Hey parents, join the LA Kings on Saturday, November 25th for an unforgettable kids day presented by Pear Deck. Family fun, giveaways, and exciting Kings hockey awaits. Get your tickets now at lakings.com/promotions and create lasting memories with your little ones. It's Friday and today 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, and today we do a live Q&A. Works just like call-in talk radio. I publish a phone number and a time for my listeners to call in. I publish that to patrons of the show, those who support me on patreon.com/radicalpersonalfinance. They call in and we chat.

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Welcome to the show. How can I serve you today, please? Hi, thanks. I'm just calling to get some advice on a Roth conversion. I actually was able to take a recent year-long sabbatical, and so I'm still on that sabbatical and won't generate any income other than capital gains from general investment.

And so I thought this might be the appropriate time to convert some of that stuff in the traditional IRA over to the Roth. Obviously, that's going to generate an income, and I've looked at the tax brackets, but of course, this is a temporary state for me with a pretty high income tax bracket.

So any thoughts on other factors I should consider when doing the conversion and doing so now while I don't have any other income? So you're temporarily in another state, not your home state, is that right? Right. I mean, I'm here just on the sabbatical. I'm sure once I do find a new job, I probably won't be in this state.

It'll be someplace I'll come considered a resident of this state, but no plans to stay here long term. Okay. Have you checked your state laws to see if you are indeed at this point considered a resident of that state? Yes, I am. Okay. Well, that's the first opportunity is, of course, no matter where you go, you're going to have to deal with the federal taxes, but if you can be thoughtful about how you establish or don't establish residency in a new state, then I think that can, for other people, that may be able to save some money.

Each state has different rules that they apply for your being considered a resident of that state, but in general, it all comes down to first knowing what those rules are and adjusting your life and your decisions so that you can fit within those rules properly and honestly, and then just simply making sure that you don't make a big splash to bring focus and attention to what you're doing and where you are.

But if you've already investigated that and you are a resident of that state, there's no way to get around it. Have you contacted your brokerage company and asked them for their advice and the process for doing what you're trying to do? No, that was actually my next step. Yeah, so that's going to be your best option is your brokerage company, whoever holds your retirement accounts, your IRAs, is going to be fairly familiar with the process at this point.

I think they will have a checklist. They'll have the advice for what you need to do, and this is largely just simply a matter of paperwork. So they'll tell you how they want you to handle the accounts. They'll tell you how they want you to actually do the process, and so you need to rely on them for the actual process.

You're definitely right. It is a good time for you to do it when you have no income. When you're on sabbatical, that's a good time for you to make the conversion. And it's basically as simple as simply calling up your broker and saying, "I want to convert this amount of money into a Roth IRA.

How can I do that?" and then following their process. I don't have any unique insight or unique recommendations to you other than what you've already identified. So you're ahead of the game. You've done your homework and you know what you're doing. Do you have any specific questions? No, that's it.

I just wanted to get your insight on that type of activity. Thank you. Yeah, my pleasure. What's your strategy for sabbatical? What are you doing? Actually, I'm somewhat of a long-time listener of your podcast and your newsletters and everything that's come along. So I had the opportunity to kind of step away from a career.

I won't say I'm 100% fire, but if I wanted to cut back some expenses, I probably could be. So the first step was to really take a year off to really kind of reassess and do what I want to do. So still kind of figuring out what the next chapter is going to be, but feel very fortunate that all the hard work over the last 20 years has paid off and that I'm in a position to do this.

How new into the sabbatical are you? How many months has it been now? It's been about 15 months. And what have you experienced over those 15 months? Like what's been your emotional state? What have you learned over these 15 months so far? It's been great. I would say personally, it's just been a time to really, I think, live life the way it's really supposed to be.

Instead of waiting until I'm 65 or 70 to really enjoy the fruits of my labor, I get to do it now, which is great. So I landed myself in a beautiful place where I can do all the type of outdoor activities that I like to do and really not having to answer to anybody but myself.

So it's a really freeing and liberating experience and I recommend to everybody to do it if you can. If all your financial responsibilities are met, similar to some of the advice you've given over the years, it's, you know, you only live once and if you can do it, absolutely.

I know a lot of people within my career industry, I'm long-term in tech, weren't so excited about the idea. Thought I was kind of crazy to step away, but I think it's one of the best decisions I've ever made. Even if I have to end up taking a job that's much lower or different than what I've done before, I'm completely okay with that.

And I think five years ago, I would have said, "No way." So, yeah. Have you had along the past 15 months, has there been anything that you've looked at that you've thought, "You know, I would really enjoy doing that thing," or "I'm really inspired about this other thing." Has there been any career opportunities or job opportunities that you've thought, "I would really like to explore that," or has it been primarily just simply enjoying not having to report to work every day?

Right. I would say both. Both. So, I have looked at some, you know, the heartfelt passions, right? We all have personal passions, things that we would get out of bed regardless of what the paycheck was. And I definitely have explored that. Most of it will reside in a non-profit space and/or a geographic location that I'm not super excited about.

But, you know, I do find challenges as I start to dip my toes in the water for the next step of a career opportunity. I actually find a little bit of bias in the fact that I don't have non-profit experience, that people are kind of turning the other way.

So, it's very interesting. It's kind of a catch-22 I didn't quite expect. I think, "Hey, I'm coming with all this corporate experience. A budget is a budget." You know, you make things work the best you can within your constraints. So, I'm a little surprised that people wouldn't just grab the opportunity.

Because I'm saying, "Hey, I don't care what the title is. I don't care how many direct reports I have. I really don't care. I just want to come and make a difference and love what I do." And I'm finding a lot of people just don't, they don't believe it.

They don't buy it. Are they freezing you out of volunteering or are they simply not being receptive to offering you a paid position? It's the paid position. Because I've already done a lot of volunteer work over the last year, year and a half, actually all my life. And I've done some informational interviews with people pretty high up in non-profits.

And very interesting within Silicon Valley, they've got a lot of retirees or a lot of people within the FIRE community that will just go and volunteer in what used to be formally paid positions. And so, they're like, "Well, we actually don't have to hire people anymore because we have all these other people with all the free time and they're willing to do it for free." Right.

Interesting. So, interesting, interesting as well. I just didn't expect that. So, definitely some lessons learned, but at this point, no regrets. Good. I planned this. I did it well. And again, anybody who has the opportunity to do it, do it as soon as you can because you only live once.

Life is so short. Yeah, absolutely. So, enjoy it. Yeah. Thank you for sharing your experience. I want to just share a few minutes of monologue for my listeners, new listeners especially. I think that the strategy that Hill is talking about with regard to taking a sabbatical is something that we should all have in the back of our head.

It doesn't have to be something that you say, "I'm absolutely going to do it now." But it's one of the best strategies to accomplish some kind of life change, life transition, and to try different ideas, different lifestyles without making a major commitment. One of the big errors that I see people make is they work at a job, live in a place, and do that job for many decades, at least traditionally, looking forward to a day of retirement when they're just ready to quit and enjoy the fruit of their retirement.

And there are many people who have done that. But if you look at the experiences that many of those people report, it's all across the board. And in general, the people who retire successfully are the ones who don't just simply quit work, quit a job they don't like, but rather they are ones who are retiring to something.

So the traditional model of years and decades in a certain industry or a certain company can work very well. But it also puts a lot of pressure on a person to get it exactly right. Now, some people, they're thrilled with their decision. But I think a lot of people would be better served with pursuing some kind of sabbatical strategy, some kind of testing strategy.

And one of the big mistakes that you can make with any aspect of business development or financial planning is to commit yourself too deeply unnecessarily. You wouldn't, you'd be unwise, for example, if you've never lived in Dallas, Texas, you would be unwise if you're living in Washington, DC, to buy a house in Dallas, Texas, to move to your house when you haven't actually been there.

That's why we generally advise if you're going to move to a new place, just go rent a place till you figure out what neighborhoods you like and what part of the city is has the better traffic and where are the kind of people that you like to be with, where do they hang out.

So you go and you test, you rent a house for a year, then if you want to buy a house, you buy a house. Well, a similar thing can happen with jobs and career changes. If you're interested, for example, I've always said if I were going to start a restaurant, I wouldn't go and spend the hens or hundreds of thousands of dollars leasing a building, buying all the equipment, etc.

I would go and get some jobs in a restaurant because it's a lot cheaper for you and easier and more effective for you to go and learn on somebody else's dime for six months or a year and get the inside view. You will never get the actual inside view on something as well from simple research as you do from going and being involved.

So a similar thing can come in with something like trying out a retirement lifestyle or trying out a move. And so a sabbatical is a word, it's of course an honored word that comes primarily from academia, but it's a word that people understand and it's a neat way for you to position yourself tentatively into some kind of life change without making a full and deep commitment.

And a sabbatical strategy can have a number of interesting benefits for you, especially interesting financial benefits. You heard Hill talk about making a Roth IRA conversion. If you have enough money saved that you can live on, then you can safely and effectively go to a place, you can even go to a place that has high income taxes.

And if you're just living on savings, you won't wind up paying high income taxes in that scenario. Or you can do a strategy of converting some of your IRA dollars to Roth IRA dollars because you don't have a high earned income. And so you're at the very lowest tax bracket to make that conversion depending on the specific details.

And now that can be a very financially effective thing for you to do. Or you can do it as a strategy. Let's say that you're going to go and get some additional schooling. Well, if you go to school while you're working and apply for need-based financial aid, you have to report a high income.

It's a lot easier if you can simply report a low income or non-existent income, then you can qualify for more financial aid. So whether it's moving to a place, trying a place out, financially, there are lots of little wrinkles that you can use to enjoy a certain lifestyle without making a long-term commitment.

Another way that you could use a sabbatical is as an opportunity to adjust your lifestyle. For example, let's say you've always been intrigued with the idea of being a hardcore minimalist, living out of a backpack, but you're not quite ready to tell everyone, "You know what? I'm going to sell my house.

I'm going to sell my car, and I'm going to go and live out of a backpack." But you can solve that problem if you say, "I'm going to go on sabbatical, and I'm going to go and live here for a time. I'm going to go and do this travel thing.

I'm on sabbatical." People understand the word. And so now you can rent out your house. You can put your car in storage or lend it to somebody, and you can try the lifestyle out without being fully committed. And so by making the social pressure a little bit simpler, you may be able to do something that otherwise you wouldn't have the courage to do.

In addition, financially, there can be neat ways to do it. So if you watch markets and you try to get a sense of moving in time with the market, let's say that you bought a house five years ago, and the house has served your needs well for the last five years, but you think you'd like to do something different.

Well, think of it like a sabbatical. Sell the house, take the tax-free gain, if you have some, sell the house. But instead of immediately jumping into the marketplace, go and take a sabbatical. Go to the other side of the world or go to another state and rent a little apartment somewhere, and then come back to your home community in a year or two, maybe the real estate market has had a correction, and buy something else or change your situation.

Similar things with jobs. It's very... and especially if you'll just simply build a good story so that you can explain a gap in your work experience. I took a sabbatical, and I went to Italy, and I studied wine in Italy. Or I took a sabbatical, and I went and I volunteered with this not-for-profit organization that's saving the trees.

And the great thing about that is when you can explain what you're doing, you don't have to have all the details. So let's say that you got laid off, right? Or you think you're going to get laid off. Like, it being laid off can be its own unique financial strategy to try to take advantage of the severance pay.

But if you'll go and just simply say, "I'm quitting this job," and you go and you volunteer a few hours a week for the saving the trees organization. Meanwhile, you're spending your time studying and positioning and building your brand so that you can transition into another career. You can honestly say, "I was volunteering with a Save the Trees organization and taking a sabbatical." And now you don't have that same problem with a hiring interview of defending, "Why were you unemployed for a year?" And then finally, from the perspective of early retirement, getting a sense of what the lifestyle can be like in the same way that Hill talked about.

Getting the sense of what it's like to own your time can help you to get some insight into the best plan forward for you. I know for me, I can't imagine wanting to not be productive. But what I seem to find is that three, four, five, six, seven, something in that range, like the five-year range, is a really nice amount of time for me to engage in an industry and engage in a topic.

Then I feel like, "Okay, I've got the hang of this." And then a break would be nice. And then I can move on to something else because I enjoy the process of learning. And so you can go and say, "Well, I'm not sure I want to quit, but I'm just going to take a year." And along the way, you might find a creative opportunity.

You might find the right organization that you want to work for or the right kind of job that you would actually really enjoy that would give you a nice lifestyle. Or you decide, "No, I actually want to just cut my expenses a little bit and live on my savings." So a sabbatical strategy, I think, is an incredibly valuable strategy for you to always have in the back of your head.

And whether you do it proactively because, "Hey, I'm going to do it this year," or whether you do it reactively, such as, "I just got laid off. I'm going to take a sabbatical now." That's up to you. But if you at least have it there as an idea and you think about what you would do in a sabbatical, you're more likely, I think, to make a good decision when the opportunity presents itself.

So thank you, Hill, for calling in. We go now to Illinois. Welcome to Radical Personal Finance. How can I serve you today? Yeah. Can you hear me? Yes. Go ahead, sir. Okay. Yeah. Great. Thanks. Hey, I just wanted to... I have two questions that are very closely related, and I know you will have some insight because it's about schooling my children.

We're done with public school. We're sick of it in Illinois. And we're trying to decide between a private Christian school. There's a couple of really good options. And then, of course, homeschooling. I think I prefer homeschooling, but the logistics of our life might make it... I'm not sure if it's totally doable.

So one thing I wanted to ask you is just kind of maybe your thoughts on how to maybe make it doable. Then the secondary question would kind of be if we'd go that route, if you could provide some guidance to maybe help us cut through all the multiple choices of things that are out there as far as home education.

Sure. Yeah. Absolutely. How old are your children? That's a quick summary. Yeah. They're currently eight and nine or eight. Sorry. They're currently six and eight, getting ready to be seven and nine. They're in first and third at public school, and next year, of course, will be second and fourth.

Okay. So the first thing is you should feel very relaxed about this subject because your children are only six and eight. They're just finally at the age at which they should start to be engaging with academics. When I was younger, one of the things that I have changed my opinion on over the years through a little bit of experience, when I was younger, I had the same thing that I think all new parents have of saying I've got to be obsessed with education.

I've got to be... Specifically academics. In the United States, we really have been an academically oriented society. I especially feel extra pressure being a proponent of home education, that my children have to be the best academics. I used to read people who would say you shouldn't start academics until seven years old.

Here I was teaching my baby to read and trying to do academics with my three-year-old. I said, "Well, maybe they're right, but I'm not happy waiting." Well, at this point, my eldest is six. What my wife and I have just seen so obviously over the last year or two is just simply everything is what everyone told me, but I didn't believe it's easier if you wait until the child is ready.

There is no such thing as being behind at these young ages. Our second child, who is four, one of the things that I watch is just simply that they don't have any proclivity towards academics. Where I would have been freaking out if that were my first child, at this point, I'm just relaxed about it.

I know that everything will change between four, five, six, seven, and eight. When you're thinking about something like schooling, you should, at this point, with a six and eight-year-old, they don't need anything. They don't need anything, literally anything except mom and dad to read to them. That's pretty much enough.

You don't have to fit into this curriculum that, "Okay, by first grade, I've got to learn these things." They could just simply be with you and hang out. If you read to them, they will learn everything they need to learn. The second thing that should release you from hopefully some pressure is that you don't have to make any long-term commitment whatsoever, especially if you're making a transition from government school to something else.

You don't have to know what that right something else is right now, and you don't have to know what it's going to be two or three years from now. Most experienced homeschooled families, every year, they look and say, "Have a chat. Well, what's working? What's not working?" You can change everything out.

You can change from homeschooling to private schooling to government schooling. You can go back and forth every which way you need to go. You can change on a year-by-year basis. You can change curriculum. You can change anything that you need to change. You should be relaxed about this. It's only in a hyperacademic world that causes parents to feel, "I got to get this figured out." You got a six-year-old and an eight-year-old, there should be no pressure whatsoever.

Let's start on a tone of relaxed and think about what's in the best interest of our children, not on the tone of, "I've got to produce this academic superstar." What are the actual logistics that would make homeschooling difficult for your family that you were alluding to? Yeah. My wife and I both work full-time primarily is the main thing.

The thing about it is that we have pretty great jobs that we really enjoy and that allow us a fair amount of free time. I'm a firefighter. I work every third day. Really, it's eight 24-hour shifts a month. I'm home a lot. Then my wife works four days a week.

We've never really needed other people to watch our kids too much, maybe one or one and a half days a week. If we're doing homeschool, we'd have to either hire somebody, a nanny or a family member or something to take over on the day and a half we're not here, or my wife would have to quit working, which she doesn't totally want to do.

It would mean the massive lifestyle change, moving, all that stuff that would be the opposite of what you just advised, which is, "Hey, take it slow one year at a time." I'd hate to totally uproot our family and cut our income in half and her in her career if we're like, "Oh, man, homeschooling is not for us." How much is your income and how much is her income?

I make close to $80,000 and she's in the mid-60s and has really good benefits too. She works for the federal government. Okay. The first thing is, yes, there's no obvious path. If your wife were making $30,000 a year, then it would be obvious. It would be, of course, she should just simply quit.

Now, at a higher income, there's a higher price to you and to your family and to your income goals based upon that. That's where you would have to have a deeper conviction that you know exactly the path to go forward in and see why that is a good option to be willing to walk away from a $65,000 income.

I don't think that's necessarily necessary, but I'll just simply give you a couple of things what I have found to be helpful about it. Number one, for you as a husband, if your wife is a stay-at-home mom, that decision can be one of the most luxurious lifestyle decisions that you can personally enjoy.

I don't understand. A lot of times, husbands put tons of pressure on their wives and say, "You've got to make more money." I used to do financial counseling with people and they would be like, "You've got to make more money because we need more income for the household." I find I have, ever since my wife quit her job, I have never regretted that a day.

And I cannot imagine the amount of money that she would need to make why I would want anything different. Because life, when you have full control over your family lifestyle, and there are a few things. Number one, in your case, you'll obviously have the constraints of your job unless you go to something that provides you with more freedom.

But when you only have one vacation time to schedule, when you only have one boss to report to, it leads to so much more relaxation in your family than when you're trying to juggle two. Juggling two jobs, juggling vacation, and lining it all up with that is a very stressful thing.

And especially if you go to homeschooling. One of the things I love about homeschooling is that we don't have to report to anybody. Now, in our case, one of my highest priorities is freedom. And so we've been able to build a lifestyle of basically complete freedom where I have nobody that I'm accountable to on a daily basis, which is really nice.

My wife has nobody that I'm accountable to, that she's accountable to on a daily basis. And my children have no fixed schedule or no fixed accountability on a daily basis. So that means that we have full control over what we do. Now, we're driven. And so we have a schedule, and we've got an hour by hour schedule.

We're not unscheduled people. The kids are on a schedule, my wife is on a schedule, I work on a schedule, etc. But when the opportunity presents itself, we can pivot on a dime. And I can cancel work today, we can cancel school today, we can come and go. And that is an incredible luxury.

And it's also a luxury with being able to enjoy all the little things together. You know, my wife and I go together to so many events. And so instead of it being this constant juggling of, okay, you got to do this, and I got to do that, because I got an hour off here and another hour there, etc.

It's just, it's awesome. It's so nice to have that life freedom. That is really, really nice. The other thing is simply that when you are freed up to focus on the children, and when you're freed up, especially if your wife is freed up from the stress of the job, having that always in the back of her head, it can change her ability to mother effectively.

Where instead of having to worry about keeping current, keeping at the cutting edge of her industry, and also being a mom, which is the situation that most working mothers are in, she can just simply focus on the things that are right for the children. And she never has to think and worry about what her schedule is like, etc.

Now, those are the two things that I find really compelling. And then also the cost savings. If you're going to get a high quality education in a private school, maybe a private Christian school, private school, whatever, it's going to be minimum... Well, let me ask you, what have you guessed as far as the schools that you've thought about?

What's their tuition? Yeah, we've looked into it, and it would be about $800 a month. Right. So that's not an insubstantial cost. Now, she'd still be ahead in terms of income if you're paying for the private school, but it's not an insubstantial cost. So that's what I like about making the decision to prioritize home life.

It's the best freeing decision possible, and I think it's incredibly important, especially for younger children. Now, eight and six, you're starting to make a transition now where it can be different. That said, I would be, especially if you haven't homeschooled, I wouldn't see any reason to make that kind of big jump.

Your wife likes her job, she wants to be involved in it. What I would just do is do the schedule you've done, and then recruit a family member or hire a caretaker for the children for that day per week, or try to negotiate it with some kind of co-op arrangement.

As we talk in just a moment about the choices for school and how you work through them, what I think works the best for most people is to be involved in some kind of community organization as well. So we often draw this dichotomy between, well, you either go to a traditional classroom school every day, and you're there five days a week, or you do everything at home, homeschooled.

Well, that's not the actual experience of most homeschoolers. Most homeschoolers are involved in some kind of community group, some kind of co-op, some kind of two-day-a-week school, something like that. And that seems to be a really ideal structure, I think, for most people, because they get the benefits of home education while also having some of those benefits of classes with others, the social contact, et cetera, without it being so extreme as the full-time model.

And so in a situation like yours, if you were to get involved in some local community, in time it would probably be fairly easy for you to find another family, and on that day your children go to the house of another family on the day that one of you is not available for them, and/or hire somebody to come to your home, or a family member, et cetera.

And since you're not sure if you're going to like it long-term, I definitely think that you shouldn't burn any bridges career-wise, but you should start by testing it and seeing what you prefer. Right. Yeah, that makes a lot of sense. And we live in a thriving homeschool community where there's multiple co-op groups, and they're all mostly conservative, Protestant families and stuff, so I think we'd have a lot of resources there, too.

So yeah, that makes a lot of sense. And I think that also, especially if you are willing to pay, if you have that strong community of people you know, you like, you respect, you trust, et cetera, first, of course, you can just simply swap help. I think it's such a relief, especially on a mom, a full-time mom, to have a day where she can take her children to so-and-so's house and they stay there.

That's such a relief for her. And so you could find somebody that you guys just simply swap some kind of child care, and/or if you pay and you're willing to pay for somebody to do that, it should be easy for you in a large, thriving homeschool community to find somebody who's effective, who's competent, and to say, "Hey, listen, we want to homeschool the children, but one or two days every week or two, or however the schedule works out, we can't do it ourselves.

And so what we need is, would you be willing for X number of dollars to care for our children on that day?" And there should be a family that would be happy for that, because there are lots of families who would be really grateful for a chance to relatively easily earn a little bit of extra money.

And your children would get other benefits, other educational benefits, the input of somebody else, etc., into their life. I think that's actually really helpful also in terms of having other authority figures. One of the challenges that my wife and I have had with our children is teaching our children to respond effectively to authority that's not simply her and me.

And so I've actually actively sought out other people because of recognizing that my children are not responding well to other people. I've sought out other teachers and tried to bring them in so that they understand that you're not the king of the world. You do need to respond to other authorities, not just dad and mom.

And so if you have a family or a couple families that you trust, I think you would very easily be able to find a solution there. Yeah, that's good. Well, we've budgeted at least $800 a month for private schools. Exactly. So we have that available for that too. Exactly.

Especially also then, let's talk about other logistics of that. With the logistics of homeschool, and we'll go to philosophies in a minute, but one of the things that I think is important to focus on and to emphasize is, I'll just speak for me, one of my goals as a homeschool dad is not to be my child's teacher, but to teach my child how to teach themselves.

Now that's really hard at four, right? Because they can't sit still and they need somebody to teach them ABCs. But at eight, your eight-year-old is at a point where your eight-year-old should be able to, at this point, pretty much be able to work their own work. And so depending on the curriculum that you would choose, let's say that you chose something simple, like a curriculum that has workbooks, you give your child and you say, "Here is the work that you're required to do." And the eight-year-old says, "I need to complete my math workbook.

I need to complete my reading workbook. I need to complete this other, whatever you're doing, a writing assignment or a writing workbook as well." And you know the expectation is that each day you need to do eight pages. And so what you're doing is basically, you transition the child to say, "You're responsible just to bring me the eight pages.

We're not going to sit and hold your hand. You sit down and you do work and you do the pages. And when you're done, you're done." And that I think is one of the most valuable lessons for a child to learn. So even if you are recruiting somebody to be a caretaker for your child, that person doesn't necessarily have to teach your child, especially your older one.

Your six-year-old may be different, but that person doesn't necessarily have to be a qualified teacher. They just simply need to be a caretaker. And it's your child's responsibility to do their work. Once your child can effectively read, there should be diminishing need for a teacher. Once your child can read and write, their basic need of a teacher is to help guide the materials, to make sure that they're having materials that are going to stimulate them, that are going to help achieve their educational goals, sorting through curriculum, seeing what's working, where they're hitting their head against the wall and making any changes there, and then correcting some of their work, correcting their written work, correcting their essays.

But as far as the actual teaching, my goal is that they learn how to teach themselves. So you don't need a great teacher. You just need a safe environment where the child is going to be cared for, protected, have contact with other people, someone to serve them lunch, and then they can teach themselves on that day.

Make sense? Does that make sense to you? Oh, yeah. Sorry, I didn't hear that. Yeah, that makes sense. Okay. So as far as philosophy, I think there are good arguments to be made in favor of a private school, a private Christian school, versus a home school. I don't think that homeschooling is always necessarily a slam dunk.

There are opportunities, so there are opportunities that a child can receive in their education that can be provided by a school that they can't get in homeschool. You probably are not going to have the same extensive lab equipment for a chemistry lab in your home as you might at a larger school.

Your child is probably going to have a harder time learning Latin when they're studying it themselves at home versus part of a school. And so I'm not opposed to private schools. I think they have benefits. My biggest opposition to private schools is that most of them take the same system as the government school and then just simply say, "Well, we do it in a slightly safer environment.

We have fewer stabbings in class." Or if it's a Christian school, "We just toss in a little bit of creationism alongside evolution," or "We baptize this and we talk about God doing this thing here." But it's very challenging to find an actual private Christian school that's thoroughly and authentically Christian.

And so I don't—I get very suspicious. I think they exist. But a lot of times you struggle to see the—I struggle to see the benefit of most private schools. For example, one of the biggest problems of government schooling is the one-size-fits-all curriculum where children are not treated based upon their personal interests.

They're not treated based upon their personal abilities, nor is their educational path timed according to their own personal capabilities. They're part of a class of 20 people. This is the curriculum that we study. Everybody has to do it. And if they're bright, they're bored, or if they're slow, they're overwhelmed.

And so that doesn't—especially in the early years—I think that that's not a great thing to do. School should be tailored to the individual needs of the child to the greatest degree possible. Now, can you find teachers who are going to care for the child and seek to stimulate the bright child, etc.?

Of course you can. But I think the personalized model of education is going to be one of the best. I've already spoken about self-direction. One of the—as far as I see it—one of my basic goals for my children's education is that they learn how to learn and that they never have the idea that learning is something that happens to you.

That they never have the idea that my only role is to go to class, sit in a chair, and listen to a teacher, and then whatever they say, I have to have that teacher. Children do need good teachers. And even if you homeschool in time, you'll hire great teachers.

You'll hire world-class tutors. You'll hire the people that they need. But the basic model of schooling—the most important thing—is that a child learns that anything in the world that someone else has learned, I can learn too, and that they develop the skill and confidence of being able to teach themselves.

So that doesn't work well in the context of a private school. In addition, the private school doesn't facilitate the same kind of relationship with mom and dad, especially in the early years, the most important lessons for a child to learn are not academic. They're character and moral lessons. So you can adjust and control the moral environment to a high degree by choosing a private school.

So now at least you know that this school is going to maintain these standards. This is their statement of faith. This is what they believe in. This is what they think is right and wrong. And so now you can have greater confidence that you can in a government school where you, your only choice is simply what zip code to live in, and somebody else, without any reference to you, your desire, your individual beliefs as a family, your moral stance, etc., hires a bunch of people to indoctrinate your children.

You can have a little bit more control, but you still don't have nearly the same control and the same opportunity to influence morally and character-wise your children as you do with homeschooling. And I think that in general, I think that another major problem of many private schools is they're too academically oriented.

In my opinion, we have too much of a focus on academics in the modern American school system and too little of a focus on practical skills. People say all the time, "Why didn't they teach us about money in high school?" Well, we could talk about it, but I don't know why, except that they don't.

And so used to be that when you went to school, you would have a shop class or a home economics class, and I had a great economics teacher who taught about personal finance. But the average student doesn't go through any kind of mainstream school and come out with any kind of practical skills.

The average student doesn't come out with the ability to earn money. They don't come out with any kind of real qualification for a job or a business. They simply have a diploma. And the diploma is so academically oriented that if they're academically inclined, they had a great time. But if they're not academically inclined, they didn't do much.

And so one of the biggest reasons that I have, why I think that my guess would be that we will homeschool all the way through, although I reserve the right to change my opinion on that as we see how our children are developing. But one of the biggest things that I observe is I don't want my children to just have this single-sided focus on academics.

So schooling is such a waste of time because of all of the stuff associated with it that the child has many more opportunities in homeschooling to develop a diverse array of skills. If you take the average school day, you know, the child rides a bus, 30 minutes on the bus, 15 minutes waiting for the bus, they go, you put together all the subjects.

There is such an absolute catastrophic waste of time when the child is waiting on other students, waiting in all the stuff, being held back, having a study hall here, etc. Home education is so much more efficient. The average homeschool student probably spends three hours a day on schooling. And you can do what's done in a government school or even a good private school in three to four hours a day.

And so what I look at it is I say, I want my children to have time to play. I believe that play is really important. I want my children to have time to create. And how are they going to have that if they're spending eight hours a day in class doing work they could finish in three or four?

So the better plan, I think, is school at home, get up, they start school at eight o'clock, by noon they're done with all of the academics. And then let's take the additional time and focus that on something that's going to be more profitable for them. So whether that's they're building a tree house in the afternoon, learning how to work with tools and do construction, whether they're learning how to do accounting and they're building up a little sideline accounting business, whether they're learning how to, they got a backyard forge and they're learning how to make blacksmithing stuff and knives, whether they're learning how to write and they're writing short stories or novels or writing magazine articles, whether they're writing a blog, whether they're shooting YouTube videos, I don't know.

But there are so many opportunities that it's far better, especially for a nine-year-old, a 10-year-old, 11-year-old, 12-year-old, it's better to have from 12.30 to 5.30 available for the development of those practical skills than to spend 12.30 to 5.30 sitting in a class listening to a teacher drone on and on when they could have just read the book and taught themselves the subject matter.

And so those are some of the reasons why I'm really optimistic about homeschooling because it just seems much more efficient. And I would just add one more thing. One of the big benefits of homeschooling also is you get to control the annual calendar. Now, many homeschool students take summers off and I'm not sure if we'll ever take summers off or not.

People argue that it's a good idea. People argue that you should. But I personally don't see at the moment why it's of any help to have only 183 days of academic schooling per year. Many teachers, the counter arguments, people say they should take time off so there's a break for the child.

They should take time off for the refreshment of the family, have a chance to do other things as well. And I'm fine with those things. But at the moment, I don't currently have any plans to ever take summers off with the children. And so if you take, and instead of having 180 days of school per year, you have 230 days of school per year because you don't have that summer break.

So you don't have all the time wasted of pulling down to summer and then all the time of getting the kids going again. But you just do school year round mixed with vacations, breaks, etc., whatever's necessary. You can put the child significantly ahead as well. That's another undersung benefit.

So when you take a much more concentrated, focused study time, when you take a personalized curriculum for the child to have their parents and skilled teachers involved, helping them to develop a curriculum that's best for them, you take the ability to focus, learning how to teach themselves, learning how to work day by day, you take the ability to have more time.

You know, if your family works five days a week, fine, have the child do five days a week. In your case, when it's probably a little bit squirrely, have the child do six days a week. Six days a week is better than five days a week, especially with your schedules, so that there's more consistency.

And then do it year round with some time for family vacations, a week or two off at the holiday. And now your opportunity to do academic learning is far beyond what it is in most schools. And then you add on to it the practical skills, the developing career skills and personal skills and business skills, etc.

With the goal of turning out an 18-year-old who is earning a full-time income, you have many more options. Final point, I guess I'll make my final argument. I don't know, because I haven't raised a high school student yet, what this will actually be like when we get there. I expect to change many things based upon experience.

But in my current thinking and my current seeing and working with some high school students, I don't see any reason why an academically inclined 18-year-old in today's world shouldn't simply graduate simultaneously with their high school diploma and a college degree. And when you look at the power of that, with them being able to do distance learning, to clip out of dozens of classes, to mix it up with an online degree that gives them a fully accredited bachelor's degree, I think that if you have a child who is good at academics, that's also something that's well worth considering, whether it's by 18 or 19 or 20.

I don't see any reason why a bright 18, 19 or 20-year-old shouldn't have their college degree by the time they're 18, 19 or 20. Then if they want to go on and get a master's degree, PhD, great, they're ahead. If they don't want to go on, they're ahead. And when you bring in, in your case, you're both working jobs, but when you bring in the context of a family business, when you bring in the context of helping them to earn income, the arguments are so powerful on the side of homeschooling that I think it's a real cost to put a child, not just a financial cost, it's a real cost of worse results and outcomes to put a child into a schooling environment that isn't tailored to them versus the opportunities of individualized education.

So that's my monologue for you. No, that's good. And obviously I've heard some of your arguments before and yeah, I think, so we're actually already having our kids work in, I've got a little bit of a real estate business too, and they're already working in that. Great. Awesome. But yeah, so anyway, that just would allow us even more opportunities for that sort of thing, I think.

So that's good too. So, all right. I appreciate it. My pleasure. Thank you for calling in and may you know God's wisdom as you seek to look at your family, consider the needs and the interests of everyone involved and the individual needs of your children. May you know God's wisdom in all of that.

We go now to New York, Peter in New York. Welcome to the show. How can I serve you today? Hi, Josh. How are you? My pleasure. Doing well, sir. Welcome. I have a question about modern portfolio theory. Okay. Is it safe to say if you try to get investment advice from most CFPs or people working at a wire house or registered investment advisors, is it safe to say almost all of them are going to give you advice based on your risk tolerance in accordance with modern portfolio theory?

Yes, it is absolutely safe to say that. And they cannot, they will not be allowed by their firm to give you advice based upon any other financial theory. Got it. So is it, I don't know if it's worth talking about how that even modern portfolio theory even came around, but I mean, is it basically safe to say it provides the standard of care and legal defense for the investment industry when they provide the investment advice?

Yes. And remember that it's all about, basically it's all about not being wrong. Now let's ignore motivation. Let's assume the best of intentions of everybody and ignore some, ignore motivation. But when you're dealing with any kind of mainstream large investment firm, can be a big investment company, big brokerage, big insurance company, any kind of mainstream brand recognized name, the biggest thing is don't mess it up.

Don't mess it up. Because when a financial advisor is managing assets, there's very little incentive for the financial advisor to grow assets beyond what the market returns. The number one goal of a financial advisor is to accumulate assets under management so that they can earn fees on those assets under management.

But there's very little difference of the actual net income of the advisor based upon whether the assets grow by 4% or decline by 4%. It's just important to keep the client happy. And the number one way to keep the client happy is to make sure that their returns line up with everybody else's returns.

So what you have in the financial space is you have everybody basically pursuing the same strategy. The only exceptions to that would be an independent advisor who is marketing themselves as having some different philosophy. There are plenty of them out there. But they're not going to be employed at a big mainstream company, a big wire house or a big company you would know.

They're going to have their own independent RIA and/or somebody who's running a hedge fund. And they're doing their own strategy in some way. But all of the mainstream stuff is all going to be based upon how do we make sure that we keep the client and basically getting the market return so that we can keep the client.

Now, legally speaking, the standard of legal duty that the financial advisor owes their client is what's referred to as the prudent man rule. Now, we can argue about fiduciary standard versus non-fiduciary standard. That's largely immaterial here. I don't think most advisors, a lot of people disagree with me. I'm not convinced that most advisors care much about fiduciary standard versus non-fiduciary standard.

I think they just worry about not doing something that's totally wrong. And today, the prudent man defense is simply going to be I followed the best recognized portfolio theory and modern portfolio theory is that standard. If you have somebody that deviates from that and they say, "No, I don't think modern portfolio theory is right.

I don't think that this diversified portfolio of all the asset classes is right. And I'm going to put all my clients into this thing over here." And then you lose money. Then the client has now a legal case against the advisor and against the firm. And so they want to minimize that legal risk.

And so, especially when you get into a large firm, the individual advisor has almost no wiggle room for recommending a portfolio. Now, maybe they can sell a client a stock and say, the client says, "I want to buy numbers of these shares." Maybe that's still done. But generally, they're just saying, "This is what our company is doing.

And let me tell you how it works in terms of insight. When I was a financial advisor, I was a fully licensed fiduciary financial advisor representing portfolios for my clients. And so the process works like this. The first thing you do is you bring the client in and you conduct a needs analysis of the client's needs and goals.

Then you prepare a financial plan that illustrates to the client what their needs and goals are. Now, a good advisor is going to look at that financial plan and say, "Is there a way that we can get what the client needs? Is the portfolio going to get this?" But you cannot play with investment return rates.

Your software basically doesn't even allow it. You can say the person is an aggressive investor, and it'll allow you to put in 6.8% rate of return instead of 6.3. But you can't say, "I'm going to earn 12% here." The software is constrained by your firm to do what the firm's actuaries think the portfolio will do.

So you present a financial plan, and then you give an idea of whether or not the results are feasible. Then the client says, "Okay, I'll move my money over to you." You make your sales pitch as to why you think that client should work with you. Well, the first step is you create, you do a risk profile questionnaire.

The risk profile questionnaires are all the same across every industry. It's the same that you do online with your online brokerage as you do in person. Some have 10 questions, some have 12. At the end of the day, it's going to spit out for you based upon how the client answers the up and down volatility questions, and largely based upon the time horizon.

How many years are you before you need this portfolio? And how many years are you going to be taking distributions from the portfolio? It's going to spit out about the same answer, and just about everybody is going to be a balanced or a moderately aggressive or a moderately conservative.

The questionnaires generally don't allow somebody to be aggressive, and they generally don't allow somebody to be very conservative, unless the person is intentionally answering the questions to force that. So I could force a questionnaire to give me an aggressive portfolio, but if you're just answering honestly, they're always going to come out in the middle.

So you create the portfolio, you match it up, the firm gives you a set of portfolios, and they say here's a portfolio that works for an investor who is interested in this particular risk profile. And you choose your portfolio based upon the platform that you want to use. So if you want to use a certain mutual fund company, and you want to use class A shares of a mutual fund, you have your model portfolio for that mutual fund company and for that share class.

If you're going to do a managed portfolio, then you have your various managed portfolios based upon which one, what benefit you're trying to get. If you're going to use a variable annuity, you have your model portfolios and your variable annuity. Every single different product just simply has the model portfolios.

And so you as an advisor, you're not a daily portfolio manager, you're a financial advisor, you're not a portfolio manager. So you choose the portfolio that's going to match up with the investor's risk tolerance. Then you submit the paperwork through to your firm, and your compliance officer looks at it very carefully.

They look at the application, they look at the risk profile questionnaire, and they make sure that the portfolio that you are assigning to the client is going to be lined up with that risk profile questionnaire. Because if the client has completed a risk profile questionnaire, and if the portfolio that's offered has been reviewed by the portfolio managers, and it comes to it's a good portfolio, it follows all of the rules of modern portfolio theory, it's been looked at, understood, considered, etc.

They'll let it go. And there's no legal liability. There's no legal liability in that case for the advisor or for the firm, because they're recommending what's the current professional standard. If your portfolio doesn't match the risk profile questionnaire, at least by within one, you get a call from your compliance officer.

So you can't have a person that has a risk profile questionnaire of moderately conservative, and then put them in aggressive portfolio. You have to go back and fit in. No, it's just not even going to be allowed. And so that's the process. And if it goes through, then you put the portfolio in place.

And then hopefully, if you're a good financial advisor, you're working really hard to serve the client, to help them to earn your money by helping to control their behavior, keeping them invested, making sure that things are doing well. But at the end of the day, you're going to get basically the same portfolio from any mainstream financial advisor with any mainstream company, because that is the current standard.

>> Got it. Yeah, I've been getting some sort of second opinions on what I'm invested in. And I'm realizing very quickly that everyone I get a second opinion from, it's all going to be the same thing. And that's not the advice I was looking for. >> Right. Yeah, you're not going to get a second opinion on your portfolio that's any different from any large company of one company versus another.

Now, that's not to say that they're wrong, right? There's good arguments in favor of this approach to investing. There are good arguments. And I'm not sure they're wrong. I'm not sure they're right. But you're not going to get any major difference from one company to the next. Because the key thing is for you to know that those financial advisors are not investment experts.

They may have experience, but they've read the same books that you can read. They've just simply taken a test. And when you take the licensing exam, you're taught modern portfolio theory. You have to understand that because that's the current standard. The only way you're going to get a different answer is if you're talking to somebody who has their own investment philosophy, and they're passionate about their investment philosophy.

And that person is not going to be at a big company. They're going to be at a registered investment advisor running their own, or they're going to be part of a small investment firm somewhere. But they have their own opinion, their own ideas. And they're willing to say, "This is how I run a portfolio, and this is why it's different." And they'll lay out their story for you as to what they think.

You would have to assess their story and say, "Do I believe that this is the right story for me?" But they're not going to be at a big mainstream company. The only thing that you can expect from differentiation from a big mainstream company is, first, is there a difference in the basic costs of the platform?

For example, if the obvious thing is if you are working with an advisor who is recommending passive mutual funds instead of active mutual funds, there's going to be a major cost difference of the underlying expenses and fees. Or if you're working with a wealth management company that will allow you with your $5 million portfolio to own individual stocks, and they'll model the portfolio, they'll model an index on individual stocks, how much is that worth to you?

And then the individual financial planning advice of the advisor is also going to change. The product suite that they like and that they're comfortable with, you talk with somebody at an insurance company, you're going to have more insurance products in your plan than somebody who doesn't do insurance. If you talk to somebody who is an expert tax planner, you may get more tax ideas than you would with somebody else.

If I went back into mainstream financial advice, I would do what I do on the show here every day, but I still wouldn't be able to control somebody's portfolio. That's just not me. So somebody would get much higher level of advice from me because of my interest in financial planning, but their portfolio is going to be the same because there's not an answer to that in the modern mainstream financial space that I'm aware of anyway.

Got it. Got it. Can I ask you one very quick follow-up question to that? Yes, go ahead. Is it safe to say that most of what they're trying to do with modern portfolio theory is keep people from selling out of their equity positions when the market tanks? And by that, I mean, if the money's in there for the long term and you've got equity positions, and you're not going to freak if 2008 happens again, and you don't want a bond allocation, is that really all they're trying to mitigate is the emotional aspects of the investor selling low?

I'm not sure that it's so much the emotional aspects, but rather trying to say that... So the basic theory of modern portfolio theory is going to be based upon that investment curve to say that if we get together the right asset classes in the right proportion, we can have the lowest volatility as measured by the up and down, the standard deviation of the portfolio, and the highest cumulative return.

And so by putting these classes together and scientifically analyzing them, we're getting the very best. For every bit of volatility that you as an investor are willing to sit with, we're going to give you the maximum return by adjusting our portfolio of stocks versus bonds, large cap, medium cap, small cap, international versus different bond portfolios, bring in some precious metals, bring in some real estate, etc.

And so we're giving you the best possible return that you can get with the lowest volatility. And it's not so much managing emotions. It's a provable concept that if you have the right asset classes and the right mixture of those asset classes, you can get with modern portfolio theory a portfolio that has the highest historical probability of delivering the return that you want with the lowest volatility that you can handle.

And I think that makes sense. That's where modern portfolio theory makes a lot of sense. That said, you're hitting the nail on the head to say that, but I'm not sure that I necessarily want to have my conservative portfolio. And this is one of the things that I think that a good advisor can do a good job at.

I have convinced many people to keep their investments invested very so-called aggressively, because I point out to them that you don't need these investments right now. You're working, you have a business, you're not going to spend the money. So if you can just discipline yourself to sit tight, go ahead, invest for a higher long-term return.

And then with good financial planning, you put in place savings, you put in place an income portfolio, you should be able to get more long-term growth. And then when you get down to it, at the end of the day, it all comes down to what your plan offers you in terms of what story you think the world is going to tell in the future, and then how that fits up with your personal income needs.

So if you're investing and you're saying, "I'm going to retire today and I'm going to live on my portfolio," you can't handle nearly as much volatility as somebody who's working, who's planning to always create income, and who's investing for the benefit of their great-grandchildren. And so if you understand modern portfolio theory, then you can go back to the individual investor and you can try to coach the investor to a different choice.

Got it. Anything else? That's it. That'll do it. Thanks so much. All right, thank you for calling in. That is our last call for today's podcast. I would simply say that it behooves you to become an expert at your money and to use professionals for the things that professionals are good at, but not to expect professionals to be good at the things that they don't do.

And so one of the things that I've always tried to do is, especially with my experience in the financial industry, is be very honest about where financial advisors bring a lot of value and where they don't. Don't take what I said—I believe that financial advisors bring a lot of value or can bring a lot of value.

So don't take my comments about the portfolio selection to say that you should become an anti-financial advisor person, that I'm just going to be a do-it-yourselfer and advisors have nothing to add. But don't expect an advisor to add value in a place where it's clear from conversations or from their firm structure, etc., that they can't add value.

Don't expect that. It's not going to happen. So take advisors for where they're good and then fill in the areas with your own personal knowledge and study for where your particular advisor is weak. As I close today's show on the topic of education, I want to invite you to come and take a look at my recommended reading list.

I've put together a book list. It's called Joshua's Financial Freedom Book List. There are 12 books on that list, but I think that if you read through my list of 12 books, you will have an incredibly strong understanding of the different aspects of finance and a really good foundation to build on.

It is impossible to put together a book list that would answer every question. There's so many good books that I left off the list. What I try to do is create a list that for an individual who doesn't know where to start, doesn't know what they've got, they could come and could start reading, go in the order that I recommended to you, and you could educate yourself about what you need to know in the financial space to put yourself on a plan towards financial freedom in 10 years or less.

If you are interested in that book list, go to radicalbooklist.com. Again, radicalbooklist.com, enter your name and email, and I will send you that book list. Radicalbooklist.com. Radicalbooklist.com. Thank you. Hey parents, join the LA Kings on Saturday, November 25th for an unforgettable kids day presented by Pear Deck. Family fun, giveaways, and exciting Kings hockey awaits.

Get your tickets now at lakings.com/promotions and create lasting memories with your little ones.