Thu, 30 April 2015
Today, we continue the Q&A blitz!
Here are the questions I cover today:
- Do you have any tips or feedback about how to factor a special needs child when planning for retirement, college, etc?. The typical advice usually is that, typical, once you have a special needs child things change as you dwell into the wonderful world of early intervention, therapies, IEPs, tax planning, etc, I used to think I would just need to change my assumptions in terms of planning for our son to be with us long way past his 18th birthday, as well as making sure we plan for after we are gone. But I’m sure I’m missing other strategies.
- I've been working at a major package delivery company for almost 26 years. I was just inducted into the circle of honor. Which means that I have gone accident free for over 25 years. Mind you I drive in New York City. I am highly trained, and pretty good at what I do. Since listening to you, and some other podcasts. I was thinking of starting my own podcast. Driving is something almost everyone does and there really aren't any podcasts on safe driving. Trust me most people don't know what they're doing. The problem I have is exactly what you went through after episode 181. I don't want to argue with people over everything that I say. I don't understand why people can't take the good, and credible information out of a conversation, and leave the bad behind. I don't agree with everything you said, but that doesn't mean I didn't pause, and think about what you were saying. Kudos to you. I'll be retiring in four years, maybe by then I won't care what anybody thinks. Since I have your attention I have a question. I have a 15 year old son. Who works for his mothers company from home. He he takes home takes home $225 every two weeks. In which she saves about 75% of that. I opened up a brokerage account for him to separate the money from savings, and checking. I spread the money out into four different ETFs. I'm trying to teach him to invest and diversify. The problem I have is he maybe using some of this money, or all of it for college. I'm afraid the stock portion could be a problem, since I know you shouldn't have money in the market you're going to need within 3 to 5 years. Would like to know your thoughts on this situation.
- During episode 181 you mentioned that you don’t have your money in the markets for moral reasons. Where do you put your money and have it grow in line with inflation or better yet beat it?
- I very much enjoy your show. I took in the marathon of show #181. Thank you for using such controversial material to make your point. There is not enough genuine debate and too much simplified propaganda from all sides in this country. One point that stood out to me from this particular show is your personal approach to investment for your own family. My question is, if your position on investing in large “Evil” public companies is so strong that you would not personally invest in them, how do you justify working in the financial industry, advising individuals on their investments in those same publicly traded companies? I’m assuming that you are or will be engaged in that financial advisory role. Could you also please touch on the investment categories that you are or will consider for your family's financial plan (generally speaking of course). Keep up the good work. Your show continues to be a source of excellent information and your delivery continues to improve!
Direct download: RPF0187-QA.mp3
-- posted at: 3:17pm MDT
Wed, 29 April 2015
I'm continuing my Q&A blitz today. I set out to answer five questions and wound up answering two. Oh well. At least I think you'll enjoy them!
Here are the two questions I cover:
- What are your opinions regarding real estate investing? Should people invest in real estate? What percentage of the portfolio should it be? Thoughts on wholesaling? Flipping? Etc.?
- My question is can you walk us through your typical financial planning process with an average client of yours. From the initial conversation to the presentation and implementation. How do you prioritize your recommendations?
Direct download: RPF0186-QA.mp3
-- posted at: 10:00am MDT
Tue, 28 April 2015
Today, I do Q&A and answer these four questions:
- Joshua, I absolutely cannot get enough of your show. Thank you very much for the effort you put in and the thought provoking product you create! It is worth the voluntary money!I've got a very open ended question: You often talk about journaling and writing to help develop thoughts, ideas, and plans. How does one get started doing this? What should your listeners focus on when getting into the habit of journaling? How often do you write in your journal? Without any framework or place to start, I find myself wanting to move on to other activities. I know it's not a direct financial topic but I believe there is a huge amount of value to the idea of putting your thoughts down on paper and developing them and it is something I'd like to start as soon as possible. It'd be great to hear your thoughts and maybe some tactics you employ to get the most out of your journaling time. Keep up the great work, -Chris
- 19:52 Joshua, One of the biggest goals I have in my life is to become financially independent. Which is why I came across your Podcast in the first place but I am having a hard time figuring out where exactly to go from here. I just started keeping track of every penny I make and spend so that I can start to budget and plan accordingly (I know I should have done this years ago but I gotta start somewhere!) I am 26 years old and have very little experience saving. I am a compulsive spender but I know I can change my habits with the right motivation and I know that I am still young enough to make a very significant change in my life. I have tried to find something "from the beginning" in your podcast but I havn't yet found one that fits my needs. The questions that I have are things that may seem really basic to anyone who has been financially planning for a while. What do I do with my first savings? Say its only $100 dollars, do I keep it in cash at my house? Do I open a savings account and keep it there? How much should I have saved before I start looking at other options, retirement accounts, etc. Sincerely, Garion.
- 29:45 Joshua, With regard to “Your Money or Your Life” (I have been reading the book for the past few days.), is the strategy for investment/FI that the author’s put forth in Chapter Nine still valid today, in your opinion. (I apologize if you have covered this already; I am still trying to get caught up with all of your podcasts.) Please keep up the awesome work. -Daniel
- 36:35 Joshua, First off I just wanted to say I'm a huge fan of the show and your format. It's so refreshing to actually listen to an in-depth discussion of personal finance rather than all the surface level junk online:"The one easy tip for financial freedom." So I hope you never question your long format in the landscape of quick tips and 3 easy steps posts. I've been growing more interested in personal finance/investing. I'm curious if you've ever encountered or heard of families that invest together. Whether it be siblings or siblings and parents investing together. This is something I've been pondering lately. It seems this would be a smart way for families to invest and take advantage of strength in numbers. Perhaps it's not discussed because it's taboo to talk about money at that level of detail. I really have 0 experience in this area so it'd be interesting to hear what some of the benefits/challenges would be of this kind of thing or if you've personally heard of families doing this. Keep up the good work, and know that your work has had an impact on me.Regards, -Ryan
Direct download: RPF0185-QA.mp3
-- posted at: 10:00am MDT
Mon, 27 April 2015
I enjoy looking for financial planning tips from odd corners of the world. Recently, I stumbled across the book Financial Freedom aFloat: How to Pocket a Paycheck in Paradise by Charles Tuller as I was browsing the finance section in my local library.
Written for the cruising community, the book lays out some specific ideas and strategies for sailors who either need or want to earn some money to be able to afford to stay out on the water for the long-term.
I'm most intrigued by the challenge of the problem: how do you live a "dream lifestyle" without a lot of money?
The answer is multi-fold:
- Own your shelter.
- Minimize your ongoing expenses.
- Work while you travel.
The last item is the most interesting to me right now.
How do you conveniently integrate work and life without feeling like an indentured servant? How do you earn and enjoy life at the same time?
The book does a good job of laying out some ideas. And, it gets better all the time. There are so many more options availalbe now in 2015 than there were in 2000, when the book was written.
Enjoy the ideas we draw and apply them to your own lifestyle--whether you'd like to cruise or not!
Direct download: RPF0184-Financial_Freedom_Afloat.mp3
-- posted at: 11:35am MDT
Fri, 24 April 2015
Today I handle your questions and comments.
Right off the bat, I respond to some of the sharp criticism of Episode 181. Perhaps it will be useful to clarify my intention with the show material.
Then, I answer these questions:
- 35:48 Dear Joshua, I have a question regarding a specific method for paying for my children's college education. Putting aside the merits of a college education in general; and putting aside thoughts that I have no obligation to pay for my children's school....let's assume that I would like to pay nearly all tuition expenses for my three daughters (ages 12, 10, 5). I see 529 plans as piggy banks that I fund, will one day need to break, spend, and never see again. However, striving to create a large enough portfolio of dividend paying stocks seems like a option in which I could pay tuition with the money strictly generated from my investments. Assuming (still a moderately big assumption on my end) that I can create the principal to generate ~$25,000 in dividends at a 4% yield, does this seem like a viable option? -Brian
- 44:04 Joshua, I am 42 years old and currently have life insurance from my employer. I'm trying to buy life insurance from one of the providers but have the following questions: Should I continue the life insurance at work even after I get from outside? Will the 2 ever be mutually exclusive? Should I search for an agent? If so, are there any websites that can help me find one? Are websites like Accuquote reliable? How else should I compare the products of various providers? -Vikram
- 1:01:52 Joshua, I wanted to ask you to consider a podcast show around radical ways to lower the cost of owning a home. Not the typical advice out there, but more along the lines of buying a property that meets your families needs but that could provide rental income to offset your mortgage too. Cash flow around homes is a large percent of take home for most families - just seems like an area that most people are not considering and could be a significant win. -Todd
- 1:20:16 Joshua, While listening to Podcast #36 you mentioned changing a 401K plan to be able to defer more than the $17.5K. Can you let me know where I can learn more about this? -Harout
Enjoy the show!
- Support Radical Personal Finance on Patreon: http://radicalpersonalfinance.com/patron
Direct download: RPF0183-Friday_QA.mp3
-- posted at: 12:08pm MDT
Wed, 22 April 2015
I'm fascinated by the topic of asset protection planning. It engages my personal enjoyment of complicated, intricate planning.
It's in important area of planning. But it's also one of the most over-hyped areas filled with sleazy marketing and sleazy business practices.
How do we work through this?
Today, I introduce the topic to you in a down-to-earth, accessible way.
We'll keep a healthy sense of paranoia and a healthy sense of reality firmly together as we traipse through these topics.
Enjoy the show!
- Support Radical Personal Finance! http://radicalpersonalfinance.com/patron
Direct download: RPF0182-Asset_Protection_Intro.mp3
-- posted at: 10:51am MDT
Tue, 21 April 2015
Every single aspect of personal finance is influenced politics, religion, and philosophy. Every law and every decision has a moral and ethical component to it.
In modern conversation, we're unaccustomed to talking about philosophy and ethics. We steer away from discussing politics and religion because we're uncomfortable with how we can have a positive relationship with another person even when we disagree.
Or, we might feel unequipped to battle in the world of philosophical or religious ideas.
The problem is that our lives are continuously influenced by others who are battling in the world of politics, religion, and philosophy. And, we're subject to the same moral/ethical code as everyone else is regardless if we want to admit it or not!
Worse still, we don't have the choice of non-participation. Every dollar of tax we pay, every item we buy, every hour we work affects the larger system in some way. By our actions we are supporting or tearing down various systems and causes.
We are either moving the systems that surround us in a certain direction or we are being moved by them.
The final horrific reality is that most of us are untrained in the fine art of sniffing out propaganda and influence. So, we are subject to it. Most of us would be content to simply sit by and live our lives quietly; it's not possible. Because you are in important pawn in others' plans for you.
Today's show is a unique experiment for me in a teaching style. Essentially, I'm trying to accomplish a few objectives in an interesting and challenging way.
- I want you to understand the impact that your worldview has on all of your decisions.
- I want to demonstrate how one specific worldview (in this case formal secular humanism) impacts the broader culture with its stated objectives.
- I want to demonstrate how all of the broader agendas within a governmental system tie back to worldview. Politics are driven by worldview.
- I want to demonstrate how propoganda and media are used to promote an idea in the general culture and how incredibly effective that can be.
- I want you to see an example of a propaganda effort that has achieved massive cultural change over your lifetime so that you can learn the skills to sniff out other agendas--specifically other agendas that are closely related to finance.
- I want you to see and understand that it's completely impossible to disconnect the social aspects of life and their associated moral questions from the daily, practical & financial aspects of life. You've got to be a consistent human being with a clear and consistent framework.
- I want you to see and understand how theories change and adjust over time and how society changes throughout history.
I hope you enjoy the show. It's an unusual discussion but it's an important one.
I will be building on the content of this show in future episodes as we sort our way through the swamps of financial movements, theories, and conspiracies in the future.
Let the critical thinking skills commence!
p.s., I've tagged this show with the [EXPLICIT] label because of the content and some of the words used. This show is most appropriate for adult audiences, not for children.
Fri, 17 April 2015
Today, I share with you the framework knowledge of how life insurnace policies actually work. Once you understand these basic concepts you'll be able to look at any type of insurance policy and more easily understand its use.
- Assessment life insurance
- Yearly renewable term life insuance
- Level premium life insurance
- The factors that affect life insurance policy pricing
- The five types of life insurance policies
Direct download: RPF0180-2How_Life_Insurance_Works.mp3
-- posted at: 3:52pm MDT
Mon, 13 April 2015
I'm not able to record and release a new show for you today due to the rather pressing deadline of the April 15 tax filing date.
I'm finishing up my return today so I'm releasing an interview I gave on the Anarcho-Yakitalism Podcast with Nick Hazelton.
Nick is a young man who raises yaks and pigs on his farm in the Pacific Northwest. He is 16 years old.
I shared a bit of my story with him and gave him a bit of life coaching on how I think about financial planning and life planning for young people.
This show was originally released on February 24, 2015 on Nick's website.
Direct download: joshuasheatsinterview.mp3
-- posted at: 10:00am MDT
Thu, 9 April 2015
This morning, I put out a note on the Patreon page for questions from the patrons and I received four:
- 02:38 I'm currently in the "Financial Stability" stage of building wealth. Where do you recommend keeping an emergency fund &/or savings for large purchases?
- 17:36 My only major financial goal is to buy a small condo in Hollywood in about 6-7 years. I am 33 years old, single and don't plan on starting a family. I have about $170K in investments/retirement and am on track to have an additional 80-90K saved for the condo in about six years. I want to make a 50% down payment on a $200K condo (so basically a 100K down payment). My dream is to have a super low monthly mortgage payment (around $500 - 600 per month). That would be very freeing for me! I want the flexibility in life + career that low monthly expenses would give me. Am I crazy to make such a big down payment? I know its almost half of my net worth, but it feels right for my lifestyle choices. I'm tired of being stuck in the super-high trendy-city apartment renting hamster wheel ;)
- 30:19 I have a 529 for my oldest son. I am planning on transferring that to my wife as she will be going back to school in August of 2016. She is a teacher, once she graduates with a specialist degree she will receive an automatic $5,000 annual pay raise. We estimate the program will cost $15,000 and can be completed in 18 months-24 months. The 529 plan is currently invested very aggressively (based on our oldest son's age of 6). I am planning on immediately changing the investment to the guaranteed option (1-1.25%). Am I missing any other investment options? We use Georgia's 529 plan which is TIAA-CREF based. It seems an easy choice to me. What else am I missing? Any other thoughts? The current value is $12,700 and we contribute $600 per year. If we are short during the last semester or two, we plan on paying with excess cash flow we hope to save up by then.
- 40:34 If you were at a "Financial Stability" stage 3.5 in the US (debt is eliminated and about 50% of basic items are addressed) and were planning on moving overseas for 2 years (in 2 years), what steps would you take to secure your financial future?
Enjoy the show!
Direct download: RPF0179-Friday_QA.mp3
-- posted at: 9:02pm MDT
Wed, 8 April 2015
Today's show gives you the tools you need to sit down and calculate an appropriate amount of life insurance coverage for you to own.
On Episode 173, I discussed the three primary ways of calculating an appropriate amount of insurance:
- Human Life Value approach
- Needs Analysis approach (the best)
- Rule of Thumb approach
This show teaches you how to calculate a Needs Analysis.
The process is simple:
What You Want - What You've Got = What You Need
In order to figure out what you want, simply make a list of everything you want for your family in case of your death.
Divide that list into:
- Lump Sum needs (immediate cash)
- Income needs (ongoing cash)
For the income needs, decide:
- How much?
- For how long?
- Liquidating approach or a non-liquidating approach?
Enjoy the show!
Direct download: RPF0178-Life_Insurance_Needs_Analysis.mp3
-- posted at: 2:54pm MDT
Tue, 7 April 2015
By popular request, I've invited Meb Faber on the show for an interview. Meb is well known in the investment world for his contributions on tactical asset allocation and trend-following.
In the interview we cover:
- Meb's background and accidental path into the investment world
- The philosophy of business behind Cambria Funds
- How to construct an investment process for individuals
- True historical rates of return for various asset classes
- The impact of asset allocation over the long-term
- How to protect yourself from your behavioral biases
Enjoy the show!
p.s., listen to the show for an opportunity to get Meb's most recent book for free!
Direct download: RPF0177-Meb_Faber_Interview.mp3
-- posted at: 2:04pm MDT
Mon, 6 April 2015
Today I want to share a very simple concept with you regarding practical asset allocation.
If you plot your goals on a simple matrix and plot all of your investments on the same matrix, you'll more easily be able to select an appropriate investment to fund each goal.
Here's the matrix:
-------------------> short-term -----> mid-term -----> long-term
Enjoy the show!
Support the show as a patron: http://radicalpersonalfinance.com/patron
Direct download: RPF0176-Practical_Asset_Allocation.mp3
-- posted at: 8:07pm MDT
Fri, 3 April 2015
Friday Q&A shows are fun and today is no exception. Today I answer five questions:
- Is there any academic support for the value of financial advisors?
- What is the best way to prepare to pass the CFP exam?
- What is the fastest way to become a 1%er?
- How do you learn to trust insurance people?
- What is the role of an IPO within a broader investment portfolio?
Enjoy my answers!
Direct download: RPF0175-Friday_QA.mp3
-- posted at: 3:48pm MDT
Thu, 2 April 2015
You can’t go from broke to rich in a single step. There’s no magic fairy who will suddenly transform your financial life for you. You have to do it yourself.
But you can work your way through a path that leads to financial independence and complete abundance. That path has stages and you should celebrate your progress at every stage!
In today's show, I share with you my ideas regarding the stages of financial independence. I believe this is a useful roadmap to help you navigate from where you are to total Financial Abundance.
Stage 0: Financial Dependence
Stage 1: Financial Solvency
Stage 2: Financial Stability
Stage 3: Debt Freedom
Stage 4: Financial Security
Stage 5: Financial Independence
Stage 6: Financial Freedom
Stage 7: Financial Abundance
My challenge to you is to take these stages, understand where you are, and lay out the numbers of your own situation. How much do you need to be financially stable? What's your number for financial independence? Financial freedom?
Write it down clearly for yourself and then keep working on it!
Enjoy the show,
Direct download: RPF0174-Stages_of_Financial_Independence.mp3
-- posted at: 3:00pm MDT
Wed, 1 April 2015
At long last, we enter into the oft-requested topic of life insurance! Today's show is an introduction to the economic basis and justification for life insurance and it's also an outline of some of the uses of life insurance for individuals and families. (We'll cover business uses another day.)
You also get the joy of a bit of a sales pitch on why I love life insurance planning so much. It's truly an incredible financial product.
Life insurance is founded on the economic value that each of us provide to others and on our moral obligation to provide for our dependents.
Because each of us has an economic value that can be estimated, we can come up with some formulas to understand how much life insurance is appropriate.
The three major approaches to determining an appropriate amount of life insurance are:
- Human life value approach
- Needs analysis approach
- Rule of thumb approach (most popular is the multiple of income approach)
The best of these methods is the needs analysis approach. It balances the need for precision and the need for simplicity quite effectively.
Life insurance can have many uses for individuals and families:
- Immediate funds:
- Cash to meet daily living needs
- Cash to pay expenses associated with death
- Cash for emergencies, repairs, or replacements
- Ongoing income:
- Funds to pay debts
- Funds for death taxes
- Funds for dependents' education
- Funds for trusts
- Funds for charities
- Funds for gifts
- Funds to supplement retirement income
- Funds for home health care or nursing home care
- Funds to transfer assets to a younger generation
- Funds to discreetly provide for confidential needs
Enjoy the show!
Direct download: RPF0173-Economic_Basis_of_Life_Insurance.mp3
-- posted at: 3:11pm MDT