Jason and Joshua discuss radical retirement planning.

Joshua J Sheats, MSFS, CFP, CLU, ChFC, CASL, CAP, RHU, REBC is a financial planner who teaches people how to live a rich life now while building a plan for financial freedom in 10 years or less. He mixes creative approaches to lifestyle design, deep-dive financial planning techniques, and hard-core business strategy to equip you with the knowledge and inspiration you need to build financial independence.

To learn more please visit www.radicalpersonalfinance.com

Below is the full transcript:


Announcer: Welcome back, America, to Sound Retirement Radio, where we bring you concepts, ideas, and strategies designed to help you achieve clarity, confidence and freedom as you prepare for and transition through retirement, and now, here is your host, Jason Parker.

Jason: All righty America, welcome back to another round of Sound Retirement Radio, so glad to have your listening ears tuning in this morning. If you’re driving down the road this morning, remember, you can catch all of these programs archived online at soundretirementradio.com. As you know, we’re always looking to bring experts onto this program who we believe can add significant meaningful value to your financial life as you prepare for and transition through retirement, and I’ve got one of those guests lined up for you this morning.

Before we get going, I like to start the morning with a verse, and I’ve got one here for us. Proverbs 18:22. “He who finds a wife finds what is good and receives favor from the Lord.” Boy, isn’t that the truth? Then, as you all know, I like to start with something kind of fun, and many of you may not know this, but my grandfather, when he was 65 years old, he started running 1 mile per day. He’s 70 now, and we have no idea where he is. Another stupid joke to share with your friends and family.

You guys, before we bring our guest on, as you can hear him laughing there in the background, I want to share with you. When I was a kid driving down the road, my dad used to love Zig Ziglar. One of the things that Zig always said is, “You will have all the success in life you want by helping as many other people get everything that they want in life,” and I was thinking about our program. We’ve had some amazing guests over the years. We’ve had David Pottruck, past CEO of Charles Schwab on the program. Ric Edelman, Jane Bryant Quinn, a senior editor from Kiplinger Retirement Report. We’ve had David Bach, the automatic millionaire, Dr. John Maxwell, leadership expert, Dr. Wade Pfau. I mean, Pat Flynn from Smart Passive Income. We have had some amazing guests on the program, and this guest in particular has some really radical approaches to lifestyle, radical, maybe some retirement planning that we’ll talk about today and a radical approach to personal finance.

With that, folks, you’re listening to episode 107. I want to encourage you to visit us online, but let me bring on and do a proper introduction of our guest today. You got it, folks. It is my good fortune to bring Mr. Joshua Sheats from Radical Personal Finance onto the program. Joshua Sheats, welcome.

Joshua: I’m happy to be here, and I’m sorry you heard me laughing in the background, but I love corny jokes, so things like that make my day.

Jason: Hey, man. We really appreciate, you’re doing some awesome work out there. I do want to give our listeners a proper introduction, so I’m just going to go ahead and tell them a little bit about your formal bio here. Joshua Sheats, he has so many letters after his name I’m not going to try to say them all, is the world’s leading authority on integrating lifestyle goals and money goals without conflict. He teaches normal people how to seamlessly connect the science of financial planning with the joy of goal achievement.

Joshua is dedicated to helping normal people achieve financial freedom by merging the creative and crazy ideas from the world of personal finance with academic integrity of formal financial planning. He simplifies the complex topics of money and makes the boring financial mumbo jumbo less boring. Joshua is an expert financial planner with a lifelong focus on advanced education. Like I said, Joshua, I’m not going to go through all of your designations and your education, but you have a lot of them, and we sure appreciate you being willing to share some of that with our listeners today.

Joshua: I’m so glad to be here.

Jason: Folks, if you don’t know who Joshua is, he’s the, he has a podcast out there called Radical Personal Finance, and a lot of our listeners that are driving down the road this morning in Seattle listening to the radio show, you may not do podcasts, but I want to encourage you, this is an awesome podcast you can subscribe to. Before we get started on retirement planning today, Joshua, I want to ask you some just personal questions about your journey. The first one is, why did you start Radical Personal Finance?

Joshua: Partly because, well, you read it there in my bio, I come from the world; I started off in the personal finance world as somebody who was interested in finance. I read all the books of all the authors that you listed when talking about who you had on the show, whether it was David Bach, or Jane Bryant Quinn, et cetera. I always absorbed those resources as a lay person. Then, I decided to go into the world of technical formal financial planning, and I started layering into that personal finance background the world of professional financial planning knowledge. I became a Certified Financial Planner, and a Chartered Life Underwriter, and a Chartered Financial Consultant. I wound up getting a Master’s degree in Financial Planning.

All of that is the academic mumbo jumbo. It’s the stuff that you learn to get you where you want to go in a more efficient way, but as I worked with clients, I realized that there was a major disconnect. There were a lot of people who were very good at talking about the simple personal finance things that work. David Bach made a fortune on the latte factor. That works. That’s helpful. Then, there’s a lot of really great professional financial advisors who were great at building a professional portfolio off of the money that you save with the latte factor by not buying a latte every day. In terms of actually connecting the design of that portfolio and the appropriate type of account to use with the goals of the person, I found that there was nobody that I could find speaking to that, talking about the meaning behind the money, and so I decided to do my best to try to cross that bridge for people.

Jason: You’re doing an awesome job. As I understand, over 2 million downloads now on the podcast, so you’re having a lot of success, not only educating but entertaining folks, and that’s awesome. I want to transition to maybe more of a personal question here. As you think back into your early childhood, think back as far as you can, what’s your first memory of money?

Joshua: I stole it. When I was a kid, I did a lot of work. One of the great things that my parents did for me was have an opportunity for me to work, and that’s probably the more appropriate thing to talk about, but the biggest memory that I have of, the earliest memory, is the fact that I realized one day that money was in my mother’s purse, and that all I needed to do was slip into my parent’s room at some point when it was unattended and take any money that I needed out of their purse, and I did that for quite a while. Until, ultimately, my parents caught on, and we had a time of appropriate discipline, and we had many, many days, I don’t remember exactly all the circumstances, but a lot of work in order to make restitution for my theft.

Jason: Wow.

Joshua: I learned that stealing money was not the way to go about getting it and keeping it for the long term.

Jason: Wow. Well, that’s a powerful, powerful memory. I’ve had the good fortune of having some amazing people mentor me and shepherd me throughout my career, and I was just curious if there are any people like that that really significantly have influenced you recently, maybe people that you consider to be mentors of yours.

Joshua: Yeah. It sounds always silly to say your parents, but I’ll say, given the story I just shared, I’ll just say my parents. Let me give 2 specific examples of how that was helpful. 2 things I really am grateful for from my father, as an early child. Number 1, my dad worked hard to give me lots of opportunities to work. Now, being a father myself, I recognize how hard that was. It’s always easier, as a father, to give your child money than it is to arrange opportunities for your child to work. Yet, if you give your child money, you create a dependent child, someone that Dr. Thomas Stanley would call someone who needs economic outpatient care for the rest of their life.

Many parents face this situation with the so-called boomerang generation. If you can work to arrange work opportunities for your child, you have a fighting chance of helping them to build independence and self sufficiency, and so my dad worked very, very hard over the years to try to help me have opportunities. I remember from sixth grade on, every single summer, I had a full time job doing something different. That was so helpful, to learn how to submit to bosses of all different types, to learn various job skills. It created in me a tremendous amount of self confidence, just from the variety of work that I had.

Second example of how in touch he was and what a great difference he made was, there was a time in high school that I wasted all of the money that I earned from a summer job. I, at that point in time, was attending a private school. One of the things that my dad did to help me be more appreciative and grateful for the educational opportunity that I had to attend a private high school was that I contributed for my education. I paid him $100 a month to chip in towards the school bill. He did that, I think, primarily as a character building exercise.

The rule was that I would work all summer to save money so that I could be able to pay my school bill through the school year. Lest anyone get, start hurling accusations of child abuse at my father, if I didn’t have the money, he probably would’ve still paid the bill, I think, although I’ve never asked him if he would’ve or not. One summer I was working, and at that time, I had kind of an autonomous job where I was doing work, but I could come and go as I pleased. I got in the habit of going to the local gas station. In the morning I would go, and I would get a coffee and a pastry. I’d go during my lunch break, and this one particular place had some really great chicken wings, and I’d buy a bunch of chicken wings, and I’d go after work, because I was working on a farm at that point, I’d go after work and I’d buy a drink and something else to eat.

I got to the end of the summer, and we’re sitting down, and usually I would make $2 or $3,000 in the summer, and that was enough to care of my bills and give me some spending money through the academic school year. I got to the end of that summer, and we’re sitting down, doing some accounting, and he’s just asking me about how things are going, and I had no money in my bank account. Like $7 or $800 when I needed $2,000, and he said, “Where did your money go?”

He forced me to go and do a forensic accounting of my bank statements to figure out where all my money had gone. I was utterly humiliated to find that I had spent, I don’t want to exaggerate the number, but I would say over $1,000 that summer, basically more than half the money I’d earned. I’d spent over $1,000 at the convenience store. That entire school year, I was broke because I’d wasted and squandered all the money. Since that day, I am much more parsimonious about the money that I spend in convenience stores than I ever was, and I learned an excellent lesson which has stood me well over the years.

Jason: That is an awesome story. Folks, if you’re driving down the road this morning, if you’re one of our listeners and you have children or you have adult children, Joshua, he’s from a younger generation. He’s from that Millennial group, and he’s out there, and he’s on his own, and he’s making a way for himself because of these things that he learned, these life lessons that he learned. I just, I really appreciate you sharing some of these stories.

At the same time, Joshua, you’re a husband, you’re a dad. You have a couple of kids. I was looking at that beautiful picture of your family on your website, and we all make mistakes with money, and so I was hoping maybe you would share, as you’ve been married and as a father, what’s been one of the biggest financial mistakes you’ve made, and what did you learn from it?

Joshua: Two of them. The biggest financial mistake I made was in my business. I started working as a professional financial advisor when I was 23 years old. I did that from 23 to, through 28, or 29 years old. During the course of that time, the financial advice business is like any new business. You put in a ton of work, and you don’t make much money in the beginning. As you’re trying to scale your business, you wind up reinvesting most of your profits back into your business. I foolishly allowed my business expenses to get way out of hand of where they should have been.

I hired staff, and I over hired staff. I hired somebody for too much time, and I didn’t put them to work, and then all of the other associated expenses incurred with hiring staff, of additional office space, computer equipment, et cetera that I hired for them to help me extend my business put me deeply into debt. I woke up one time, after a few years of financial advising. I’m sitting down, looking, and I had chosen to go into debt instead of increasing my income based upon the inferring of the time. I was sitting there and wondering, “Where has all my money gone?”

As I did a forensic accounting, I guess maybe I didn’t learn a lesson I should have learned when I was in high school, but as I did a forensic accounting of it, I realized that it had all gone into the salary of my staff, but I had not set up the appropriate systems to make sure that my productivity was increasing based upon the hiring of that staff. I wound up laying the staff off, getting rid of the office space, et cetera, but it took me a year or 2 of hard work to get that debt paid off. It was a deeply difficult time in my life to get that debt paid off.

I felt utterly foolish, because a lot of times when you borrow money, at least you have something to show for it. You have pictures of a great vacation, you have a cool car sitting out in the driveway, or you have a diploma on your wall. The worst thing, though, is to borrow money to pay to other people, because they’ve got the good stuff to show for it, and you’ve just got a pile of debt. That was a huge lesson that I learned, and it still affects me to this day.

Jason: It’s easy to have success pull you into that trap, that temptation, of debt. If you’re out there, if you’re a business owner, and you’re thinking about taking on debt for an opportunity to grow, be very careful with that. There’s lessons to be learned, and the borrower is slave to the lender, as we’re reminded. You said there was 2 parts to that. What was the other?

Joshua: Yeah. The other thing is a little bit of a mixture, where I would say one of the biggest mistakes that I made, although it wound up making me money and not costing me money, but I’m thankful for that, because I was careful in it, was buying a house at an early age. My wife and I, after we married, we lived our first year of marriage in a very small apartment. We lived in a 238 square foot studio apartment in downtown West Palm Beach. We paid $500 a month for it. We had a great time. We loved it.

After a year, I had been pretty stable. I’d been in my business for a while. I was doing fine financially. We’d saved up money, and I wanted to go ahead and buy a house, and it seemed like a good time in the local market conditions. We found a house that seemed perfect for us, and we bought it. I had always been taught to put down 20% on the house, and so we’d saved, at that point, a significant amount of money, in retirement accounts and in non retirement accounts, and this house that we chose to buy, it was within many of the so-called guidelines for home ownership. It was a reasonable purchase, and we went ahead and chose to buy it.

Well, we put 20% down on the house, and in the choice of doing that, plus some other expenses, unexpected and expected, including having a child, wiped out most of our cash. We’d put $50,000 into the house to get it 20% down. Well, 6 months after buying the house, I decided that I was going to, unexpectedly, consider moving on and starting a business, and I didn’t have any liquid capital to speak of in order to get my business started.

All my money was locked in my house, and it was locked in retirement accounts. I realized the massive inflexibility and the problem of having money tied up in a house, especially in the early stages of wealth building. Now, thankfully, the story ended well. I was able to sell my house, made a decent profit, got all my money back, and since then it’s been fantastic to have the capital back in my bank account.

I learned a lesson, which I taught on my show, and I wouldn’t have, remember, I was a financial advisor. I was the one who advised people to put down 20%, but I came to 1 of 2 rules, and I said in the future, I will either put down as little money as possible, because you’re far safer to have $50,000 sitting in a bank account, and a mortgage payment of an extra $100 a month, a $1,500 a month mortgage payment, than you are to have less money in the bank account and a $100 less mortgage payment, because you still got the $1,400 a month mortgage payment, not the $1,500. In the future, I’ll either put down as little money as possible, or pay cash for the house. I realized that everywhere in between is a lot riskier than either of those 2 extremes. That was a hard lesson for me, but thankfully, it ended well, but I learned that one the hard way.

Jason: Lot of nuggets of wisdom in this interview, folks. If you’re driving down the road, I really hope you’re enjoying this. If you’re not going to be able to catch the whole thing, visit us online at soundretirementplanning.com, you’re listening to episode 107.

I want to transition, Joshua, into some more, because this show’s all about retirement. It’s about people that are just getting ready to retire, and people that have recently retired, so you worked in the financial services industry, you’ve got a lot of knowledge in this area. As you think about retirement planning, what’s the most important component to a good retirement plan as far as you’re concerned?

Joshua: Lot of times we ask the question, and people jump quickly to, what type of account to use, how to save, et cetera. I think the first, most important place to start is by planning not to retire. Here’s what I mean. When I was working in retirement planning, I noticed that often, the people who could most afford to retire chose not to, or at least chose to delay it for a longer period of time.

Donald Trump doesn’t have to run for President, but he’s running for President anyway, right? There’s a reason why rich people keep on working. What I realized is that rich people keep on working because it’s more meaningful to them about something other than just money, where many times, the people that are desperate to retire, because they don’t like their job, and they’re the ones who often can never accumulate the money. I think it’s a good question to ask, as we financial planners like to ask, to say, “Hey, what would you do if you retired? Let’s plan out that lifestyle,” et cetera, but a better place to start is to say, “What would you do if you knew you could never retire?”

Jason: Oh, I like that.

Joshua: That’s the situation that most people, statistically speaking, most people are going to be in a situation where they can never, or choose never, to retire. Before we work on a plan to retire comfortably, let’s build a plan to work comfortably first, and then move on to the retirement plan.

Jason: That’s awesome. That’s really good advice. One of the things we teach here is that retirement’s all about cash flow. It’s your income that will determine your lifestyle in retirement, but I got to tell you, one of the things that funny about money is there’s never enough. Regardless of whether or not you’ve saved $50,000, $100,000, a million dollars, ten million dollars, we meet with people, and the thing that always changes, Joshua, is their lifestyle changes as their income increases.

One of the things you talk a lot about is lifestyle design. How do you keep that in check? How would you recommend our listeners keep their lifestyle in check without spending more and more every year?

Joshua: I think first is just to be aware of it. Most people have no idea about how much money they spend, and those of us who’ve worked as professional financial advisors will attest to that, because even if somebody knows their basic level of expenses, they only know it on a monthly basis. They say, “Oh, my mortgage payment is about such-and-such, my phone bill is such-and-such, my electric bill,” but they forget about all the other expenses. They don’t know how much they actually spend, and because they’re not aware of that number, they can’t actually create a meaningful plan towards that number.

In order to focus on that, you’ve got to be conscious of it and to be aware of it. Awareness is the first step. Then, the thing you described as far as the amount of expenses increasing, that happens in a couple of ways. I always laugh when people present this idea of finance where they say that, “You know, the great thing is, as you get older, you’re going to pay off your mortgage, you’re going to pay off your debts, you’re going to have more money to spend. You’re just going to have a, overall, more frugal lifestyle.”

Well, there’s a ring of truth to it, because it can be true in many situations, but in observing and working with actual people, oftentimes it’s not true. People spend more money, and the reason is because they don’t have a specific goal that’s more important to them than the money that they spend. The first thing is, be aware of it, and the second thing is, create a goal that’s compelling.

Those who actually save and successfully retire pull back from active earned income because they’re choosing to do something else, are the ones who set that as a goal and a priority and made a plan to get there. It’s the same in anything. If you want your life to count for more than just how fancy your house was, and whether you actually bought the second boat at the second house on the weekend, you’ve got to crystallize the goals that are important to you, and then make a plan for systematically investing into those things. Those are the people who ultimately are able to achieve their goals.

Jason: I’ve got another question for you, before we end today, and this is one that I really want to get in, and we only got a couple minutes, but you have this beautiful family now. You’re married, you’ve got a couple of kids, and I want you to imagine that we’re standing, well, you’re not, but we’re at your funeral, and your son walks up to the front of the congregation, front of the church, or wherever the service is being held, and he kind of dramatically holds up one finger, and he says, “My dad, he taught me this one thing,” and then he goes on to share what that was. What do you hope that legacy looks like, Joshua?

Joshua: For me, it would be, my dad was a man of integrity, because the thing that bothers me the most is hypocrisy. I think most people share that dislike of hypocrisy. I desire very much to be known to my family as, to be, very much to be known to my family as somebody who was consistent. Those who are in our family are the ones who know who we really are.

Often, with my podcast, it’s heard all around the world, but I always try to get together with listeners when they come through West Palm Beach. The piece of feedback that I most value from people is when they say to me that, “You know, you’re the same person on the show as you are here in real life.” I desire that that consistency is the same in every way.

To me, money is one of the least important aspects of that. The whole point of money is to fund the things that are truly important. Jesus taught his disciples, “Do not lay up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal, but lay up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves do not break in and steal. For where your treasure is, there your heart will be also.”

My hope is that, at that time, especially as it relates here to a money show, my hope is that, hopefully, all the money’s gone. I desire, my hope would be to give away all my money before I die. Now if I die prematurely, it might have to go in the terms of a will, but if I’m dying as an old man, I want all the money to be gone and all the money to be invested during my lifetime so that, as the old saying goes, I want to bounce my last check, because that’s my job, is the proper stewardship. I need to make sure that all of my plans with money are invested into an eternal kingdom. Integrity and mission, to me, would be the primary things that I am working to do so that my kid can give that eulogy.

Jason: Man. That is awesome. It’s awesome that you have the courage to be able to say that in this world that we live in today, where there’s a lot of consequences, but Joshua, I realize we’re out of time. Folks, listen to Radical Personal Finance. This is episode 107, but visit Joshua’s blog. Joshua, thank you for being a guest today.

Joshua: Thanks for having me.

Announcer: Information and opinions expressed here are believed to be accurate and complete, for general information only, and should not be construed as specific tax, legal, or financial advice for any individual, and does not constitute a solicitation for any securities or insurance products. Please consult with your financial professional before taking action on anything discussed in this program.

Parker Financial, its representatives, or its affiliates have no liability for investment decisions or other actions taken or made by you based on the information provided in this program. All insurance related discussions are subject to the claims paying ability of the company. Investing involves risk. Jason Parker is the President of Parker Financial, an independent, fee-based wealth management firm located at 9057 Washington Avenue Northwest, Silverdale, Washington. For additional information, call 1-800-514-5046, or visit us online at soundretirementplanning.com.