Seth: Hey everybody, how's it going? This is Seth Williams and Jaren Barnes and you're listening to the REtipster podcast.

Today, we're talking about what a lot of people have been talking about amongst themselves in recent weeks and months. It's something that has arguably already kind of begun, at least that's what some people are thinking, and that is an upcoming recession in the U.S. economy and what that means for real estate investors as a whole, and even more specifically for land investors. If this is happening, why do we think this is happening? What are the signs and evidence pointing to that? And if it is happening, what next? What are we supposed to do about it? How can we plan and prepare and be smart about this, knowing what we know about the past?

It was Jaren's idea to talk about this. And he and I kind of put our own thoughts together about assuming this is going to happen, or whenever it does happen, what can we do to prepare for that? It's kind of like part two of what we're going to talk about here.

But I recently got a lot of really good insights from a member of the REtipster community who prefers to stay anonymous. So, I'm just going to refer to him as JB. JB, you know who you are. Thanks a lot for sharing your insights. But JB sent me a beautifully written email, basically giving me a little, mini-dissertation about where he thought the economy was at and where it's going and why. And he said I was free to mention any of his comments here in this conversation. So, I'm going to go over some of that stuff. Some of it are his ideas, some of them are my own, but just be aware if I sound smart in this conversation, I'm actually just rehashing what another person told me. So, I just want to be clear about that.

And also, a big disclaimer. Jaren and I are not economists, we're not experts at predicting the future. This is not financial advice. And the point of this conversation is not to direct you on what you should be doing with your money, nothing like that. It's really just the conversation about what we're seeing and what we're hearing and what other experts are saying. And what we're going to do just as we go into this time and how we're thinking and preparing for what might happen. You can also see show notes for all this stuff at retipster.com/133, because this is episode 133.

I was initially really hesitant about even doing this episode because I don't like to predict the future. I don't know what's going to happen. And I'm not the most confident person, even when I do know what I'm talking about. So, doing this kind of thing sort of made me feel uncomfortable and I'm sure a year from now, we'll listen back on this. And it'll be very evident all the ways that we were wrong.

But just keep in mind, these are just theories and thoughts, and it's not in any way meant to predict the future. But even though we don't know, I still think there is some usefulness to thinking this through and theorizing and thinking about the “what ifs” and what might happen and when it might happen and how bad it might be and all the different ways to respond to that sound.

Sounds good, Jaren?

Jaren: I'm excited. Yeah. I think that it's going to be a really good episode because a lot of people have apprehension about the future. And I think that if you are going to invest in any capacity, it's probably a smart thing to remain optimistic about the future, because otherwise, what's the point of investing, right?

I am one to make a case that even though the economy seems to be taking a downturn, there's a massive silver lining. And I think that there's lots to be excited about. So, I'm happy to dive in and have us kind of give our best thoughts of what to do and how to prepare and how to navigate.
I'm really excited to hear from you specifically, Seth, because you actually got started at the bottom of the 2008 crash. In some regards, correct me if I'm wrong, but I feel like you actually kind of went through a lot and figured out what do you do when you don't have sold data that you can rely on? And you kind of navigated the waters of that transition there in terms of the economic turnover.

Seth: Yeah, that's very true. It was a terrible time, relatively speaking, when I got started. Economically throughout the country, it was a very rough time. The very beginning of just awful period of recession. And I was working exclusively in Michigan, which was the worst state to be in, hands-down. The joke was like, “Whoever is the last person in Michigan, turn out the light because everybody's leaving.”

And I was trying to buy and sell land. The one thing that nobody wanted because nobody was building anything in Michigan. But even then, I was able to do really well. And the reason it worked is because I stuck to the fundamentals. Even when property values go lower, make your 10% to 30% offer based on that lower number, not this higher number.

And that's kind of jumping ahead, but as we start to see values decline, which I mean, how far will they decline, will they decline? All the stuff we don't know. But assuming at least the growth stops, which I'm sure is going to happen at some point, because it's unsustainable how fast it's been growing. Just watch that really carefully.

But before we get too far down that road, I want to start, and this is sort of entering a lot of JB’s commentary in terms of the past year or two, how we got to where we are now and some of his thoughts are going to be into what I'm about to say here.

Looking back at 2020 and 2021 and even into 2022, why have property values gone up so much? And there's a number of different reasons for this. It's kind of like an issue of high demand and limited supply after COVID because a lot of people understandably started working from home and they haven't had to move with job changes unless they really wanted to. And when they did want to, they were moving out of cities and apartments and just signed up to do Zoom meetings instead of commuting, which employers were happy to let them do because of the pandemic.

There have also been issues where a lot of people who did want to move or even needed to move, didn't want to put their house on the market, and have a bunch of strange people doing walkthroughs and open houses in their house when they might have COVID. Especially back before the vaccine, when it was a ton of fear, people thought they were going to die if they would get it.

So, if people had to sell their houses, they would be off-market listings. And because of that, it sort of led to this artificially low supply where there were actually warehouses to buy but nobody knew about them. Basically, anybody who did put their house on the MLS, the price would go way up because there were only so many listings to go around.

Jaren: Well, not only way up, but across the nation. At least from my limited exposure, I kept hearing over and over again that people were offering over-asking prices in markets that were not California or New York, even here in Indiana. Why would you offer over asking?

I just had a friend who's moving from Chicago. For our audience, I live in Northwest Indiana, which is kind of confusing. It's a suburb of Chicago, even though it's on the Indiana side. So, I'm 45 minutes from downtown Chicago. My friend is moving from Chicago to Ohio and they had to do that even right now. They just put an offer in on a house that got accepted and they had to go above asking. They had to aggressively fight for it. And it's like, “Man, that's not good to be in a market like Ohio or Minnesota, Wisconsin, and having to fight for over asking.” That's kind of weird.

Seth: Yeah, I know. The people I know around here, it's been a very similar thing. If you have financing contingencies, if you need time for inspections, if you're not offering over asking price, you're not getting the deal. You need to just do something really dumb if you want any hope of getting the house. Honestly, when you look back at the 2009/2010 era, which is how terrible it was in terms of how houses wouldn't sell, it's about that terrible but the other direction. I know it's the polar opposite of where you want to be. It's not at all in equilibrium.

Another thing that has led to this limited supply is that back during this whole recession in 2009, 2010, I know this was a big thing in Michigan. A lot of builders just got out of the construction industry altogether. It was just that bad that they couldn't find work for so long, they just got into other things.

And so, a lot of people who would be around to build houses and that kind of thing, they're not here. And we've basically gone a lot slower and we haven't been keeping up with the demand for housing to the point of, I think we've got about 25% of the inventory that we actually need. So, we're like, we'd have to quadruple the output or that's what we should have been doing since the last recession that we haven't done.

And it's also compounded by the fact that since COVID hit, and I guess even before that, but especially after COVID hit, interest rates have just been incredibly low and money has been very cheap.

Jaren: Historically low. Yeah.

Seth: Yeah. I think lower than they've ever been in my life. I haven't looked closely at the charts, but yeah, just very, very low.

Jaren: I have heard that back in the 80s, what was normal, what was run-of-the-mill for just conventional mortgages, was like 16% interest as opposed to 3%. And then when you factor in inflation, that's normally on average. Right now, it's a lot higher, but on average it's around 4%.
So, if you're getting a mortgage at 3% or lower and inflation is at 4%, when you factor in the cost of inflation, you're essentially having free money in terms of your interest rate. You have to pay it back and all that, but it's pretty hard to beat and historically that's not been the case. So, the last 10, 12 years plus have been incredible. It's been an incredible ride.

Seth: Yeah. And if you know anything about the economics of what that does, when interest rates are super low and money is cheap to borrow, is people who are selling real estate can ask a lot more because when you look at just what the monthly payment will end up being, if that interest rate isn't there to jack that payment up, that means, “Well, we can fill that in with just a higher asking price.”

And especially when there's super low inventory and prices are going up anyway, it's created this sort of perfect storm where there are several significant contributing factors that are making prices go way high and it's not sustainable. It can't and it won't keep going like this forever. It’s just my prediction, but I'm pretty sure that's accurate.

According to the Texas A&M Real Estate Research Center, a quarter of four of 2021 land prices in Texas alone were up 29%, which I mean, just do the math. That can't keep going. That is very unusual for values to go up that quickly quarter after quarter. So, it's not going to be like this forever.

And at the same time, especially in 2022, it's also worth noting that the price of oil has basically doubled over the past year and the price of natural gas has tripled and this stuff makes everything more expensive from gas to food, to raw materials, the cost of trucking and shipping things and building things. It's all getting more expensive. And then when you get the war in Ukraine, when Russia throws a wrench in the global economy, that's going to make things worse. Plus, the fact that the government's been throwing money out of helicopters for the past couple of years now, just at an unprecedented rate, inflation's going to be going up.

I think we've kind of hammered home that point, but several different sources believe that a recession this year is imminent. That includes the CEO of Wells Fargo bank, Jamie Dimon, the CEO of Chase bank, the biggest U.S. bank. Jamie Dimon, I just saw an article yesterday. He was saying that he thinks Americans have about six to nine months of excessive cash left before that's going to run out and things are going to start getting tight.

You're officially in a recession when there have been two consecutive quarters of negative GDP in the country, and we've already had one quarter of that. I can link to a source for that in U.S. News & World Report. And a lot of people, for a lot of reasons, think that the same thing is going to happen in quarter two, which means we're officially in that recession.
And the real estate market is already being affected by this. In April, new home sales dropped 17%. I think we're just sort of seeing the early stages of where this is going to go. And when you look at the issue of rising interest rates, which honestly, interest rates are part of the problem, the fact that they've been so low. I mean, it's great if you want to borrow, but it's just contributed to the jacking up of property values and the difficulty of finding homes and that kind of thing.

Jaren: Hey, Seth, I have a question on that, actually. From your experience as a commercial banker, what do you think is a good range for a healthy economy? What should baseline interest rates be?

Seth: Yeah, that's way beyond my pay grade. I don't know. That's a question for the Fed. I do know that interest rates are used directly as a tool to combat inflation. The higher interest rates go, it slows inflation down. But there are times when it's arguably appropriate to have a super low rate because it'll encourage people to borrow. It's cheaper to get money. And the more money people borrow, inject into the economy, it creates more jobs.

So, it's kind of a tool that the Fed can use to regulate the economy. If they want to slow things down, if they want to speed it up, changing that interest rate can and will have a huge impact on that. A lot of times, this kind of hit me when I was in Economics 101 in college. And our professor was saying that a lot of people attribute the success or failure of the economy to the president, but it actually has a whole lot more to do with the chairman of the federal reserve and who makes the decisions on when interest rates are going to go up and down. Because it's a big determination of how much people borrow and how much money gets injected into the economy.

But for all the people who are smart about economics, this is nothing new to you. But for those of you who aren't intimately familiar with the role that interest rates play in the economy, I'm just trying to go over some of that. But as interest rates go up, it's definitely going to have an impact on how quickly homes sell and the cost of borrowing and what people's payments end up being.

Mortgage companies have already started laying people off because of the rising interest rates and the slow down and borrowing and that kind of thing. And some people are predicting that a lot more layoffs, not only in the lending industry, but many other industries are going to continue happening as this plays out.

We kind of understand the situation of what led to this and we can sort of see the early stages of where this might be going. So, the question is when will this recession hit? How bad will it be? How long will it last? And there are different ways to theorize about that. There's also the war in Ukraine to consider. How long is that going to go on? What's the outcome going to be of that? What are the long-term implications? And I don't think it's something that's going to get resolved quickly, even if the war stops and is resolved in some way, there's still a ton of political damage that's been done. It's not something that's just going to heal overnight.

In terms of when you're going into something like this, I know one way that inflation can actually work to your benefit is if you load up on debt because inflation will sort of erode away, especially if you get fixed low-interest rate debt where the payment is not going to change, but inflation goes up and the value of the dollar goes down. You're effectively getting cheaper payments as the time goes on because your payments aren't changing, but the value of the dollar is getting smaller.

I've heard a lot of people say load up on debt, buy as much as you can, get as much debt as you can. I get where they're coming from. And I think that's accurate if you can get a low fixed rate before all the inflation hits and if you're very confident that your investment is going to generate sufficient cash flow to service that debt and beyond. But interest rates really have already gone up quite a bit. Just over the past couple months, it's been like a full interest rate, at least with some of the projects I've been looking at.

So that's not to say it's not going to continue going up, but just be aware debt can be an effective way to do this, but you got to be smart about it and you got to get the low fixed rate and be really confident about. What if you loaded up on debt with an office building that isn't going to be doing well anytime soon? Just debt by itself isn't the only factor. You have to consider, “Is this a good investment? Is it going to cash flow and pay for itself?” and that kind of thing. I think debt can be a good thing if everything else aligns.

Other people have a totally different philosophy in terms of “Avoid debt at all costs right now. Just do stuff that's cash where you don't take on any new payments.” I think there's validity to that too, but there's a cost to that as well. An opportunity cost in terms of your cash-on-cash return is going to be terrible, because you're burning up all your cash and also, you're losing any benefit of debt working in conjunction with inflation.
It's one of those complex issues where I don't know that there's like a single recommendation or anything that anybody can say, but just things to be aware of in terms of whether or not to get debt and when you should or shouldn't go down that path.

I think the input that I've been hearing and seeing from other people much smarter than me is to kind of just get your financial house in order. Don't exhaust all of your cash, have resources that you can easily liquidate or get access to. And I think this kind of goes into maybe phase two of this conversation where when we look at real estate investors as a whole, but even more specifically land investors, we've been lucky, in a sense, I think in that over the past couple years as values have just gone up and up and up and up, it's been in this environment where you can offer a lot more than you normally would and it probably will be okay, because values are going up and up and up. And it's really hard to lose when things are constantly going up like that.

But what if it's not going up and up and up? What if it levels off or goes down? Or what if it doesn't even go down, but it just slows down? Suddenly you have to hold onto properties a lot longer. And this is what it was like when I was getting started. It was all about a race to the floor in terms of pricing. That was how I sold stuff. I was just able to price it super cheap and offer seller financing and everything, basically using every tool I had in my toolbox to get these things sold and they did and I made money.

But it only worked by being hyper-conservative like that. And being hyper-conservative is not what I've seen a whole lot of people doing as of late. And part of that is because everybody's in the same mindset of “Values are going up and up and up. It's okay, I can offer more. This is what I have to do to get the deal.”

And if this recession happens anytime soon, it's something that you'll want to really closely evaluate and maybe reevaluate and maybe take a more conservative approach, maybe even change markets if you're working in a place where that's the only way to win. It’s to just make these insanely high offers. I don't know. I mean maybe, but maybe there's another way to go about it. Maybe there's another market you could work in or another property type in that market where you can get away with lower offers or just another play in general where you are improving the value. You're not just flipping, and that kind of thing. You got any thoughts, Jaren?

Jaren: I think that the biggest piece of advice I could give people right now is just to remain nimble. I would very strongly discourage people letting their emotions get into a kind of fear and anxiety and all that because here's the reality of it. We're going to have a transition, period. And we don't know how long that's going to last.

During that transition period, most likely, my opinion is that we're probably going to really struggle to figure out sold comps. Comps are going to become extremely difficult for, let's say six months up to maybe a year-and-a-half timeframe. During that time, figuring out how to navigate the business and how to figure out what to offer on properties and stuff is going to be a challenge.

Seth: Hey, Jaren, just to clarify, when you say sold comps, do you mean you won't be able to find them, or they just won't be reliable because the values are irrelevant?

Jaren: They won't be reliable. They're going to still be there. There's going to be six months, 12 months in historical sold data, but they're going to become obsolete. So even brokers, for some duration of time, are going to really struggle to determine a market value for something, especially something like land.

I think we need to be prepared for that. I think that it's inevitable that at some stage in a downturn where valuations are being corrected, we're going to be in uncharted territory. And so, you're going to have to figure out how to navigate those waters.

But the good news is on the other side of that transition period, we're at the bottom of the market, which means all of the things that we heard about in the Glory Days to some degree. Obviously, the 2008 crash was an historical crash. We don't know if it's going to be that severe personally, because I graduated high school in 2009. I've just been in the real estate world with it already going up and up and up and up. I kind of came in where I missed the crazy gravy train.

Whereas I feel like now, whatever gravy train is on the other side of this, we're going to be at the bottom and be able to ride that wave. So, I'm excited. I think there are going to be deals to get, there are going to be crazy deals, crazy motivation. I think with the push towards people moving away from cities and going more rural, there's a lot of opportunity for land investors. But the key issue is how are we going to navigate through this transition period? Again, once we have six months of sold data, life's going to get a whole lot easier on the other side of it.

My biggest suggestion, don't buy stuff right now that you have to hold for six months because it's like a development thing or some crazy intense subdividing deal. If you're in a situation where you've never done something like subdividing or whatever, take whatever strategy it is, if it's more sophisticated, more risky, I wouldn't take more of those types of things on right now. I would 100% just do things that are easy and that move quick.

Practically what I've done to adjust in my own business is I typically offer around 50 cents on the dollar and I can get really good at figuring out market value because I use land specialized agents and so on and so forth. I'm now telling my agents, “Hey, I want to sell all of my property within 30 to 60 days. So, you give me a list price based on selling it within one to two months because I don't want to hold it.” I used to say three to six months. That's how I'm being conservative. I'm still going to offer 50 cents on the dollar, but I'm going to do it based on a valuation that's going to move the property quick.

I think that it's a good principle to approach the next six months to a year and a half where if you have to fire-sell all of your inventory at cost, you can, because I think worst case what might happen is valuations might drop overnight and if you buy right, you just have to unload all your current inventory and then adjust your offers and adjust your pricing according to the new market value.

Just keep that in mind. I would definitely buy out of the rate where you feel very confident that you can sell at what you bought it for if you have to unload your property and then just move into the next direct mail campaign based on the new values. I would probably shy away from blind offers and range offers completely because when that happens or nobody really knows what market value is based on sold comps, blind offers are going to be obsolete all over the place.

Now you could do blind offers maybe and have a benefit. Maybe a counter-argument that's worth considering is that you're going to have much higher motivation and if they see that dollar amount and it's worth it, maybe it could be good. But for me, I'm keeping it with neutral letters moving forward.

Seth: When you say avoiding blind offers altogether, that's a big statement. So, I'm wondering, would it make sense if you do blind offers, what if you just did 10%- or 20%-blind offers? The whole thing about offering 50% there was a long time where that was unthinkable for me. And we're in an environment right now where you can get away with that especially when it's in a super-hot market and it's relatively easy to value stuff.

I guess it illustrates the point of where I started and where I came from. You would never make a 50% offer under any circumstance. And that's changed. But if it is going back in that direction, maybe another way to do it if you're getting your blind offers is just keep it super conservative.

I don't know. What are your thoughts?

Jaren: Yeah. I want to retract my statement there because I agree with you. I feel like it was a bit strong and I was trying to do that with presenting the counter-argument that I feel has some validity to it. Let's say you were in a situation where you knew you could probably pick up property for like $2,000 across the board and you just send up blind offers at $2,000 and you're not really relying on sold comps to determine your offer amounts. I think there's a great opportunity there.

So, to say that I would shy away from it 100%, that was too harsh. And I'm going to back off from my statement there. I would just be very cautious if you're actually using sold data because the point I'm trying to emphasize is that at some point, everybody is just going to be a big question mark. Like, I don't know what this thing is worth. Even agents are going to struggle.

Back in the day in the land business, like you mentioned briefly, and correct me if I'm wrong here, Seth, but I get the gist that for kind of the OG land investors, they used to run their approach to figuring out market value was kind of like, “I don't know what this thing is worth. So, I'm just going to sell it at 50 cents on the dollar.” Because if I'm seeing some comps that justify, say, $50,000 to $60,000, I'm going to be at $40,000 and consider that my market value, just be stupid low, the lowest thing on the market every single time and then buy at like 20 to 50 cents on the dollar on that I think you're going to be good. So be more conservative. And I guess don't be super tied to the hip with sold comps because that's really what I feel like is going to be the biggest bottleneck and struggle.

Seth: Yeah. I'm glad you brought that up. Because I know that was a big part of the thought process back in the 2009, 2010, 2011, 2012 era. Comps literally weren't there. You could not get very confident in what a property is worth and that's part of why whatever number you land on, however you get there, that's why you make the offer 10% or 20% is because you don't really know the value. I mean you can get sort of halfway there, but if you end up being totally wrong, it's still okay, because there's this massive margin in there to protect you.

And especially when you're working in a buyer's market where you can make whatever offer you want and people say yes, that totally works. But it's a very different thing when you're working in a seller's market and there are comps and you can’t get confident about what it's worth and values are going up and you can sell anything.

So, you have to consider all those different factors in terms of what your offer percentages should be. There may be markets where there's a mixture of those where you can get confident about values, but it's a slow market. You just have to weigh those different things and be smart about it.

Jaren: And the last thing on my list that I forgot to mention was if you use funding partners, I would start setting very conservative expectations. It's much better to present the case where things are like, you just want to make sure you're conservative. You want to under-promise, over-deliver. So, I would tell them, “Hey, we might hold on properties up to a year.”

So, I'm telling my agents I want to sell property within 30 to 60 days, but I'm telling my funders that we might hold property for six to 12 months so that again, I'm setting up this situation where I can over-deliver and under-promise. I think that's a really big thing for you to do moving forward.

Seth: Yeah. Even like another way to do it. I mean, that's one viable way, but just to communicate really well, just have expectations that things could get weird. The winds have changed upon us. We don't know where it's going to go, how difficult it's going to be, but just be aware, the party may be sort of dwindling in terms of values going up and up and up. So, don't do this unless you're okay with that uncertainty, if we end up having to wait longer than we thought. That's just a possibility now. And I think it's interesting what you were saying earlier, Jaren. And I kind of share your sentiment in that. In some ways, it's really exciting to see values plummet a little bit.

Jaren: I'm super excited. Yeah. I've been waiting for the economy to crash ever since I got into real estate back in 2013, 2014. So, it's been a long time.

Seth: And it's interesting because I also feel that way. But when I go back to, for example, when I first bought my first duplex in 2011. Currently the market value, as of right now, I think it's $220,000 or something like that. When I bought it, I paid $44,000 for it and I was terrified. I was like, “This could be really stupid. I don't know where this is going to go.”

People were telling me that I was being really dumb by investing in real estate. Period. That was just a dumb thing to do. And what you got to remember is that sitting right here right now, we have the benefit of hindsight and we can see that obviously you could buy any piece of real estate and you couldn't lose because everything was going to go way up. But back then, we didn't know that. I remember seeing articles about how real estate will never recover. Period. This is the new normal, get used to it.

Jaren: That's fun.

Seth: And we can laugh about it now, but people really thought that then. People legitimately thought, “America, we're just going down and that's just how it's going to be from now on.” But it is good to have this perspective, seeing the lows and the highs, just knowing that nothing really lasts forever. Everything is cyclical. It's not something to be afraid of. You just have to know that things will always change. And you don't want to get too used to a norm that this is how it is because that's not. Things are always going to be different.

And another thing, just with the recent, I guess, good times that we've seen in terms of values going up and up, it's given me a new perspective that I didn't have back when I got started. And that is, “Given enough time, everything will go up in value.” Say you do make a bad purchasing decision and you're like, “Oh man, I shouldn't have bought that. Or I paid too much.” That is kind of a downer, but also realize if you can just wait, the day will come where that thing exceeds what you paid for it, no matter what. That day is coming. It's just a question of when is it going to come?

The time is certainly an important factor and sometimes it's a huge factor and it will kill a deal for you, but just be aware if things go down, it's not going to permanently stay that way. It's just part of the cycle and the sky is not necessarily falling. It's just something that happens.

And kind of alluding to what you were saying earlier Jaren, have a plan B, don't assume that your most ideal scenario is always going to pan out that way. Just think through, “What if it doesn't sell for this price?” or “What if it does take twice as long or four times as long as I thought?”

And think through, maybe there are other ways you can make money from this thing. Maybe you don't have to sell it. Maybe you could lease it out to somebody or if you're somebody who has never done seller financing, maybe consider that. I understand the reasons for some people not wanting to do that. But if the situation requires it, be willing to go there, because that might be an important part of the pivot or adjusting to change in terms of making things continue to be viable.

Yeah. I think that's pretty much it in terms of my thoughts. And again, I don't want to go too much further, not only because I don't really know anything else, but even if I did, we don't really know. We don't know what's going to happen, but we do know what has already happened. And we do know this situation as of today, we're recording this as of early June, 2022.

So, if you're listening to this later than that, you probably already know way more than we did when we recorded this thing. But yeah, those are just our thoughts on what we're thinking anyway and how we're looking at this and preparing for it. Anything else we should talk about on that topic?

Jaren: I don't really think of any advice. A point of intrigue for me is that I didn't realize how much of a lag time there is from the world's response to economic factors. I do think right now, like I think you even mentioned when you were talking about the stuff you got from JB… Or no, you said the head of Chase said that it looks like six to nine months is kind of the window. I have heard that from other people who are in finance as well, like the next six months we're not really going to see the effect, but six to nine months later, things are going to get pretty interesting.

So, if you hear this and you're in that six-to-nine-month window, understand we're at the trail end of the gravy train. So, unload inventory, get prepared, pay attention, and remain nimble. If you don't walk away with anything else, that's my biggest piece of advice, it’s to be nimble. Be able to navigate quickly on things that spring up.

Seth: Yeah, totally. It seems obvious, but a lot of people are not nimble. You just haven't really had to be. In terms of buying stuff and seeing values go up, it's just been a certain way for a while now. Yeah. I think that kind of sums it up.

Do you want to do one of these exit questions that we haven't done in a while?

Jaren: Yeah, let's do it. I like doing those. I saw a product promotion on some social media website. I don't remember where it was, but it was promoting some version of this card game, but for couples. To just engage, for doing dates and stuff. I think it could be a pretty cool thing.

Seth: Yeah. I think that's actually where some of these questions came from.

Jaren: Not to say that we are a couple Seth, but…

Seth: We basically are.

Jaren: Nice.

Seth: We're sort of married. Okay. So, assuming your life is a story and you're the author, what does your happy ending look like?

Jaren: Your life is a story. You're the author. What's your happy ending?

Seth: Yeah. Maybe a simpler way to ask that is what does your happy ending look like to your life? How do you want things to wrap up as you are getting ready to leave the world?

Jaren: Man, what a question. To keep it brief, I had kind of… What do they call it? Midlife crisis, recently, where a lot of my perspective about life had a major shift and I just realized that life is a lot more simple than I realized. And it's kind of, in a way, discouraging or disappointing. Because you're like, “That's it? That's all it is? Oh, it's beautiful and it's amazing, but it's very simple.”

Seth: What do you mean by that?

Jaren: Well, I fixated a lot in my twenties on finding some kind of vocation, it’s a good way to put it. Like there's some mission, some purpose for my life. And I think there can be for certain people, but for a lot of us, and I would actually throw myself in that box, I think a lot of life it really boils down into a few categories. It's like what you do to make money, your marriage and your kids, your family relationships, and then your self-maintenance, like health and taking care of yourself and self-improvement, those type of things. And then entertainment, enjoyment. It really boils down to those categories. And there are things that you can do within those categories that help your life thrive and then kind of detract from your life.

Seth: What would you say, there's still a mission or no?

Jaren: I was so fixated with this idea that I have some special mission for my life. I don't know. I think there might be more intentional missions or whatever or purposes for your life in certain seasons, but when we die, when the majority of people die on this planet, no one's going to remember their name. And that's a reality that was really hard for my Enneagram type three mind to accept. But it's true. Most people, even though as I'm living my life, I try to be impactful with it. I'm on the podcast. I'm trying to make a difference with what I do every day.
But at the end of the day, none of the things we do is really all that important because we're all going to die. It's kind of a shocker or a hard pill to swallow, but once you swallow it and you accept that, it really helps you clarify what you care about, what you really, really care about. And what I really care about is my family. I care about my kids. I want their life to be very successful.

I feel like my focus or my drive is shifting away from what my pursuit of being glory could give me versus just trying to do a really good job at sewing into my kids and preparing them for the future because they're kind of the only way that I continue on in some aspect. They might be able to tell stories about me to my great, great grandkids or something if I am intentional there.

All that being said, my happy ending, I definitely want to be financially independent. And there's a scripture, I think it's a proverb. “A righteous man leaves an inheritance to his children's children.” So, I definitely want the family to treat a fork, so to speak. I want to have a very different legacy for my future generations.

But beyond that, man, I just want to just simply enjoy life and just enjoy my family and be intentional. And if I can do that well, and I can just remain in a heart posture throughout my life where it's more about the local immediate relationships in my life than it is having this big influence or this big following online or whatever. I think that's really all I care about. That we're good financially and if we could get some properties in Belize or some really cool resort kind of stuff in the middle of it, that'd be fun too. But if all we accomplished with my life at the end is that I did well as a father and I served the people and the immediate people in my life…
Essentially to go high level, I was going broad instead of going deep. I have now shifted where I want to go deep. And I want to be very intentional with the few people in my life that are actually in my life and not the subscribers on YouTube or whatever, which I'm not against. I love you guys, but I don't know who you are a lot of the time. So that's my happy ending. Just being a good dad and finishing strong financially.

Seth: Yeah. It is crazy. In this social media age we're living in now, just those meaningless numbers and ego stuff and trying to look like you have it together and have it all success figured out. It's such a weird amount of pressure to do that. Especially for an Enneagram type three where I feel like it would be even harder, whereas it's already kind of hard for everybody.

I think mission is definitely important, but it's on the same coin. You're right, I think it's for most people within 50 years of your death, everybody who ever knew you was going to be gone, you'll have zero impact.
And even when we talk about our kids and stuff, my happy ending would be a similar thing. On the money front, it's having enough money to just pay for everything that's important to me, give to my kids something, have a comfortable life, give to causes and charities and church and stuff that I care about. Making an impact there.

I think what it ultimately boils down to is my own personal satisfaction. I would be really satisfied if all those things happened. But even when we talk about our kids, that's a great goal and everything, but why do they matter? 50 years after they're dead nobody's going to remember them either. It sort of begs the question, “What's underneath it all? Why does any of this matter?”

I think for me, it's God. I believe in God and the Bible and everything that that says, and that gives me a whole lot of meaning. Because there is something beyond this life and it's going somewhere. It's not just me spinning the wheels until I die and then it's all over and it goes black. That's an incredibly depressing thought.

But Tim Keller, he's a really well-known and respected author and a pastor. He's got this book called “Every Good Endeavor.” And there's this little quote from that book that I always look at and remember, I'll just read it for you quick. He says, “Everyone will be forgotten. Nothing we do will make any difference and all good endeavors, even the best will come to not unless there is a God. If the God of the Bible exists and there is a true reality beneath and behind this one, and if this life is not the only life, then every good endeavor, even the simplest ones pursued in response to God's calling, can matter forever.”

And that crystallized it for me because if you don't believe in God, and we could go for hours on all the evidence there is to support that. It's not just like a happy touchy, feely “Oh, it makes me feel good.” There is a huge reason and tons of evidence to believe that. But if you don't believe that, what is the point of anything? How does anything matter other than just my pleasure in the here and now? Which is an incredibly empty way to look at life because nothing lasts forever and it's over and it was all pointless.

Jaren: Well, and that's why a lot of people kill themselves when they reach the top of the success ladder.

Seth: Yeah.

Jaren: They're clinically depressed or what have you. I don't know. Actually, that was going to be my question for you. For the people in our audience who might be atheist, they might be agnostic or something, what do they use to find purpose? There's been a big shift even with my relationship or how I view God in this whole thing, because I do think that ultimately, I agree with you, that's the underlying purpose of everything. But even in that context, what's the goal for spirituality?

I think it boils down to just simply doing a relationship with God. If you just can fork out time where you pray and just like a marriage, if you show up every day and you're faithful to that, sure, maybe there might be the occasional instead of where God is like, “Yo, go do this for me” or “Hey, here's a primary project for the next few years” or what have you.

But even in that, I have a guy’s group and there's a principle we talk about called “Pray and obey.” Ultimately, that's really the crux of it all. It's just like, “Do life with God and you're going to be alright.” Because I don't need to be the big super guy, like a pastor, our missionary. There's nothing but vain glory in that. And ultimately God deserves the glory, not me. It's just kind of a stream of consciousness here, but to land the plane, do you have any friends that are not Christian that you've had these conversations with?

Seth: Yeah.

Jaren: I haven't. So, I have no idea what people do, but are they just all walking around empty and just sad all the time? What do they do to find purpose?

Seth: That's the thing. The folks that I know who are in that camp, I kind of get it. I don't think they're crazy at all. I just think they've filtered a lot of the same information in a very different way. Or maybe they've even been burned by the church or something or someone has offended them and they kind of choose, “Nope, that's not for me. I'm going to go this way.” And we could literally go on for so many hours about this, but yeah, I have had these conversations with, definitely both atheist and agnostic and I don't think they're crazy. I think there are a lot of incredibly intelligent people who think that way.

Jaren: But where do they find purpose at the end of the day? That's my biggest question. Because I had no purpose before I became a Christian. I was lost. I was doing drugs very young in my teenage years, like 13, 14, 15 years old. And I go nowhere really fast. And so, I had no purpose. I don't know where people find purpose if they have no concept of God.

Seth: Yeah. I can't speak for them, but from what I've heard or just this sentiment I've picked up is that in the end, all humans are wired to pursue pleasure and escape pain.

But yeah, in terms of where they draw their meaning from, I can't speak for them. Maybe they have different thought processes or different things that motivate them in their life. But it's not rocket science to understand that all people want things that are going to make them happy. Everybody's in the pursuit of happiness.

Jaren: There's a really good book called “Man's Search for Meaning” that I would really encourage people to check out. It's written by a psychologist who is a Jew who went through a Nazi concentration camp. And he came up with the interesting philosophy kind of as a counter argument, it's called hedonism. This is like the philosophy that you just described, where the foundational principle is the pursuit of pleasure ultimately.

And he says that really what makes you happy is not the pursuit of pleasure, but having a mission. And so, he developed an entire branch of psychology where what they do is they try to help people find meaning and purpose. And I guess I would add the word mission in the midst of their suffering so that they can have a mental grasp as to why they went through something so hard.

And he gives an example of this Japanese guy back in World War II I believe. They were fighting with the Philippines. And he ended up after the war was over staying and hiding and terrorizing a bunch of people in the Philippines and stuff. And he ended up becoming like a national hero in Japan and all this, but in his later life, he was depressed. He was a celebrity. He was almost worshiped. Everybody admired him because he lived for 50 years or 20 years or whatever the number was in the jungle, living in caves and being essentially like a real-life Rambo, which is all suffering, but he was living with a mission. He was living with purpose and so he was fulfilled. But when he got back and was a hero and could do his heart's desire, he found himself empty of meaning. It's an interesting concept.

Even if you're atheistic, I think exploring frameworks of philosophy is a good route to go because it's helpful to have a working framework when you approach life. Otherwise, at least for me, I'm kind of a sucker for frameworks and for principles because I like boxes and I like things logically, systematically flowing together and making sense. When I don't approach it, when I'm like frameless or box list in terms of my approach, I always feel like I'm dangling over an open abyss and I really don't like it. I like to have a target.

Seth: Yeah. I don't think you're alone in that. That's having a way to make sense of situations in life in general. It’s very useful for all of us. It makes sense to me.

Jaren: Well, that got really good. That was a great conversation. I did not expect that. I enjoyed that.

Seth: Yeah, me too. And for those of you out there who are atheist and agnostic, I really hope you don't take this conversation as judgey. That's not at all where I was trying to go with that. I was just trying to explain the lens through which I view the world and what's worked for me.

Jaren: Yeah. I don't think you came across as judgmental at all, Seth, just to throw it out there. I think you were very open-ended, but you never know in this day and age everybody's offended about something.

Seth: Yeah, you're also on my side, though. So, it would be easy for you to not see it that way. Just in case somebody vehemently disagrees with where I'm coming from, that's not what I was trying to do. Again, if you guys want to check out the show notes, retipster.com/133. We will look forward to talking to you guys again in the next episode. Talk to you next time.