Radical Personal Finance

Latest Episodes:

178-How Much Life Insurance Do I Need? A Simple Tutorial On How To Calculate A Life Insurance Needs Analysis For Yourself Apr 08, 2015

Show notes

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!

Joshua

Links:

Episode 173: http://radicalpersonalfinance.com/173-economic-basis-of-life-insurance-and-individualfamily-uses-of-life-insurance/
Episode 101: http://radicalpersonalfinance.com/how-to-calculate-how-much-you-need-to-save-for-your-kids-college-rpf0101/
Support Radical Personal Finance! http://radicalpersonalfinance.com/patron

177-Interview with Meb Faber of Cambria Funds: Investment Process for Normal People Apr 07, 2015

Show notes

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!

Joshua

p.s., listen to the show for an opportunity to get Meb's most recent book for free!

Links:

Meb's website: http://mebfaber.com/
Cambria Funds: http://www.cambriafunds.com/
Support Radical Personal Finance! http://radicalpersonalfinance.com/patron

176-Practical Asset Allocation and Asset Location for Short-, Medium-, and Long-Term Goals Apr 07, 2015

Show notes

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:

home-run dollars

aggressive dollars

safer dollars

-------------------> short-term -----> mid-term -----> long-term

Enjoy the show!

Joshua

Support the show as a patron: http://radicalpersonalfinance.com/patron

175-Friday Q&A: Can Financial Advisors Increase Your Returns, How to Prepare For the CFP Exam, Fastest Way to Become a 1%er, How Do You Trust Insurance Agents, What is the Role of an IPO in an Investment Portfolio Apr 03, 2015

Show notes

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!

Joshua

Links:

174-The Stages of Financial Independence: A Useful Roadmap to Help You Navigate from From Broke to Financial Freedom Apr 02, 2015

Show notes

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,

Joshua

Links:

Here is the new page on the website: http://radicalpersonalfinance.com/finance-topics/stages-of-financial-independence/
Become a Patron of Radical Personal Finance! http://radicalpersonalfinance.com/patron

173-Economic Basis of Life Insurance and Individual/Family Uses of Life Insurance Apr 01, 2015

Show notes

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:
- Spouse
- Children
- Parents
- Nondependents
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!

Joshua

Support Radical Personal Finance! http://radicalpersonalfinance.com/patron

172-Retirement Planning From The Financial Advisor's Perspective: Interview with Roger Whitney, Host of the Retirement Answer Man Podcast Mar 31, 2015

Show notes

Retirement planning is at the core of the financial planning profession. But, it's a very complex subject and it's tough to wrap your head around the process.

I've invited Roger Whitney, CFP®, CIMA®, CPWA®, AIF®, financial advisor and host of the Retirement Answer Man Podcast on the show today to chat about retirement from his perspective.

Roger specializes in working with retirees and prospective retirees in a formal financial planning capacity. I think you'll be intrigued by some of his perspectives.

Show topics include:

Roger's path through the financial planning profession
How to create a retirement plan
How to plan for retirement when you don't have enough money
What to do if you can't retire...or simply don't want to
The impact of podcasting on Roger's financial planning practice

Enjoy!

Joshua

Roger's "Retirement Answer Man" podcast: http://www.rogerwhitney.com/
Support Radical Personal Finance! http://radicalpersonalfinance.com/patron

171-Constantly Adjust the Scale of Your Budget Numbers for Maximum Mental Impact Mar 31, 2015

Show notes

One of the challenges of personal finance math is the relevance of a particular scale. Sometimes you can get a massive benefit by switching to a different scale.

One famous example is the daily latte. $4 for a latte sounds about right in today's world. But if you do it every day, it adds up. To fully appreciate the impact of the seemingly small expenditure you can change the scale from daily to annual.

$4/day x 5 days per week x 52 weeks per year is $1,040/year spent on coffee. That's a lot of money!

If you're scared that I'm trying to take away your latte, don't be. I'm not! But I do want you to use and apply that tactic to the actual numbers from your financial life.

In today's show:

Updates from my canceling the show last week so I could launch the new website! It still needs plenty of work (especially for me to go back through and properly categorize all of the past episodes) but it's functional!
Why we need to convert to a different scale to appreciate the meaning of a number.
Why we have problems understanding very large numbers.
Why we have problems understanding compound interest.
Converting from annual/monthly numbers into daily numbers.
Converting from daily/weekly/monthly numbers into annual numbers.
How to create factors to quickly convert numbers to a 10-year number for both one-time epenses and ongoing expenses.
Stretching to a 40-year time period and a lifetime time period.
Using the financial independence math based upon the 4% rule. (Multiply monthly numbers by 300 and annual numbers by 25 to know how much you need to have saved.)
How I apply this concept to my income as well.

Enjoy the show!

Joshua

Links:

Support the show financially! http://.radicalpersonalfinance.com/patron

Out & About: Joshua's Interview on the "Dough Roller Podcast" by Rob Berger Mar 25, 2015

Show notes

I've got a double problem this week that is keeping me from releasing shows:

No internet at my house.
Launching the new site.

So, I'm releasing a couple of interviews that have been recorded with me in the past.

This one is very good. Rob is a great interviewer and he was able to get very in-depth.

This show has an in-depth discussion of the benefits and problems of financial advisors.

Rob was also able to pull some pretty personal stuff out of me from my past!

Joshua

Links:

The original post on Rob's site: http://www.doughroller.net/personal-finance/interview-of-joshua-sheats-cfp-of-radical-personal-finance/
Subscribe to Rob's show: http://www.doughroller.net/thepodcast/
Support RPF on Patreon: http://radicalpersonalfinance.com/patron

Out & About: Joshua's Interview on "Side Hustle Nation" with Nick Loper: Tax Savings Tips for Side Hustlers Mar 21, 2015

Show notes

I'm not able to record a normal show today, so I'm releasing a copy of an interview I conducted with Nick Loper from Side Hustle Nation.

This interview was released on February 19, 2015 on Nick's show, just in time for tax-time!

This show is a good overview of some general tax tips:

When and why you should incorporate your business, and why most beginning side hustlers should NOT.
How to set up a business name even as a sole proprietor.
The types of expenses you can deduct as a side hustler.
3 overlooked tax savings opportunities that will get your gears turning.
How to audit-proof your side hustle.
A free business idea for people who get a kick out of helping people save money.

Enjoy!

Joshua

Links: