect your housing values. Now if we get to the numbers and we say, what are the costs?

You first would compare any cost that you can calculate. So obvious thing that you can calculate is property taxes. Do I have a $10,000 per year property bill or a $0 property bill? That's a big, big deal. Then you want to then go and say, but what else would change?

Are there, is the actual house acquisition cost higher or lower? Are the utilities higher or lower? Are groceries higher or lower? Is there a change in sales taxes that's higher or lower from one place to another? Would there be additional transportation expenses that are higher or lower? One thing to think about is what costs are deductible and what costs are not.

So the cost of property taxes generally would be deductible, as is the cost generally of mortgage interest if you itemize on your taxes. Whereas the costs of commuting are not deductible. So if you're going to incur an extra $2,000 per year of commuting expenses that's not deductible, calculate and see if it might be better for you to have property taxes and interest expense that is deductible.

Now if you're struggling this much with the decision, if the savings on mortgage taxes, sorry, the savings on property taxes are zero, you go from whatever the bill is to zero and you're still struggling with the decision, there's probably no clear financial solution to that. And you've probably already made the spreadsheets to try to compare it.

So I would just say pick where you want to live. Pick which place you're more excited about. And then think finally about culture. I would not live in New Jersey because of the political environment and the cultural environment. For me it would feel like living in a prison, for me to live in New Jersey.

Now I don't know that Pennsylvania is a lot better, I've never lived in Pennsylvania, but if I had to choose just knowing what I know about the states, I would choose Pennsylvania in a heartbeat to not live under the New Jersey government. But I'm a wacko and that stuff matters.

So you just think about, I would say do the financial calculations but then go back and say what are you more interested in? What really, where do you think would be a better place for your children to grow up and where are more career options? That would be my answer.

>>Joseph: Okay. Now when it comes to relocation, if we're just owning a house, you know, less than five years, can you talk a little bit about the 1031 exchange and how does that work? >>Tavis: You can't use a 1031 exchange for a house that you're personally living in. You can only use a 1031 exchange for rental property.

So the best thing to do is if you've lived in the house that you're living in for a couple of years, the best thing to do is simply sell it, take the profit, hopefully you have profit, take the capital gains profit, and you'll be eligible, if you're eligible, you've lived in it for the last five years, you'll be eligible for up to $500,000 of tax-free capital gains which was split between you and your wife.

But you can't use a 1031 exchange on your personal residence. >>Joseph: All right, and that's $500,000? >>Tavis: $250,000 per person, so for a married couple filing jointly, it's $500,000 of gain that's exempt from income tax. >>Joseph: Got it. All right, Joshua, thank you so much for your time. Thank you for calling in.

We go on and stay in New Jersey. Welcome to Radical Personal Finance. Tell me your name, please, and share your question. >>Lucas: Coming from New Jersey. >>Joseph: Yes, tell me, I'm sorry, I missed your name. Say it again, please. >>Lucas: It's Lucas. >>Joseph: Lucas, go ahead, sir. >>Lucas: Hey, so first of all, I just want to say your listeners who are both financial geeks and surfers got very excited when you started talking about Nicaragua and Costa Rica, so we are all in favor of that.

>>Joseph: You know what? So, of course, Costa Rica has tremendous surf all up and down the Pacific Coast, and then Nicaragua also has good surf up and down the Pacific Coast. Of those two, I would probably rather do, Costa Rica's fine, and Costa Rica's probably more comfortable for most people, but I like Nicaragua, and I think it'd be more interesting for many people, but the place that I would do it if I were in Nicaragua is right next to Playa Colorado, which is well known as a surf beach, and there are two communities right next to each other.

There's one in Playa Colorado, and then there's the other, the Tarancho Santana, and both of them have great surf breaks, come from all over. And then you've got San Juan del Sur, and a number of other places as well. So yeah, I will take that into consideration. >>Lucas: Very cool, very cool, thank you.

So I'm calling in today to talk about a situation I thought some of your other listeners might be in, and it has to do with my parents. They are wonderful people, we have a great relationship. They gave my siblings and I a lot in the way of love and values and the importance of education.

However, there's pretty glaring lack of their own self-education in terms of savings, particularly for retirement, but really just financial planning in general. And they're both getting into their mid to late 60s now, and where the end would normally be in sight for a lot of people who are in their age group, it doesn't seem like they have much of an ability to plan for a retirement at this point.

Very minimal financial assets, I'm talking to the tune of what would normally make up an emergency fund for an early 20-year-old. They have a house that is not paid off, still over $100,000 in a mortgage, and not a whole lot of opportunity to increase income. My dad is a self-employed artist, he doesn't have a whole lot of ceiling, or I'm sorry, he has a ceiling when it comes to how much he can bring in.

My mom does a little bit better, but their total income is below $60,000 on a pre-tax basis. So, once again, I got great parents, they set us up very well to do well for ourselves, and we want to be able to give back, mostly in the way of trying to help them stabilize themselves so they can have something that looks like a retirement at all.

Of course, we would never let them go to the poor house, we would never let them become destitute, but we also want to respect their desire for independence. So, my sister and I have put together what we thought was a very comprehensive financial plan. What it does hinge on is one piece of information about their property.

They have, for our neighborhood, they have a double, functionally a double-wide property, but with some variance, they might be able to subdivide, keep the house on one of the lots and sell off the other lot, basically for a profit, and use that profit as a nest egg to start investing and building some kind of retirement portfolio.

Where I get uncomfortable is that is subject to a lot of people's decisions who don't have my parents' best interest in mind, the municipal planning board, zoning board. We're in the process of getting a site plan together with an engineering firm, we're in the process of working with a lawyer who will represent us before the board when we go through.

But everyone I've talked to has said there's kind of a 50/50 shot of if this is going to go through or not, and if it doesn't, I don't really have too many ideas. So I'm wondering, is there anything that I'm missing, anything else that I can be doing in terms of trying to set my parents up so they can have something that looks like a retirement?

Are they open to these conversations, they're sharing information freely, and they're open to your input and soliciting your advice? Yes, yeah, very open. Probably I guess several months ago at this point, my sister and I laid out things very clearly, we set up scenarios, we did a pretty comprehensive financial sheet.

Neither of us are in the financial or accounting industry, but we're both engineers, we have pretty good data analytic and mathematical competencies. So we laid it out for them and they were receptive, but it's just a matter of kind of kick-starting things and how do we get it through.

And the first step is really this property subdivision, seeing if we can get that to work. What do your parents want to do for the next 20-30 years of their life? What's their ideal vision? Well, I figured we would get here. My dad wants to keep working, he loves the work he's doing, he wants to keep doing it forever, but he does not have a planning bone in his body.

And my mom wants something that looks more traditional like a retirement, be able to visit her eventual grandkids, not have to think about working in a restricted setting, 9-5, 50 weeks a year, that kind of thing. At the moment, other than their home mortgage, do they have any other significant debt?

At this time, no. And how much equity is in the property if they sold everything? How much equity do you estimate do they have in their house? I would guess somewhere in the range of $80,000 to $90,000. So I think the first thing is, you're probably going to fail at trying to turn your parents into investors at this point.

That doesn't seem realistic to me. If somebody has lived 60 years and they've not become a wealth accumulator, they're probably not going to become a wealth accumulator unless they have some major thing that, major reason why it becomes important to them. So they're probably not going to magically just change and start saying, "No, you know what, son, what we really want to do is we really want to save and invest money." It's never been important to them.

Now maybe they decide at this point it is important to them and they do change. I'm not denying that people can change no matter what age, just saying that it's probably not going to happen. If history is any guide, it's not that important to them. They're probably not going to change.

So where do we go from here? I think the first thing to do is to try to help your parents develop a vision of what they're hoping to do over the next 20 or 30 years. What's fascinating is that this is what the AARP does now. The AARP used to promote and push this idea of, "We're helping you so that you and your spouse can walk arm in arm down the beach with your khaki pants rolled up and the silver hairs on your head, enjoying your new beach house." They used to push that old idea of retirement.

But it's not happening. That's not what most people are doing. So the AARP has kind of readjusted many of their things to be all about the next phase, the real possibilities, I think is their slogan now. They don't really call themselves the American Association of Retired Persons. They're all about, "What's this phase of your life?" To me, that's the right thing.

You've I'm sure heard me talk about retirement, but I don't think that the basic concept of retirement as quitting from life is healthy for people. It's not good for their bodies, not good for their brains, not good for that. But what they can do though is they can adjust to say, "What is a lifestyle that we would be really excited about?" and build that.

And then once that lifestyle is crystallized, then we can start to figure out how do we fund that lifestyle? You mentioned that your dad's an artist. What kind of art does he do? Stained glass. So he needs a workshop then. He needs a... Yeah. Okay. Right. So once they get a clear idea of what they'd like to do, then I think they can adjust their living in some way to fit that.

So the first thing I like to do is to say, let's try to make... I'm trying to think of the order to go through this. So if your parents have wanted a lifestyle, let's say that your parents say, "What we really want to do is travel." Let's use that.

Do they talk about travel? Do they have any interest in travel? Yeah. Okay. Yeah. More now than ever. Okay. And if they were going to travel, what would be their ideal way to travel? They're not really cruise ship people, but definitely going places, walking around, not hostile level, but not the Ritz-Carlton either.

Do you think they're RV type people? I think they could be. Yeah. So just as an example, let's say that your parents said, "We want to travel." And you say, "Well, Mom and Dad, I want to help you travel, but you don't have hundreds of thousands of dollars." Well, there are lots and lots of couples in their 60s who make their living traveling in an RV, doing a combination of different things, one of which would be work camping, staying at campgrounds where they basically serve as a host for the campground and they check people in, et cetera.

And for that, they get discounted accommodation. They get free accommodation. And with that free accommodation, that allows them to live in their RV and to be happy. So what I would do is I would try to probe them and I would say, "Is there something like this that appeals to you?" Because what could happen is if that did appeal to them, depending on how much money your dad makes on the stained glass and things like that, then let's say that they said, "We're going to work.

We're going to keep on being active. We like to travel. We know we don't have a ton of money. So what we're going to do is we're going to buy an RV. We're going to do work camping and we're going to keep doing, we're going to set up a little trailer or buy a bunk house or whatever your dad needs for a shop that he can use for his stained glass projects.

And we're going to live in the RV and we're going to go north in the summer and south in the winter. And then what we'll do is we will subdivide the house, sell off the lot. We'll rent out our primary house for a rental income so that we keep that house in case we want to move back to it and we'll rent that one out.

And then we'll use the money for a second house as a down payment on another rental house. And we'll try to get to the point where we have one or two rental houses and then our work camping provides for most of our living expenses and we make it up with the additional stained glass income as well.

A couple who's living on the road frugally can live on the road really at any budget. People can do it on less than a thousand dollars a month, but many times people will do it on a few thousand dollars a month. That's very reasonable, a couple to three thousand dollars a month.

So maybe something like that would be a lifestyle they would really be excited about. And then in terms of the finances, the most important thing is that your parents not take Social Security until 70. They want to stretch out their Social Security as much as possible so that Social Security benefit is as high as possible, which means they've got to have a transition plan right now for the next 10 years.

And they've got to have a transition plan that doesn't make them feel like, "Well, we're just hating life and we're suffering." So that's where I come to say, "What would you like to do?" And so if you can make the transition plan with a lifestyle that they would be encouraged by with seasonal employment such as work camping, etc.

And again, even your dad with the stained glass, maybe what they do is they set up a place in the wintertime when it's harder to get work camping jobs and he does stained glass in the wintertime. But then all summer they head north and they go to their different work camping locations up in the north.

And then if you use the house, rent it out, and see if they can work towards another rental house as well, that would be the kind of thing which would provide them with income for themselves. One use if you fail to subdivide the property, one use of the property might be to actually use it.

Well, it may not be possible with HOA regulations or something. Obviously, you're having problems with the local municipal people. But if you can use it as a place for them to park their RV. Maybe they buy something like whatever kind of RV, something small so it's easy for them to handle and fuel efficient and good cost.

But if they have a fifth wheel or some place they can park their RV, build a shed on the second lot, put a nice place where they can have full hookups for an RV, then when they come back during the wintertime, they can come back to their own house.

But they have a tenant in the house and they just live on the second property in their RV. Something like that could work for as well. You know, as many times as I've heard you talk about RVing, that never occurred to me and that's a really good idea. It's fantastic.

First of all, I love RVing. I have a wanderlust bone in my body. Every bone in my body has a wanderlust. But I love RVing. And if you go and you talk to work campers, for people in this phase of life, it is one of the best situations for them.

Nobody gets rich doing it. They're not going to get rich. But what they can do is they can defray their living expenses. They've got to have some money and some income, which I think is where a rental house would be helpful. And then having some savings. They've got to have savings as well.

Because they've got to buy a rig. They've got to take care of it. But the work campers, they'll often work something like a week on, week off. But the work is right outside the door of their RV. Depending on where they go, if they're a big campground, they could be very busy.

If it's a remote campground, they don't actually have that much work to do. And the lifestyle of it, there are lots and lots of older people RVing. And so they're constantly meeting people. You always see them. They're there at eight o'clock at night, sipping wine out by their fire.

Life is good. And every now and then they go up and check somebody in. But I've known a lot of work campers who really love it. And for an ability to defray expenses so that you can generate more capital for the next phase is really a good solution. And if they're healthy and active, it could be the kind of thing where your mom doesn't have to do the nine to five.

She does the primary customer service work. Oftentimes couples will be working together. You'll very frequently see that where they're in the office together. I've been in many campgrounds and you go up at eight o'clock at night and the husband and wife, the work campers in charge are up in the guard shack.

But they've got the TV on, they've got a little lamp, they're sitting in a comfortable chair. And if somebody comes in and does a late check-in, they're there to serve them. But they're spending their evenings together. They just happen to be getting paid in terms of a free place to park, free utilities, or sometimes a small stipend as well.

So, I think if you'll help your parents develop ideas about what they would really like to do, what they'd really like the future to look like, then I think you've got a positive direction to go in. And then you can just try to help adjust the finances on the back end.

And that may just simply mean a different job for your mom. If your dad likes his stained glass work and he might say, "I can't take my workshop on the road. Are you kidding me? And I don't want to just do it in the wintertime. I want to do it all year round." Then the solution might be to say, "Mom, how can we adjust your career into something that's not draining for you?

Do you want to be a receptionist at the local Puppy Pound to work with animals? Or do you want to work with kindergartners because you love children? Is there a way that we can make it exciting for you to go to work?" Going to work 40 hours a week is not a draining bad thing unless you're in a bad fit for you as a job.

And so, for every person in that situation, there is an opportunity that they would really enjoy. It might be taking care of horses. It might be trimming dogs' hair. It might be blacksmithing. I don't know. But there are so many things that we can do now that we can earn a great wage, can keep our life, keep things going, and really enjoy our time at work.

The final thing I would say is for people like that, I think you should be very careful with their investment options. And I think that you should probably think carefully about real estate. Real estate is intuitive for people in a way that mutual funds are not. So think about, is there a way that we can rent out their house, have it paid down?

Can they wind up with a couple of rental trailers or a couple of rental houses? That way they know, "Mom and Dad, you don't spend this capital. This money, you just spend the income." Because that's intuitive for people in a way that mutual funds are not. And then if you make sure they go out to 70 with their working, that'll solve it.

If they can work till 70 in some form or another, they could probably live on their Social Security income. Check those numbers as well in your spreadsheets. So those are my thoughts, Lucas. Good for you for getting involved with your parents' money. I'm glad it's going well. >>Lucas: Thanks so much, Joshua.

I appreciate it. >>Steve: My pleasure. We go now to Texas. Daniel in Texas, welcome to the show. How can I serve you today, Daniel? Daniel in Texas. >>Daniel: Hold on. Sorry. >>Steve: There we go. >>Daniel: How can I serve you? >>Steve: So question. We've previously talked about my business some, but I am now...

I guess the base question is how do you use creating content to build a product business? So I am selling a gluten and grain-free brownie mix off tiltedbrownies.com, if anyone wants to look it up. >>Daniel: Hold on. Hold on. Hold on. Hold on one second. >>Steve: I'm sorry. >>Daniel: Hold on.

>>Steve: Off tiltedbrownies.com. Off tiltedbrownies.com, your central source for gluten-free brownies. Did I get that right? >>Daniel: There you go. Yeah. They're so good, they'll knock your tilt off. >>Steve: Nice. >>Daniel: There you go. Yeah. Yeah. So I am putting up blog content Monday through Friday on our website, recipes, gluten-free living, stuff that interests me.

So I guess a lot of it is I'm doing it to help people and to make their lives better. Part of it's a gross thing for me as well, but ultimately all aspects of what we do with our business we hope helps grow the business and make more money off of it.

So do you have any thoughts? Obviously your business is primarily content, and even the content you sell as a product is content. Do you have any thoughts on how to maybe use that more to help grow the business? >>Steve: Do you work exclusively locally or do you work nationally?

>>Daniel: I am selling online nationally. >>Steve: Okay. So in that case, then the web serves you very well. And of course the web can serve you locally as well, but it's just very different if you have a national presence. Tell me about your social media strategy. >>Daniel: It's probably lacking, let's be honest.

So my brother handles the social media stuff. We're trying to post a couple times a week on Facebook. We're posting a couple times a week on Instagram, trying to get into Pinterest and such as well, but primarily Facebook and Instagram. Partially I would say our primary outlet is we sell at a farmer's market on Saturday morning.

So there's definitely stuff related to the farmer's market. There's a Saturday morning post that goes out on both Instagram and Facebook, "Hey, come check us out," blah, blah, blah. My brother is as well trying to kind of taking, I don't know how familiar you are with Gary V., but trying to take his kind of Instagram 180 strategy, basically going high engagement on other people's content on Instagram.

My brother's doing that some, not to the level that Gary V. thinks you should, but to a fairly high level, basically trying to do meaningful interaction with at least 20 pieces of other people's content on Instagram every day. And then I am, I'm posting on Facebook. I'm posting when I put the blog post out, I'll post on, I'm also on Mimi, but on, do a Facebook thing with our meta description and a link to the blog post.

I've also started just for the heck of it, putting it on LinkedIn to see if anything happens there. I don't know if it will, but. - It's hard to imagine how LinkedIn is going to serve you or Twitter. So I think the biggest thing is what's your strategy? Well, your strategy is to provide something great that people really love, but you've got to get discovered.

So how do you get discovered? Well, in my opinion, social media is going to be your obvious solution here because the discoverability on social media, especially Instagram with the right communities, the right gluten-free communities and the right recipe sites, et cetera, is going to be your best option, your biggest seller.

So if you think about what is somebody who's gluten-free, what are they looking for? What I would do is try to profile the things that somebody who's gluten-free is looking for and all of it. Part of that of course is brownies, but then everything else. And so if you look at the communities, there are so many big pages and so many big brands and groups and organized communities of people who specialize in gluten-free that you simply need to focus on being findable there.

I don't know how to do it specifically. I would say Gary Vee's course is the great place to go. And absolutely one of the most important things is to be active in promoting other people's things. And so what I would do is I would hardly ever post an Instagram, maybe once a week is fine.

But if you're making first two Instagram posts per week is insufficient. But if you're making 20 posts per week, you say four of them are going to be about what I'm doing and 16 of them are going to be about what everyone else is doing. And so let's just not just focus on brownies, let's show what other people are doing.

And in so doing, you start to build friends for yourself in that community to show people, "Hey, look, we're committed and we're part of this community. We offer this niche product that you would like." I would imagine also that if you do a little searching for education, that there's a lot of education out there for how you can really spread your physical product with other people in the influencer space.

So whether that means going to Gluten Free Con or Keto Con or whatever it is, whatever conference it is, and buying a booth there, what you've got to do is you've got to get your brand known by the people who are already in this space. Do you have an affiliate program on your website that other influencers can sign up for?

I do not. So that would be an easy thing to do is if you have a great product, set up an affiliate program with your shopping cart so that influencers can sign up for your affiliate code and then start to see if you can market that affiliate program to other influencers in the Gluten Free community.

Because people who are in the Gluten Free community, a well-known, could be a blogger, could be a YouTuber, I mean, the platform is immaterial. It doesn't matter what platform. People who are serving the Gluten Free community need a way to make money off of what they're doing. So their monetization options are a few things.

They can develop things for themselves. They can sell their own products, whether it's a cookbook or a t-shirt or a course, etc. But one of the most powerful forms of revenue creation for an influencer is affiliate marketing, is getting an influencer to market your product as part of their overall system.

So you've got to have an affiliate program and then use that affiliate program also for people who are other kinds of people. One of the other things I would do is I would look and research. There's got to be a half a dozen companies doing monthly box memberships of Gluten Free content, of Gluten Free recipes, Gluten Free stuff.

There's got to be at least a half a dozen of those out there. So I would find the people who are doing that and I would place your product in that. A long time ago in the archives of Radical Personal Finance, I did an interview with somebody, I can't place the name right now, but who specialized in this kind of product placement.

So I would work with some of the consultants. I would take their classes, their courses. Somebody's created a course on it and I would just focus on product placement and then making it easy for people to buy. I think one of the... Are you also selling through something like Amazon FBA in addition to your own website?

I have not figured it out for Amazon yet, no. It is on my radar, but it seems rather tricky. So that would be high on my priority list if I were you as well because one of the challenges of buying from somebody is oftentimes it's hard for people to set up a buying relationship with a new mail order vendor.

And so it's a hassle. I got to go to their website, I got to put in my address, I got to put in my credit card, etc. And so if you can profitably distribute, I don't know if there's any downside of distributing with Amazon FBA, but if you can profitably distribute through the platforms that many people are already using where they just simply pull out their Amazon app, they click buy and there's two-day shipping and boom, it's at their house, that can also be a way of expanding things.

And then I would think a lot about how do you feature your customers? So tell me a little bit at this point about what you're doing to feature your customers and to get them posting online about what you're doing. Not much. We've tried to push some for if people will give us an online review that will show it to us, whatever, that we will give them 10% off.

To be quite frank, I've been pushing getting signups on our email list more than doing that. I feel like there's only so many things you can yell at someone in person. No question. Sharing information. What I would do is... So probably nothing basically. So the idea is try to figure out how to profile your customers, especially in the Instagram world when everybody loves to show what they're doing, what they're cooking, etc., especially in the gluten-free world.

So figure out how to run contests and customer appreciation things on Instagram, all the contests for free bags of brownies, etc. There are worlds out there. It's not my thing, so I haven't studied it in detail, but I just watch and I can see what's working by what people are doing.

So go and figure out how to do that to engage the people there. And then, I mean, those are a lot of tactical solutions. I love the fact that you're doubling down on your brand. I'm looking at your page here. You guys are in kilts and that's fun. So entertaining things as well.

If you look at some of the brands that have built a big following, usually you wind up creating a cult of some kind. The goal is to create a cult and a cult has to have personality. It has to have something that's differentiating about it. So have you studied the...

I guess the last thing is, have you gone out and searched for the big products that are out there and kind of studied their marketing, the people who are doing really well? Somewhat. I could probably do more of it. I've been trying to figure out the balance of trying to find the, I guess, independents who are being successful on a large scale versus the large companies who've just kind of jumped into the space and using their Betty Crocker.

And he just says, "Well, I'm Betty Crocker and now we offer a gluten-free thing." Well, I think I'm about out of... I guess I just want to close this particular question out because it's a little bit out of the realm of personal finance, just simply by saying that the better that you can articulate why you guys are different and the better you can just simply focus on showing your customers how special what they're doing is.

If you're making these things in your kitchen, I would be making that very clear. Show pictures of you making the things in your kitchen so that when somebody buys the brownie mix, they're happy. They're not buying from Betty Crocker. They're buying from Off-Kilter Brownies. But I would focus on how the big brands are promoting their things.

One of your most important areas of promotion is going to be setting up a proper affiliate code and figuring out how to get influencers to like your product, to try your product, to like your product, and then to rep your product towards their audience. Yes, you need to build your brand.

You need to build your profiles. But at the end of the day, if you can go to that gluten-free, I don't know, Jane's Gluten-Free Resource where she just does nothing except gluten-free products and gluten-free baking, and she can profile you on her YouTube channel that has 300,000 subscribers, and she says, "By the way, go and get these Off-Kilter Brownies.

Use my special link. Get 20% off." And Jane also gets her commission for promoting that. That's the type of thing that will quickly get you from selling a few dozen packages to many thousands of packages. You're going to have to leverage that. So as far as I'm concerned, that would be one of the first areas I'd focus on.

Hope that helps. I just say I'm not the right solution for this beyond that, but there are people out there who are teaching this, and so you've got to find them and find their advice, because they're going to know how to do it better than me. That works. Thank you.

Great. Thanks for calling in, Daniel. All right, we go now to Massachusetts. Andrew in Massachusetts. Welcome to the show. How can I serve you today, sir? Hi, Joshua. I believe that you've covered in previous shows the permanent portfolio as a way to sort of set up a passive investing strategy.

And also, you've talked on some episodes a bit about using whole life insurance policies similar to, I guess it goes by different names, the infinite banking concept, where you sort of utilize the cash value in your policy where it makes sense. And I'm wondering if there might be, for someone who's interested in the permanent portfolio and also interested in perhaps getting some life insurance, if using, because one of the components of the permanent portfolio, of course, is the cash portion that some strategies, some people who implement strategy say to invest that in short-term treasuries, like one to three-year treasuries.

But I'm wondering if, now, obviously, it's not as liquid, but I'm wondering if it might make sense to actually, for the cash portion of one's permanent portfolio, if they're pursuing that methodology, actually look at trying to fit that into a whole life insurance policy that sort of serves as the cash portion.

I was wondering what you thought about that, if there are any pros and cons to that or what. Interesting. Let me give 90 seconds of background for other listeners while I consider your question. The permanent portfolio was basically originally developed by Harry Brown, who was an investment advisor. And he was trying to figure out what is a simple investment strategy that could work no matter the economic conditions.

And originally, he started out by recommending a strategy that included stocks, bonds, cash, gold, silver, Swiss francs, natural resources, et cetera. But over time, it became simplified to simply say, you keep 25% of your money in stocks, you keep 25% of your money in bonds, you keep 25% of your money in cash, and you keep 25% of your money in gold.

And by doing that and then rebalancing basically once per year, you have assets that can perform in every economic condition. And the brilliance of the strategy is that it focuses on protecting yourself from different economic movements. So at some points, stocks do well, you profit some from stocks. Some points, bonds do well.

Some points, cash moves does well. Sometimes gold does well. But you're hedged against the different macroeconomic movements of an economy, the movements of the Federal Reserve, et cetera. And most people would acknowledge that it's probably never going to be the superior performing investment strategy, but it's also going to generally always be a good performing investment strategy.

The best book on it that I would recommend to start with is go back and read the book by Craig Rowland and J.M. Lawson called The Permanent Portfolio, where they dug into it in depth. And the great thing about that book is they talked a lot about the practical applications of it, different specifics that you can use, different companies, different ways that you can do it.

What should you hold your gold, for example? Should you buy gold ETFs or should you have physical gold in your gun safe or should you store gold in your private vault in Austria? It's different. What do you hold for your stock portfolio, index funds, other things, et cetera? So now I've given 90 seconds of background, I still don't have a good answer to your question.

On the one hand, I don't see a basic problem with that because in many ways, the portfolio values that are in life insurance can often be viewed and logged as a cash asset. For all intents and purposes, they are functionally equivalent to a cash asset because in a traditional whole life insurance policy, the policy values are guaranteed to increase by the insurance company.

Now we always want to be a little bit careful of actually booking them as a cash asset because in many insurance policies, the insurance company has the right to delay a distribution or a loan request for a certain period of time. Sometimes that can be months. I don't remember exactly, but maybe six months with some insurance companies and some policies.

But as a matter of practice, I have never in my career heard of a company actually exercising that policy right. As a matter of practice, you can get a wire transfer out of your whole life insurance policy in 24 hours. So I view my life insurance cash values, I view them as a cash asset.

I book them as cash. But what are those assets invested in? Well, a lot of the assets inside of a life insurance policy are invested in bonds. Depending on the company, they're heavy into a bond portfolio. So is it better to calculate a life insurance portfolio as a bond portfolio or as part of your bond allocation or your cash allocation?

I don't know. In many ways, it's not your problem how the insurance company is investing. You just care about the end contract. You don't care if this insurance company has 80% in fixed income, 10% in stocks, and 10% in real estate, or if they have 50% in fixed income and 30% in real estate and 20% in stocks.

You don't care because to you, your cash values are guaranteed to grow up. So to you, it's functionally equivalent to cash. What I'm struggling with, and I can't do live here without maybe giving it some more thought. What I'm struggling with is... The biggest problem would be how does this fit in terms of your accumulation strategy and how do you time it?

That's always the challenge with life insurance is because you have to put premiums in, and because you have to put premiums in based upon an appropriate comparison with the premium versus the cash value, you simply don't have the same flexibility as just putting money in a cash account. And then when it comes to an investment portfolio, you're going to have a lot of practical trouble actually maintaining the exact cash amount in the life insurance policy that you wouldn't have just simply keeping money in cash.

A life insurance policy is a really useful tool for all the reasons discussed, but it has the constraint of needing to be funded with a series of ongoing payments and then having certain constraints on the amount of money that you have in it and the amount of money that you don't have in it to keep the policy healthy, especially if you're doing loans, if you're not doing a distribution strategy.

You've got to keep enough money in the policy to pay the interest on the loan and to keep the policy in force until your death. So I guess my answer to you with, as you can hear, I'm kind of fumbling a little bit for clarity on the different points involved.

My answer to you would be it's probably fine to calculate in your whole life insurance cash values as a component of your overall cash allocation. Let's say you have a hundred thousand or a million dollars in your portfolio and you're going to then allocate $250,000 of that to cash.

Well, I'm fine if you've got a hundred or $150,000 in a life insurance policy, but then just do your rebalancing and such with the other money that's outside of the life insurance policy because it'll be more flexible than the life insurance policy. I guess in theory you could get to a place where you say we've got a universal life insurance contract that gives us more flexibility.

I just personally get nervous about those because they don't have the same benefits of a traditional whole life contract. I don't think those strategies are mutually, I think they can go together. I think they can be friends. I don't see why bank on yourself and, or infinite banking to use the less hyped version.

I don't think that infinite banking and the permanent portfolio have to be enemies, but I haven't thought it through enough to be clear on exactly how to promote them together. So that's the best I got for you. Good question though. Interesting. Yeah, thank you. Yeah, that was kind of what was my thinking as well is that if you, you know, obviously there's going to be some difficulty in modifying once you have the insurance contract set up and you're funding it, but that aside, if you can kind of, if it's an acceptable size for your, what you are doing with your permanent portfolio, maybe it can work out, you know, okay.

Yeah. I mean, I don't know that anybody, I'd have to call Jake to Silas. He came on the show and talked about permanent portfolio. He would be a good guy. Call that question into his podcast. He runs the voluntary life podcast. Yeah, I actually did talk to him about that.

What did he say? What was his answer? Well, you know, I think part of the problem with these two strategies is that you have people who are very pro permanent portfolio and you have others who are very much a proponent of this type of, you know, bank on yourself.

And I have had a hard time finding anyone who sort of first understands both strategies. So you were an obvious thought in my mind since you've covered both topics. But yeah, I don't think you really, well, I may have not done a very good job explaining. You certainly hadn't heard of the bank on yourself type of strategy before I brought it up to him.

So I think, you know, maybe I didn't do a great job explaining it, but I don't think you really saw the value in it. The biggest problem with infinite banking slash bank on yourself and just for context for listeners, those are basically two different marketing names. Infinite banking was Nelson Nash and then bank on yourself is Pamela Yellen wrote the books on it.

My problem is always how do we, and this is the thing that's even constrained me personally, is you have, because of the constraints in the United States tax code on life insurance policies, you have to, you can't fund them as perfectly as, they're not infinitely flexible. Usually for the best results, we're going to use a traditional whole life insurance contract as compared to, although you can use universal life contract and some of the infinite banking people use a few different contracts, but they use some weird companies.

I've never been sold on some of the companies that some of them represent. My opinion, if you're going to buy this kind of life insurance, your options are exclusively the big mutual companies, New York life, mass mutual, Northwestern mutual. That's it. And generally. Is Penn Mutual in that grouping?

Maybe so. I haven't paid much attention to them. You just mean companies like that. Yeah. I mean a mutual company, a company with good history, et cetera, because you're ultimately banking on the power of the insurance company. You're not actually a bank. You don't actually have the money. You're trusting the insurance company to do a good job.

And so you need to have a mutual insurance company, not a stock company. And you need to have a company that's well run, that's stable, that's going to take care of your money. It's a big, big deal because you don't have FDIC insurance. You, yes, you do have the Guarantee Corporation that backs up life insurance contracts, but you don't, you're not, you're guaranteed, if you're banking on the guaranteed values inside of a life insurance contract, the whole concept falls apart.

What you're actually trusting is that the company will do a good job paying its dividends, the company will be well managed so that you'll get the dividend rate that you're hoping to get, the projected dividend rate, not the basic guarantees within the contract. So you need a good company.

And then you need a flexible company because when you're, depending on how you're going to be using it, putting lots of money in, lots of money out, it's not, you know, you need the company, the contract to be the right way. Then you have to look at the argument that they make about how dividends or how loans are captured in the policies.

And frankly, I just need to read some more about it from some of the people who are really active in the space. I set a project for myself a few years ago. I bought about, I searched the market, I bought all 15 books I could find on it. And I was going to do a big research project, maybe create a product or something that I could sell.

And I got busy with other things and I just never got back to it. So at some point I may do it, is read all the 15 books, do a bunch of interviews with the people, and then try to be that guy who I know insurance and find the problems, find the solutions and answer it.

But to go back to my biggest problem with an insurance policy is I usually would want a good traditional whole life insurance policy. We're probably going to want a quick pay policy. So we're going to want a policy that you put premiums in for 7, 8, 9, 10, 12, 15 years.

But those premiums have to be appropriately adjusted to the size of the insurance policy and to your income. And so the challenge is often, do I have the structure of life that has the income where this is going to make sense? And the thing I learned when I used to sell life insurance was I couldn't sell, I made the mistake at some point of selling policies that were too big.

And what happens is it's all fine and well for the person to sign up for a $100,000 a year premium when their business is doing well, but what happens in the next recession? And all of a sudden then you start backing it off and you try to help them adjust the premium, but now it goes from $100 to $50, and even then sometimes the $50,000 premiums fall off.

And so what I came to be frustrated with is that if you do that, a lot of the benefits of the whole life policy simply fall away. And I learned not to be so aggressive. I had too many policies that I had to readjust and that fell off the books.

And then when you do that, the policy owner gets sunk in the transaction because all the costs came out, the commission came out, et cetera. But if the policy doesn't stay on the books for a decade, two decades, three decades, then it turns into a bad idea for the policy owner.

And so where I came back to was that the point of safety was always to back off the amount of premiums. And so if they were really comfortable with $100,000 a year or really comfortable with $20,000 a year or whatever the appropriate thing was, then I would say, "Let's back this off and let's do 70% of it.

And let's make sure that we have that." And then make sure that policy is just stacked with additional premiums so that if necessary we can back it off for a couple of years if we go through a recession, et cetera. Because a lot of times the people who are in this space, who are doing this, might have significant fluctuations in their income.

It's unusual for somebody making $70,000 a year to all of a sudden have massive fluctuations in their income because they're doing that in a job. But it's also generally not the best idea for somebody making $70,000 a year to be investing primarily through whole life insurance. Better for them to be using 401ks, Roth IRAs, et cetera, because they get more bang for the buck.

So once we move into this space with whole life insurance contracts, we're generally going to move into the up markets where people have a lot more income, a lot higher tax burden, where now it's a much more attractive product and they've already maxed out their other areas of investments.

So I never quite solved that problem, but I just have never figured out how infinite banking works to do it as everything. You need, yes, the policies work for some things, but you need additional assets for yourself. The thing that I, the way that I have always looked at whole life insurance contracts is they're a great place to accumulate some money.

The life insurance benefits are really important to me. They're really wonderful. I love the fact that they're there, but often there's probably other sources of financing that are preferable to life insurance contract. So if car financing is easy, I wouldn't take the money out of a life insurance policy so I could pay myself back.

I'd take a 0% car loan if I borrowed money on cars. If I were doing something else, I would do it on credit cards. And then the life insurance policy is simply there if those other financing mechanisms are not available or they're expensive. That's when you can leverage it and that's when you, where you can really leverage it effectively to cut your costs of borrowing in other places.

So I teach this in my credit card course. Let's say, let's say you have $200,000 or $100,000 in your whole life insurance contract, but you've got credit card debt that you've accumulated for some reason. And I'm assuming here that we're not just, you know, but whatever, whether we're paying it down, you have money in a life insurance contract.

This is what bugs me so much when people who are teaching people to pay off debt and they always say cash in the life insurance contract. Don't cash in the life insurance contract. That's dumb. What you do is you take a loan against the life insurance contract, use that loan to pay down your credit cards, drop your utilization ratio from whatever it is down to a much better factor.

Let that, let your, let that filter through to your credit reports, bumps up your credit score, then apply for new 0% credit cards. Take those new 0% credit cards, borrow on the new ones, either through purchases or balance transfers, and then transfer the money back and pay off the loan in your life insurance contract.

That's the best way to use a life insurance contract to pay off your credit card debt is to drop your interest rates. But you don't want to take that, that money from a safe, you know, protected creditor protected situation, stable, et cetera, and use it to pay off a credit card when you can just simply borrow against it, then put it back in a couple of months and keep paying off the credit card at 0% interest.

So that's the best I got. That's where I'm at. Yeah, no, that's helpful. That was kind of what I was thinking is it's a nice tool to have if you can, you know, if you have some extra money that you're looking to invest and, you know, give you some different options depending on the economic environment.

But yeah, I mean, obviously there are restrictions to it and you can, obviously you're committing to some amount of premiums over some period of time. It's got to work. When you talk to him, Jake is still doing permanent portfolio, right? Is he still? Is that still his? Okay, good.

I believe yes. That's right. Yeah, I think he's one of the best defenders of it currently because the guys who wrote the book, they used to speak publicly, but they eventually shut their website down. They did the book and the book is still good. I'm not aware of anything that has to be changed.

But Jake is, you know, he's financially independent. He's living on the portfolio. Yeah, I believe you're right about the authors of the book. They're kind of doing other things now, but the other guy that I was kind of talking to about these topics was the guy who runs the portfolio charts website.

I don't know if you've checked that out, but it's kind of interesting. He looks at maybe a dozen or so different index type portfolios that are sort of, yeah, the lazy man style, including, you know, Timothy Robbins, all weather portfolio and some others there. And he actually developed his own just because he's been tinkering with the numbers so much that I'm kind of leaning towards, which is a derivative of the permanent portfolio that is tilted a little more towards stocks, which historically has performed a little bit better than some of these other portfolios, but with a little more volatility that is.

The key seems to me, as far as I'm looking at it, if we start with the big important rocks first, right, that's what I always want to do. Why does something work? I think the reason why the permanent portfolio can work and why it's very good is because first it's grounded in good analysis, right?

It's grounded in this idea of having asset classes that perform differently in all market conditions. And then it's simple enough that the investor who reads it and understands it and believes it will stick with it. Because it seems to me that if we take the amount of time out large enough, almost any thoughtfully created portfolio will work, right?

A hundred percent stock portfolio has worked very, very well. It's just had a lot of fluctuations. A hundred percent real estate portfolio has worked. I don't know of anyone who would say a hundred percent gold portfolio has worked as well as you would like. That gold just does not perform that way.

But when you own productive assets that generate dividends or generate increases or generate interest, some intelligently put together portfolio is going to work. The key is, does the person stick with it when things are going hot and when things are going cold? And then do they rebalance over time?

And what I love about the permanent portfolio is it seems to me that it solves, especially with the heavy allocation towards gold and cash, it solves my fears, right? If I know that I've got $250,000 in gold in my vault in Austria and I can go pick this up whenever I want, I just go to Austria and they start giving me gold and I can turn that into euros and go and spend it or take it and put it in the bank and have that bank account pay my credit card, that makes me feel nice in a way that makes me willing to put up with other things in a different way.

And then when I look at cash and I say, "Hey, I can hold some of this cash digitally. I can hold some of this cash physically and I can distribute my cash around the world using a basket of currencies," that makes me feel really happy. And then I just, because I don't have to worry about my investing, I can just go on and focus on keeping on making money.

And so I'm not saying, I think almost any of the portfolios can work if you understand them and you believe in them and they click for you. And so in general, most people are going to have something that they read about and they say, "You know what? That works for me." It's not a Wallens, it's VTSAX, right?

That's it. It works for him and he'll stick with it no matter what and it'll work for him. For other people who have other concerns, Harry Brown wasn't convinced that all stocks was the way to go and all American companies is the way to go. I'm not convinced of that.

So you develop something else. But when you have a portfolio that you understand, the strategy that you get and that you stick to, in time it should work. Great, appreciate it. Thank you, Joshua. Great question, Andrew. I appreciate your calling it in. I'm now going to take two written questions from patrons of the show, patrons who weren't able to call in live, one on life insurance and the other on the intersection of minimalism, travel and prepping.

So I'm going to begin with life insurance question. The question was written in a slightly of a confusing way, but I'll do my best with it. So, "Hi, Joshua. I won't be able to attend the call today, but I have a question that I've asked several advisors and Googled, but I haven't been able to find the answer to.

The question is this. Why wouldn't I want to title a life insurance policy to a trust, either for my wife or my child from another marriage? Each party is separate." The question is a little bit hard for me to understand what the specific problem is. So what I'll do is to answer Kevin's question, just very simply give you a quick snapshot of life insurance titling, of the way that it works and the way to set a policy up properly for yourself.

Always remember with life insurance contract, there are four parties that are involved in the contract. The parties that are involved are number one, the owner of the contract. The owner of a contract is the individual that has all of the rights of the contract. The second party involved is the insured.

This is the person on whose life the contract is dependent for its functioning. The third party is the payer of the contract. Usually this would be the owner, but it doesn't have to be. And then the fourth party is the beneficiary of the contract. And so who is it that receives the money when the insured dies?

Those are the four parties in a life insurance contract. Now all those four parties can be the same person. So I can own a life insurance, be the owner of the policy. I can own a life insurance policy on my life, I'm the insured. I can also pay the premiums for that policy, I'm the payer.

And I can have myself or more properly my estate be the beneficiary of that policy. However, additionally, I can change those four things to be anyone else. So I can own a policy on my life that I can pay the premiums for, but I can make my wife the beneficiary of the policy.

Or my wife can own a policy on my life that she pays for, that she is the beneficiary of that policy. It's also important to remember that you don't have to have a natural person be these individuals involved in a life insurance contract. So I can establish, or the estate is a good example.

My estate is not a natural person. My estate is an entity, it's kind of like a trust, it's an estate, it's kind of like a trust. I can set up a life insurance trust that owns my policy, and that life insurance trust can pay for that policy on my life.

And then a trust that I've established, that same life insurance trust or a different trust, can be the beneficiary of the policy. A company can own a life insurance policy, can pay the premiums on that policy, and can be the beneficiary of a policy, just like a natural person.

The only person that's always going to be a natural person in a life insurance contract is going to be the insured. Now there are limitations as to what entities can take out a life insurance policy on a person. There has to be what an insurance company would call insurable interest.

So you, as my listener that I don't know, I can't go to an insurance company and say, "Hey, listen, insurance company, I want to take out a policy on Joe Smith's life, and I'll pay for it, and I want to be the beneficiary of it." The insurance company says, "Well, what insurable interest is there?

How are you harmed if Joe Smith dies?" I say, "Well, you're just a listener." "Well, you're not harmed." Now if, on the other hand, you were an investor in my company, and you put a lot of money into my company, I could now go to the insurance company and say, "I want to take out a life insurance policy on Joe's life because he's my number one investor, and if Joe dies, I'm really going to be hurt because we're going to run out of investment funds." Now I could probably get an insurance policy on your life.

So that's a quick background on who's involved. So what's the best way to own a life insurance contract? Well, it depends on the situation. So first of all, who needs to have the policy rights? In general, most of us will find that it's easiest if we own our own policies on our own life.

That's not necessarily the best, but it is the easiest. So if I take out a policy on my life, I can do that for any reason at any time. If I want to take out a policy on my wife's life, now, of course, I need her consent. She has to consent to my taking it out.

And now I'm in a situation where I'm going to own the policy, thus I can sell the policy, I can borrow against the policy, I can cancel the policy, I can do anything I want with the policy, I can transfer the policy, but she doesn't have any rights in that contract anymore because she's simply the insured.

So why would different people own a policy? Well, the first thing you can think about is protection. Let's say, for example, that I own a policy on my life for a million dollars, and now my wife is the beneficiary, right? That's why I bought the policy. But pretend that my wife and I divorce.

Well, my wife doesn't own a policy on my life, and it may be that the divorce court requires me to pay her payments of some kind for her support or for child support, et cetera, but she's not going to have that insurance policy that guarantees that. Now, often as part of a decree, a divorce decree, the judge will require somebody to get a life insurance policy, but it would protect my wife more if, instead of me owning the million-dollar policy on my life, it would protect her more if she owned the million-dollar policy on my life, because if she owns a million-dollar policy on my life and then we divorce, I can't force her to do anything with that contract.

She still owns it, so she can still be the beneficiary of that contract no matter what happens. And so that's safer for her because once the policy is hers, it's hers. She can't change it. Now, she's got to pay it, but I can't force her to cancel the contract.

The only thing I can do as the insurer to the contract is simply to either live or die. That's it. And if she can prove that I'm alive or dead, the policy will work as it exists. So in general, from a safety perspective, it's often best for people to own a policy on the other person's life.

So I've often recommended to husbands and wives that each of them own the policy on the other person's life to protect them. Depending on the state, you can go a little bit farther with this in terms of the source of funds and should it be a joint bank account or an individual bank account.

Generally, that stuff is not so important in terms of practice, but it is theoretically important in some situations. Now, remember, this also needs to be considered in terms of asset protection, because one of the things we do want to do is if we're going to get a life insurance policy, especially if it's got any kind of cash value in it, we want to make sure that it has in it, that those assets inside the policy are protected.

So that's important as well. Now, back to the trust that's involved. Is it a good idea for you to have a life insurance trust on a policy? It can be. There's not really any reason not to do it, except the expense of establishing the trust. Why does somebody set up a life insurance trust?

Well, generally, the normal reason for establishing a life insurance trust is for estate tax planning. In the United States, when you die, the face amount of all of the life insurance policies that you own is included in your gross estate. Pretend that I have $10 million of assets, plus I own $10 million of life insurance policies on my life.

When I die, my wife would -- let's use someone other than my wife so we can ignore the spousal exclusion. My father would inherit, when I die, he's the beneficiary of my policies, he would get $10 million income tax free, because the proceeds from a life insurance policy are received income tax free.

But my estate would include the $10 million of life insurance that I owned, in addition to the $10 million of other assets that I own. And in the United States, with the current $11.5 million estate tax exemption amounts, that means that, assuming I'm not married and I'm not using the spousal exemption amounts together, that would mean that now about $9 million of my estate is going to be subject to estate taxes, which are very expensive.

Well, that could have been avoided very simply if I had not owned that life insurance policy at the date of my death. If I had simply established an irrevocable life insurance trust, and then I had transferred money into that trust for that trust to buy a life insurance policy on my life, now when I die, the only asset that I own is my $10 million of assets.

I don't own the life insurance policy. And what would happen is the trust owns the life insurance policy, the trust then simply takes, when I die, the policy is exercised, and the policy premiums go to the beneficiary of the policy, which is just paid out according to the trust documents, or goes directly to my dad.

And so my dad receives the money income tax free. Now, the reason why trusts are really great thing, life insurance policies are really great things for trusts to own, is that the inside buildup of cash values inside of a life insurance policy are not taxed. So thus they are not subject in the United States, there are not subject to the heavy trust income tax rates for a trust such that would generally hold another asset.

So the trust holds an asset that's creating income, the trust now has to pay income tax rates at the highest marginal brackets. Whereas if the trust owns life insurance policy, any income that's growing in that, or any cash values that are growing in that policy, are not subject to income tax.

And then when the policy is exercised, because the proceeds of a life insurance policy are not subject to income tax, then still the trust is avoiding the insurance taxes, sorry, the income taxes on that death benefit. So this is why trusts are really good things to hold a life insurance contract.

So if that's what you're talking about in this question, is there any reason not for my trust not to own a life insurance policy? Well, no, the only problem is do you need it, right? Most people don't have $20 million estates, most people are not, especially now that we've got $11.5 million estate tax exemption, most people are not in that situation.

Now, 15, 20 years ago when the estate taxes were at $750,000 and above, then almost any millionaire needed a life insurance trust owning a life insurance policy. But at the moment, very few people do. It's only a very small number of estates that will be subject to estate taxes.

So that would be one thing. Now, should you want, the question is, why wouldn't I want to title a life insurance policy to a trust for my wife or child from another marriage? I don't think in this situation that you necessarily have to have a trust. So when people have blended families, and they have children from one marriage, and then they're remarried, usually the biggest financial planning problem here is how do we make sure that certain assets go to certain people?

And so frequently if you have a husband and a wife who have children from a first marriage, then they've divorced and they've married again, usually the husband will want to make sure that his assets go to the children from his first marriage. The wife will often want to make sure that her assets go to the children from her first marriage, etc.

And a lot of times it would be frustrating and really problematic for the children who are in a, you know, if people are being disinherited basically. This becomes difficult, especially when you have assets that are not necessarily liquid. Let's say that husband and wife in their second marriage have a great big house, and that great big house is going to be passed along to one person that needs it.

What about the other children? So life insurance is one of the great functions that life insurance can form is as an estate equalization tool. Let's assume I have two children. I have a half a million dollar house and no other meaningful assets except a life insurance policy. Well, one of my children wants the house.

They want the lake house. So I can just simply leave the lake house to that child number one, and then I have a $500,000 life insurance policy that goes to child number two. Now everyone's happy. Child number one inherits a $500,000 house. The house gets a step up in tax basis at the date of my death, so they get a house tax free.

They can live in it. It's got a $500,000 tax basis starting with them. Second child gets $500,000 of cash. They're happy. They have no taxes due on it. They just simply now I've equalized my estate. Life insurance really works really well at performing that function. Life insurance also has the benefit of flowing according to beneficiary status.

So life insurances are not ordered by your will. Your will can deal with other assets that you may own, but a life insurance policy is independent of that. So if parents just simply want to make sure that their children from a first marriage get a certain amount of money, yeah, you can just simply take out a life insurance policy, establish the child as the beneficiary of that policy, and then when you die, it goes to them.

It's one of the simplest tools. The only problem with life insurance is that you've got to pay premiums, and that when you're doing this kind of planning, it's going to have to be some form of permanent life insurance policy that is guaranteed to be around at the date of your death.

And so generally your premiums are thousands or tens of thousands of dollars, not hundreds or a few thousand dollars as they are with term life insurance policies, which are just for temporary life insurance protection. So is there any reason not to title a life insurance policy to a trust?

There's no reason that I can see other than simply the costs of establishing the trust, the hassle of funding it, the hassle of making sure the trustee sends out the crummy notices every year, etc., so that you can properly have that life insurance trust function properly. And I just don't think it's probably not necessary.

If you want to buy a life insurance policy on your life, and you want to make your child from your first marriage a beneficiary of that, you can do that. Your wife can't stop you from doing that. Your wife can't change the beneficiary. Your wife has no control over the policy unless she's the owner of the policy.

If you want to have one policy that your wife owns on your life that she's the beneficiary of that you just pay, and that protects her, and then you want to have a second policy that you own, that you pay for, that goes for your child, you can do that.

And so you probably don't need a trust. I guess the only thing I can think of that the additional benefit sometimes of a life insurance trust would be creditor protection, asset protection. With that kind of irrevocable life insurance trust, you don't own it. So thus it's an asset that can never be attached by your creditors.

It's an irrevocable trust that simply owns a life insurance policy. Now, you may be making annual contributions to the trust every year, so therefore you are putting money into it. But if you can't put the money in it sometimes because your money is being seized, then in general that's the trustee who will have to figure out how to adjust the policy.

They may have to take a reduced policy paid up with a reduced amount of insurance, something like that. But they can figure that out with the policy that's in the trust. So if you were thinking about this from an asset protection standpoint, and you absolutely wanted a guarantee no matter what that you have a life insurance policy that goes to your child, then I think maybe the life insurance trust adds a little bit of additional protection.

You buy a $5 million policy in the trust, you make your transfers to it of $15,000, $20,000 per year for your premiums, up to $15,000 per year under the gift tax exclusion amounts. It works pretty well. It works pretty simply. And once the money is in the trust, once the crummy notices are sent, so that the child has the right of withdrawal from the trust, the money stays in there.

When you die, that trust will pay out the life insurance proceeds to your child. And in fact, you of course should set up a spendthrift trust to be the beneficiary of it so that your child gets the additional savings as well. So that all that money is protected from their potential creditors or their potential divorces, etc.

So reasons why you wouldn't want to do it? No, it's great. It's complex. It's a hassle. You got to hire an attorney to set it up. There's costs to it. But in terms of financial planning reasons, not a bad idea at all. Final question of the day. I will balance today out with finish it up with kind of a light and fun one.

Andy writes in and says, "Joshua, I won't be able to call in today, but I was wondering your thoughts on balancing minimalism versus prepping. You teach storing food and water and equipment, but I figure that RVing and going international have given you good opportunity to practice pairing down to the minimum, and I'd like to hear your experiences.

My wife tends more towards minimalism, and I tend more toward prepping. So that leads us into a bit of disagreement when I want to store crates of food, water, and backup gear, and she doesn't. Thanks, Andy." Andy, you are right. I moved my family, four children, two dogs, etc.

I moved around the world with fewer than a dozen suitcases. So I can teach you all you want about water storage, but I guarantee you this. I did not move with stored water. So first of all, let's talk about the philosophy of minimalism. There are different people who have different approaches to minimalism, and here's how I analyze it.

In a way, I consider myself a minimalist, but not in the way that it's often presented. The way that a minimalist will often present their case is that happiness or nirvana or something is found in having the smallest number of possessions. I don't know if this is still popular, but a number of years ago, it was very popular for someone to say, "I only own 100 things." And there were people who travel in a carry-on suitcase, and everything they own fits in their suitcase.

I respect that, right? I admire that. That's cool. I can fully see how that makes you very mobile to not have much stuff. And I like not having much stuff in that situation. There's another kind of expression of minimalism, which perhaps a word might be just kind of a non-cluttered aesthetic.

You walk into a house, and the house just has a few things in it. It's not cluttered with knick-knacks and tchotchkes and random stuff strewn about and shot glasses from Cancun and pewter spoons and things like that. There's an aesthetic of bare walls and a few pieces of artwork and a few pieces of furniture, etc.

But here, we're not just trying to work towards some arbitrary tiny number. I admire that, and frankly, my wife and I both have that bent. Neither of us likes clutter. For example, I like my kitchen counters to be totally clear. I don't want anything on the kitchen counter. I don't want a coffee maker.

I don't want a toaster. I want to get to the end of doing the dishes and see the counters clear. I don't always do it. Sometimes I have the coffee maker out and the water to tea kettle for a little while, but I don't like--growing up, my mom loved gadgets, and so her kitchen is just packed full of gadgets.

I don't like it. My wife doesn't like it either, so thankfully, we try to keep our counters clear. Now, in a way, that's kind of minimalism. And if you go through and you khanmar your drawers and you just have the things that you really need or the things that spark joy, you can do that as well.

I don't like to have a bunch of stuff stuffed in a drawer as well. So in that degree, I also consider myself a minimalist. Where I think the difference is, though, is having things that are not useful to you or that you don't love. That's one thing. And then the second thing is having things that are poorly organized.

There's a big difference between having things that you need or that might be useful to you and having things that are poorly organized. Now, I've been at both extremes, and I don't think there's one right answer, but I believe there's value in having things that you need or that you might need.

And in fact, there's financial value in it as well. There is a tradeoff. You could have so many things that you can't move easily. For example, preppers. Preppers are often known for stockpiling tons and tons of gear. And I read stories about hardcore preppers moving, and some of them have to have a semi-truck.

And that's true. If you've got 50,000 rounds of 5.56, and you've got boxes and boxes of toilet paper and long-term storage food and buckets everywhere, you've got to rent a semi-truck, certainly. So it's harder for you to move than just simply getting in the car and going. And I think there's a lot of benefit in keeping things light.

I have a good friend of mine listening to the show who seems to have established the habit of moving across the country regularly, but he practices what he calls the low-drag lifestyle. When he moves across the country, he doesn't get a U-Haul truck. He gets rid of all the stuff except what fits in a small or a mid-sized sedan, and then he and his wife get in the sedan and they drive.

And then when they get to their new location, they go ahead and buy the new things they need and live very lightly. And I did the calculations, the math on that, and I'm convinced that it's not necessarily stupid. It allows you to move into any apartment. It allows you to move into any house.

You just don't have a lot of stuff. You buy fresh the stuff that you need. And they're fairly minimalist. They don't stock the house full of tons of stuff. They just keep the basic things. But if you see value in having reserves, you kind of got to put those reserves somewhere.

So, you know, I have four children. If my children have no clean water, we're forced to go and drink out of a dirty municipal supply, they're going to develop dysentery or have diarrhea, and they're going to die. One of the major causes of death all around the world is contaminated water that causes people to become sick.

And this happens after a disaster zone. So what kind of father am I if there's an earthquake at my house or a hurricane at my house, and now I don't have any water to feed my children, and so I give them contaminated water, and they die from dehydration and dysentery?

That's unacceptable. That is absolutely unacceptable for me as a father to, when something is so easily solved and so easily provided for, it's unacceptable for me to take that kind of risk. Now, I understand if a father is in the middle of, you know, he lives in Port-au-Prince and makes a dollar a day, then he may not have the ability to do that, but that's not me.

I don't live in Port-au-Prince, and I don't make a dollar a day. So when I have little people who are dependent upon me for their life, and I know that they need clean water, I better make sure that they have clean water. Now, when clean water is so simple to have, you know, some flats of water bottles, some buckets of water, some barrels of water, a water filter, depending on how much space I have, then it will be unto me if I don't take care of something that's so simple.

Same thing with food. How could I, as a father, how could I be so irresponsible to make sure that when we live in a world of abundant food, and I have abundant money to buy food, that I don't make sure that I take care of my children with their food?

That's simply irresponsible to not do that. Now, does that mean that I have to have massive, massive amounts of supplies? Probably not, not necessarily. But is it a bad thing to have supplies? Here's my theory on stuff. Stuff is a drain if it's poorly organized and you don't know what you have.

But stuff in and of itself is not necessarily a problem. So, to give you an example, the way that I like to store things, I try to keep everything in modules. That works for me. So, whenever I have something that's a module, whether if I buy a, you know, I have my podcasting module, right?

I've got my equipment. And all of my podcasting equipment goes in one bag, and that bag has all of my gear. It's got my cables, it's got my microphones, it's got my recorders, it's got my extra stuff, it's got my batteries, my battery chargers. Everything's in one bag. I know that bag has all my podcasting equipment.

It's a complete kit. It's not burdensome to me to have one bag of stuff that's all fitting together, that's sitting on a shelf, that says, and it's clearly labeled, "Podcasting Kit." When I travel, I grab the kit, I put it in. When I make a podcast, I take everything out, I put it on the table, and I put it away.

Everything is in a kit. So, that thing is basically one item. It's not multiple items. So, it's not--I'm not conflicting with minimalism. And to me, the same thing applies to really everything else. If I have a phone, I'm going to have the accessories for my phone. So, it all goes in one bag.

I've got the chargers, which is what I do with my phones. I've got a wall charger. I've got a car charger. I've got a Faraday bag. I've got the little clippy thing that I use when I'm filming videos. I've got the selfie stick or whatever it is that I'm going to use.

I've got the headphones. Everything's in one bag. That's cell phone accessories. It all stays there. Extra batteries, extra cables, whatever it is. It's a kit. So, that way, I don't have junk everywhere just sitting in a drawer. I've got a kit. And then when you go up beyond there, I like to use Rubbermaid bins.

And so, what I've always done is I've had multiple shelving units, and I put the shelving unit somewhere. I have a Rubbermaid bin. This Rubbermaid bin has sports equipment. So, I pull it out. There's the sports equipment, and everything is segmented into little modules and kits. I don't find that somehow I'm emotionally drained because I'm not a minimalist anymore.

I've got sports equipment. If I like playing sports, then I'm going to have sports equipment. The key is to have it organized so that it's not overwhelming to you and it's not overflowing everywhere. And so, by that standard, I don't think there's any point to minimalism. Like, having less stuff doesn't help you.

I'll give you this just with children. I had for years, I always had this idea. I want my children to be the kind of children that can be happy with nothing, that can be happy playing no matter where they are with whatever they've got. And then we went RVing, and they just had one little box of toys each.

And so, they only had a little bit, and I achieved my goal. My children learned how to play in the dirt with a rock and a stick. I was happy with that. But here's what I learned. I learned that I didn't know what I was talking about before I had children.

Yes, my children could play with a rock and a stick, but they also came back to me every five minutes and asked, "Daddy, this, this, let's do this, this, this, this." And I couldn't get anything done because they're showing up every five minutes because they didn't have enough toys.

Well, then, once I could, I got them more toys, so we're not as minimalist in the number of toys as we once had. But now, they don't come back every five minutes saying, "Daddy, Daddy, do this, this, this." So, I needed more toys, needed more books, and needed the stuff.

So, there's nothing ideal about having less stuff. You just want to have the appropriate amount of stuff, the ideal amount of stuff for what you need. So, yes, I have learned to pare down to a minimum. I moved with, again, under a dozen suitcases, less than that. I can't remember the exact number, but I moved the country with a dozen suitcases.

So, I didn't bring a whole bunch of prepping gear. But once I got established in a new house, okay, what are the needs of my family going to be? How do I make sure that I have backups and reserves? The power is still going to go out. The water is still going to go out.

I might run out of food. It's not that hard to have a few reserves. So, you look around in your local area, and it's as simple as saying, "Hey, let's get a little bit of extra rice and beans," right? Or, "Let's go ahead and buy a little bit more canned chicken." "Let's go ahead and make sure I have a water filter." You can get a water filter in any place in the world.

"Let's go ahead and make sure that I have some buckets of water." "Well, here's some water containers. I'll get this water container. I'll get that water container." "I'm going to make sure I have that." "Let me make sure that I put aside a couple of cans of gasoline." I'm not a doomsday prepper.

I don't have an 18-wheeler. I don't do that. I keep all that stuff in my bunker. Kidding. I want you to think I'm kidding anyway. So, the point is that you expand to it. But if it annoys your wife to have the stuff, then make sure it's well organized, and then consider dispersing it in another place.

So, one of the big mistakes that a lot of people have is they have the stuff that overwhelms their house. But is it really? Your wife's a minimalist. Is it really going to bother her psychologically if you have cases of water bottles under the bed in the spare bedroom instead of empty space?

If so, find another place for the water bottles. But there's a balance here. The problem with the guy who lives with a hundred things, right? Colin. I used to read a blog by Colin someone or other who would do this thing. The problem with that is he can take care of himself.

And certainly he can be in situations where he may or may not have what he needs. He's probably going to be okay. But if he had children, that's just irresponsible. You can't do it. You've got to have food. They start screaming if you don't feed them. So, there's a right balance.

Many preppers do go to the extreme. I'm not trying to advocate for people to live for ten years on their own through the zombie apocalypse. I think it's cool if you want to do it. I enjoy the intellectual exercise. But that's probably unnecessary. It's hard to imagine the need to be able to be self-sufficient for ten years.

But three months? So, if it's bothering your wife, I say keep it somewhere else. One of the simplest things I would recommend is having a trailer. Having a cargo trailer and storing some of your things in the cargo trailer. So, that way it's out of your house. But it's mobile if you need it.

So, you can do that with a camper. You may do that with a storage unit. Another thing is make sure that when you are having things that you're careful and you're thoughtful. One of the things that I don't get is so many preppers especially, they wind up having things that don't complement one another.

There's one guy that I like his stuff, but he's addicted to flashlights. He's got dozens and dozens of flashlights. I don't see the point of having a dozen flashlights. I see the point of having a headlamp, a flashlight, and a lantern. Because they're all three different sources of light that are redundant.

So, you have backups, but they complement one another. I'd rather have a headlamp, a flashlight, and a lantern than three flashlights. Three flashlights starts to feel like a bunch of junk, but a headlight, a flashlight, and a lantern don't. And so, with everything, that's always been my approach. How do I have redundancy, complementary redundancy that's thoughtful and intelligent and then make sure it's streamlined.

I do think preppers tend to go through a phase where in the beginning, it's got a few things and it's all about the stuff. And then over time, people recognize, you know what, I don't need this much stuff. Give me an example. Let's say toilet paper. The thing that most of us don't appreciate until it's gone.

Well, toilet paper is something that can take up a lot of space. So, if you're trying to have two years worth of toilet paper, that might annoy your wife. But if you look at it and say, all right, maybe I have a little bit of extra toilet paper, but instead what I'll do is because I don't want to have too much stuff, what I'll do is recognize that I'm probably never going to need two years worth of toilet paper.

So, let me have some toilet paper. Let me pack and store some baby wipes. And then let me have some cloths that we can use for cloth toilet paper, which is reusable and can be washable if we ever needed it. It's going to be much more effective and much more cost and much more space efficient.

So, that's my answer is store the crates of food, store the water in a place where it's not particularly frustrating and annoying. Don't put them in the living room. Put them in a shed out back. Put them in a cargo trailer in the backyard. Put them in a storage unit nearby.

But make sure that you have the stuff that you need. And in time, you'll start to get better and better. There may ultimately be some trade-off. For example, if you have too much junk, too many prepping supplies, etc., you may not be able to live in a small apartment.

And some people buy big houses and big farms just to store their stuff. Calculate the cost. Calculate the benefits yourself. But it's probably not necessary to go to that extreme. And so, keep the benefits of your minimal flexible lifestyle. But as you become more skilled, you'll recognize that you can probably get by with less stuff and still perform all of the same functions.

Those are my thoughts. Thank you for calling in for a Friday Q&A show. Today was mammoth, 2 hours and 4 minutes. Thank you for listening. I hope you've enjoyed these questions. I just remind you, give me your thoughts. Send me an email, joshua@radicalpersonalfinance.com. I'd love to know your thoughts on hosting an in-person group.

Again, something like a 3-day seminar, maybe something around February 2020, is basically the idea and price point of basically, I would guess, a few thousand dollars, $200,000 to $3,000 all inclusive for a 3-day seminar, networking, and maximum, like small event, 50 to 60 people maximum. Send me an email, joshua@radicalpersonalfinance.com.

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