Q&A: Would You Spend $60,000 on a Wedding Knowing It Could Be $800,000 Someday?

Summary

Afford Anything | Get Smarter With Money

Episode: Q&A: Would You Spend $60,000 on a Wedding Knowing It Could Be $800,000 Someday?

Release Date: July 28, 2026
Host: Paula Pant
Co-Host: Joe Salcehai
Guests/Callers: Mike (Kansas City), Abby (repeat caller), Leia (Luxembourg, pseudonym for anonymity)

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Episode Overview

This Q&A episode tackles major life and money decisions, focusing on big-ticket spending (like a $60k wedding), the nuances of retirement planning with pensions and multiple accounts, and the behavioral versus mathematical sides of investing. Paula Pant and Joe Salcehai blend expert analysis with first-principles thinking, never shying away from behavioral finance or the real-life trade-offs involved in achieving financial freedom.

Three listener questions drive the conversation:

1. Mike: Is his family on track to retire in 12 years?
2. Abby: Is it “un-FI” to spend $60,000 on a destination wedding when she could invest the money?
3. Leia (Luxembourg): Should she keep paying fees for a private pension or invest on her own—with the risk she'll dabble in individual stocks?

Paula and Joe break down the numbers, challenge the guilt and “rice and beans” mentality of FIRE, and continually return to the question: What actually makes you happy and helps you build wealth?

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Key Discussion Points & Insights

1. Setting the Table: Introducing Listeners’ Questions

• The episode opens with playful banter about Joe’s “nightmare” wedding spending experience, underscoring the diversity of approaches and family dynamics around major spend decisions. (00:00-02:14)
• Paula outlines the episode: three major questions, each touching on a pillar of financial freedom.

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2. Mike’s Retirement Plan: Is His Math and Approach Sound?

Caller: Mike, 51, Kansas City (06:30)

Situation:

• Mike, a grad-school professor with a military spouse, wants both partners to retire in 12 years, around ages 63 and 55.
• Their portfolio:
  • Roth IRA: $300k
  • Pre-tax accounts: $300k
  • Taxable brokerage: $70k
  • High-yield savings: $40k
  • 529 college plan: $20k
• Military pension (projected): $80k/year.
• Health insurance covered via Tricare.
• Projected annual expenses in retirement: $120k; plan provides $160k.
• Concern: Are they missing anything? What’s the “Achilles heel”?

Discussion Highlights:

• Tax Diversification: Mike is praised for a diversified “tax triangle,” balancing Roth, pre-tax, and taxable money—a strong foundation. (06:30-07:00)
• College Timing & Sequence of Returns:
  • Paula emphasizes the risk of commingling college expenses and retirement withdrawals, both hitting within the same 4-year span—a classic “sequence of returns” risk zone. (08:00-09:24)
  • “That’s when sequence of returns matters most.” – Paula Pant [09:10]
• Timeline Mapping: Joe urges creating a visual timeline to clarify when funds are needed for overlapping goals, nudging Mike to keep college and retirement withdrawal plans separate. (09:24-11:17)
• Emotional/Behavioral Factors: Discusses purpose after retirement; a child in college can help smooth the adjustment. (11:21–12:39)
• Portfolio as One: Both hosts agree: Since retirement is simultaneous, treating all accounts as one joint nest egg is efficient—for both tax and investment allocation reasons. (13:03–18:29)
  • “If she’s got a great bond fund and he doesn’t, then over-contribute to… be over-exposed to bonds in her portfolio and don’t put any in his.” – Joe Salcehai [16:20]
  • Asset location should prioritize tax treatment over account holder. (18:04–18:29)
• Health Insurance & Survivor Benefit: Paula reminds that Tricare isn’t free and raises the question: what survivor benefit is attached to the pension? (13:38–15:34)
• Assessing the Achilles Heel: Joe pinpoints inflation and overestimating returns (using a 7% return as a fixed assumption), and urges Mike to chart annual milestones to ensure progress is on track, allowing for course corrections. (21:47–26:32)
  • “Inflation is a bear…your expenses take more of a bite out of retirement than you’d expect.” – Joe [21:51]
  • “Course-correct.” – Joe [26:32]
• Additional Advice:
  • Paula suggests opening a 530A plan (Invest America/Trump account), for further tax-advantaged education savings. (26:34-28:24)

Summary:
Both hosts agree Mike’s plan is robust. The biggest risks are sequence of returns around concurrent college and retirement spending, and relying on optimistic return/inflation assumptions. Tracking milestones and reassessing annually is key.

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3. Abby’s $60,000 New Zealand Wedding: Is It “Un-FI” to Spend Big on Life Events?

Caller: Abby (repeat caller – grad school, first job, now wedding) (31:15)

Situation:

• Planning a destination wedding in New Zealand. Cost: $60,000.
• Investments: $800,000.
• Income: $400,000/year.
• They can cash flow the wedding.
• Internal guilt: Should they invest the money instead ("FI math")?

Discussion Highlights:

• Rejecting FIRE Guilt:
  • Joe rails against the misconception that the FIRE movement = “rice and beans” deprivation. “Cheapening your life does not make it better…That piece of the FIRE movement needs to be shown the door.” – Joe [33:30]
• Purpose of Money:
  • Paula reframes wealth: “The point isn’t to amass zeros on a statement...Money is a manifestation of your values and priorities.” [34:32]
  • Spending on meaningful experiences is not inherently wasteful.
• Opportunity Cost Revisited:
  • Paula counters the “what could this be worth in 40 years?” argument. If your alternative uses are trivial, the trade-off isn’t real. Build the life and memories you want now.
• Don’t Equate Money with Quality:
  • Joe cautions: “I saw some really expensive weddings that were not awesome and some really inexpensive ones that were super awesome… Don't make the mistake of equating more money with a better experience.” [37:33–38:06]
  • Focus on the experience you want, not hitting a savings goal for its own sake.
• Behavior-First:
  • Joe shares: “All the years I was a financial planner, I’ve never heard anybody say, I wish I would have spent more money on my wedding. What I have heard is, I wish I had a more beautiful day.” [39:23]
• No Guilt If It’s Affordable:
  • If the future is secure, spending on life goals is justified. “If you had come here and told us you want a $60,000 wedding but your future meals for next week are uncertain…our answer would have been hella different.” – Joe [45:18]
• Takeaways:
  • If you can afford it, and the expense reflects your priorities, there is no financial sin.
  • “Solve for happiness. That’s the takeaway. We’re not solving for zeros, we’re solving for happiness.” – Paula [45:10]
• Listener Stories:
  • Joe shares a chat comment about a fun $1,800 Vegas wedding—proof cost ≠ value.

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4. Leia in Luxembourg: Private Pension (High-Fee, Auto-Invest) or DIY?

Caller: Leia (alias), Luxembourg (49:12)

Situation:

• Immigrants, early 30s, working and investing in Luxembourg.
• Private pension: €534/mo, 1.2% annual fee, invested in mutual funds; commitment for 10 years; tax savings of €1,500/year.
• DIY Alternative: Invest directly in ETFs for lower fees, but worried they’ll get tempted to buy individual stocks and lose discipline.

Discussion Highlights:

• Behavior vs. Math:
  • Paula and Joe both spotlight the critical trade-off between mathematically optimal choices and realistic behavior. (52:49–55:20)
  • “This is very much a question about knowing yourself…If you end up buying into individual companies…then that outcome is much worse (than paying higher fees).” – Paula [55:20]
• Fees as “Insurance”:
  • Joe reframes the 1.2% as an “insurance fee”—a price for ensuring your future self stays on track (especially if structure and friction help). (61:33–62:29)
  • “Just knowing how much knowing yourself matters more than the fees. In this community, we worry so much about the fees.” – Joe [55:20]
• Habits & Automation:
  • Paula’s hierarchy: automate first, habits second. Simple automation (to ETFs) doesn’t always prevent later tinkering.
• Slippery Slope—“Un-Automating the System”:
  • Paula mentions how people set up automations but then override them. Joe gives a cautionary story of clients who drained a forgotten $90k fund once they “saw” the money. (58:30–61:16)
• Look at Local Context:
  • Joe urges Leia to research what happens if she leaves Luxembourg (can she access the account? Tax traps?). Every plan has an Achilles heel.
• The Core Lesson:
  • “A big part of money management is admitting that human nature is flawed and fallible. Designing a plan that recognizes that, and having safeguards accordingly, is wise. If that fee is the ‘I’m imperfect’ fee and it leads to the outcome you want, then it is well worth it.” – Paula [61:56–62:39]

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Memorable Quotes & Moments

• On FIRE and Deprivation:
  “Whoever started that piece of the FIRE movement needs to be shown the door. Cheapening your life does not make it better.” – Joe Salcehai [33:58]

• On Money’s Real Purpose:
  “Money is a physical manifestation of your values and priorities.” – Paula Pant [34:32]

• On Experience over Assets:
  “We do underestimate time. We overestimate assets, and we underestimate time, which is this precious, non-renewable asset.” – Joe [43:28, again at 71:33]

• On Guardrails and Fees:
  “Think of the fee as your...insurance that guarantees you don’t mess with it. That is like the payment you make to keep it safe from human impulse.” – Paula [61:33]

• On Happiness and Enough:
  “All the years I was a financial planner, I’ve never heard anybody say, I wish I would have spent more money on my wedding…What I have heard is, I wish I had a more beautiful day.” – Joe [39:23]

• On Real Risk in Retirement:
  “Inflation is a bear…your expenses take more of a bite out of retirement than you’d expect.” – Joe [21:51]

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Timestamps for Key Segments

• Mike’s Retirement Plan: 06:30–29:02

  • Sequence of returns/college overlap: 08:00–13:02
  • Asset allocation & survivor benefits: 13:03–18:29
  • Milestone planning & course-correcting: 21:47–26:32
  • 530A account addition: 26:34–28:24

• Abby's Wedding Dilemma: 31:15–47:02

  • FIRE guilt/culture: 33:30–34:32
  • Purpose of money, not just accumulation: 34:32–36:09
  • Weddings: money vs. happiness: 37:33–39:23
  • Joe’s planner anecdote: 39:23–40:47
  • On guilt and “if you can afford it”: 45:18–45:43

• Leia’s Luxembourg Pension / Fees vs. Behavior: 49:12–67:53

  • Know yourself, temptation, and fees: 52:49–62:39
  • The “imperfect fee”: 61:33–62:39
  • Checking exit risks (leaving Luxembourg): 62:39–63:46
  • “Mathematics vs. your own nature” (mortgage payoff example): 64:09–66:12

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Key Takeaways

• Retirement Planning: Visualize timelines for major simultaneous expenses; prioritize risk management over optimizing for returns alone.
• Spending on Life Events: No guilt if you can afford it and it reflects your values. Happiness, not just account balances, should guide your financial plan.
• Behavior vs. Math: It's smart to factor in your own behavioral quirks—even when that means paying for structure or accountability.
• Course Correction: Annual milestones let you adjust as you go. Don't fixate on projections; focus on adaptive planning.
• Money is for Living: “Plan for the future; don’t live in it.” Delayed gratification is only helpful up to a point; enjoy key experiences in their rightful window.

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Final Note

Listener action item: If you’ve got questions on the five pillars—financial psychology, increasing income, investing, real estate, entrepreneurship—submit your questions to Afford Anything and download the free interactive FIRE workbook at affordanything.com/FIIRE.

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For more, catch Paula, Joe, and guests on Afford Anything every Tuesday and Friday—no surface-level tips, just deep dives on the decisions that actually build wealth and happiness.

Transcript

[Paula Pant]

Joe, how much did you spend on your wedding?

[Joe Salcehai]

Oh,

[Paula Pant]

you were not expecting that question.

[Joe Salcehai]

It's like, wait, I have blocked it out. It is a nightmare. Personally, I did not spend a lot of money. My father in law spent the money, did not share with me how much money that he spent. He and my mother in law, I guess, spent together. I remember there was consternation about how much is being spent around every corner

[Paula Pant]

there was that passive voice. There was consternation. There was consternation was had. Right.

[Joe Salcehai]

As if we hadn't created it somehow. There was constant. I don't know who created that, but we did get lucky. I mean, Cheryl's uncle had a beautiful place that we could get into for free. I was required by my father in law. If I wanted entertainment, I was going to pay for it.

[Abby]

And.

[Joe Salcehai]

And if I wanted limos, like for the wedding party, like, I was paying for that too. So for me it was the cost of a DJ who I knew and liked and the cost of a limo.

[Paula Pant]

So now you were a dj. You were a DJ at the time.

[Joe Salcehai]

And that was cool. I hired my favorite competitor. I had one big competitor that I hated. They got all kinds of gigs because they had great advertising, but they sucked. They were horrible. And then I had this other guy who was phenomenal, just a fantastic dj and I was so excited to have my favorite competitor DJ my wedding.

[Paula Pant]

That's amazing. That's amazing. And that's a great spend because, you know, you know that scene, you know the industry, you know the players.

[Abby]

Yeah.

[Joe Salcehai]

Our wedding was a blast. We were. Cheryl and I were middle school coaches. So we had a dinner with our family. And then when it was time to cut the cake and to party, we had our teams come join us. So my wedding reception was flooded with seventh and eighth graders. Oh, it was so awesome. It was so awesome.

[Paula Pant]

Amazing. You were track and field coaches.

[Joe Salcehai]

Yeah, we were track and field coaches.

[Paula Pant]

Nice. Nice. Well, we are going to answer a question today in the middle of the episode.

[Joe Salcehai]

Oh, this isn't just about me and my wedding. I had the slides ready to go after.

[Paula Pant]

That'll be the after show.

[Abby]

Okay.

[Paula Pant]

But in the middle of the episode, we're going to answer a question from someone who. She's having a wedding in New Zealand and wants to spend $60,000. Is that a good deal? Yay. Nay. Pros, cons, we're going to discuss that. That's mid show. Before that we're going to talk to Mike. He wants to retire in 12 years. And after that we're going to talk to a listener living in Luxembourg who has a question about what is behaviorally right versus what is mathematically right. All of that is coming up right now. What do you think, Joe?

[Joe Salcehai]

Wow. Okay, we stretched out. Buckle up, we're ready to go.

[Paula Pant]

Welcome to the Afford Anything podcast, the show that knows you can afford anything, not everything. This show covers five pillars, Financial psychology, increasing your income, investing, real estate and entrepreneurship acronym Double I fire. I'm your host, Paula Pant. I trained in economic reporting at Columbia. Every other episode ish I answer questions from you and I do so with my buddy, the former financial planner Joe Salsihai. What's up, Joe?

[Joe Salcehai]

I had a horrible morning this morning, Paula.

[Paula Pant]

What happened?

[Joe Salcehai]

Well, I found out my toaster wasn't waterproof and I was so shocked.

[Paula Pant]

With that we go to our first question which comes from Mike.

[Mike]

Hi Paula and Joe. This is Mike in Kansas City. I'm 51 years old, professor in graduate healthcare education. I also do some contract patient care and coaching consulting on the side. So pretty reliable income. My spouse is 43 years old. She's in the service in one of the unarmed branches. So also reliable source of income. For a variety of reasons, we were a little bit late to the game of becoming parents, but we now have an eight year old daughter. So we've got a little bit higher cash flow needs, I think than most people our age. Based on the age of our daughter as it relates to our accounts. I want to give you the numbers of what we have currently and I've combined both of our accounts into one and I'll tell you kind of my thinking for that and ask Paula's opinion if I'm approaching that thinking correctly. Roth IRA between the two of us we have 300k pre tax. Between IRA 403 and TSP, we have 300k, 70k in taxable brokerage, 40k in high yield savings. It was higher but life happened. We are aggressively replenishing that 20k in a 529. We're adding a little bit to that, but really not prioritizing it. A couple other key factors. Spouse is eligible for military pension. Technically she can retire in five years, but if she stays in longer, pension goes up. So I'm estimating her pension will be $80,000 a year when she retires. We also get health insurance covered via Tricare. I'm estimating that we'll need about $120,000 per year initially in retirement because I'm including budgeting to assist with college expenses. My question then, am I Approaching the overall retirement planning correctly, can I plan for both of us to retire in about 12 years? That puts me at 63, my wife at 55, and in doing so, it makes it easier for me to look at all of our retirement accounts as one lump portfolio or one joint portfolio. Most of the Roth money is mine. About 90% of the Roth is mine, so we'd have access to that by the time she hits 55. And her retiring at age 55 would give us access to her tsp. So again, am I looking at this correctly, that we can, if we retire together in 12 years, that this is all one portfolio? If that's correct, I've calculated a retirement portfolio of about 2 million. Assuming a 7% rate of return and conservatively investing 2,200 per month. Then my question, kind of a Joe question, because he always talks about, well, every plan has an Achilles heel. What could be the Achilles heel in this plan? So if I'm looking at annual expenses of 120,000, this plan has us at 160,000 a year. ADK pension, ADK withdrawals and health insurance is covered. So I'm wondering what am I missing here potentially? Thanks so much. Learned a lot from both of you and appreciate any input that you have.

[Paula Pant]

Mike, thank you for the question. The first thing I would say is congratulations on all of the incredible planning that you've done. It's clear from your question that you've done a great job thinking through this, lining up everything, getting all of your ducks in a row. Kudos to you. Big congratulations to you for doing all of that. Joe, I'm just going to dive right in. Joe and I did not discuss our answers in advance, so I'm curious, Joe, to hear what you're going to say. But I'll dive right in with the first things that I noticed right away. Number one, you've done a great job of diversifying the tax triangle. And so I think big thumbs up in terms of tax diversification, of having different buckets of different tax treatments. I think you've done a great job there. I noticed there is not a lot of money in the 529 account. I'm curious as to why. Your daughter is 8 years old. She's going to need the money starting in 10 years and then running between 10 to 14 years from now. Given that she'll need it starting in 10 years and through to year 14, that means that her sophomore going into junior year is right at that moment 12 years from now when you want to retire. That's when sequence of returns matters most. You know, in the two years prior to retirement, you know, it's your retirement date. Plus minus two years is the window of time when she's going to college. Assuming I guess that's an assumption that I'm making. But assuming you that she wants to and that you want her to go to a four year college and to begin that at the age of 18, assuming that that means that her college experience is going to be your retirement date, plus minus two years, which is one sequence of returns makes the biggest impact. And so that is the number one thing that I would be protecting for. You did mention that you are a college professor. There is a possibility that she has some type of a discount if she enrolls at the same university that you teach at. You didn't say that in your question. So I don't want to make that assumption. But I'll also just kind of put that asterisk here because guess my question back to you is, does she have some type of a benefit if she were to go to the university that you teach at? If so, is that the reason that you're not putting more money in the 529 plan? And if that is the reason, how certain do you want to be that she will go there? You know, do you want her to have the opportunity to go somewhere else if that is a better fit? Those are my questions back to you. And again, I would not it sounded like from the structure of your question that you're thinking about retirement drawdowns in the context of using a portion of those early drawdowns to pay for her college. But again, given sequence of returns, I would probably not commingle retirement drawdown planning with the college bucket. I would, from a planning perspective, keep them separate.

[Joe Salcehai]

I'm a little worried about sequence of returns risk. I'll get into that because as you know, Paula, I think sequence of returns is the second domino. I think he's far enough away from the jagged edge of a safe withdrawal rate that I'm not as worried about that. But those first two years I am for the very same reason, which is that his expenses could balloon because of the fact that he's has this at the same line. And this is the importance of when people would come into my office and they would tell me a list of different goals to draw them out on a timeline. Like when you put them out on a timeline together. Paula, you nailed it. A lot of people would come to my office, they wouldn't realize, oh my goodness, she's Going to be a junior in college the same year I want to retire. You can already see that that's going to change cash flow. There's also a cool part to this though, which is, you know, a lot of studies now on retirement though, talk about if you can at all tiptoe into retirement and a lot of people don't get the chance to. But if you do get the chance to tiptoe into retirement, that's, that's actually better. And so those first couple years where your daughter is still in college and you're training your spending for the rest of your life as you transition, having that transition in the middle of it I think might actually be a good thing. It might be a decent thing to help you cope with this new lifestyle that you have. Because you're automatically the big thing people have a problem doing is replacing the things in their life that they were doing with other things. And now like friends of mine with kids in college right now, they're, you know, you want to leave your child alone. You don't want to be helicopter mom or helicopter dad, but you know, once a quarter they're off to the university to go visit junior and see how she's doing and take her and her friends out and they're corresponding, they're sending care packages, they have this and then

[Paula Pant]

she's flying home for Thanksgiving and Christmas and. Yeah, right.

[Joe Salcehai]

So there is this little bit of help with one of the biggest problems in retirement, which is what is my purpose once I've done working.

[Paula Pant]

Oh, I didn't, I thought you were going to take that into a different direction. I thought it was going to be what is, what is my spending look like during that four year window when my daughters in college? Because there's going to be all of that. In addition to the college fees and the things that are planned, there's going to be all of that additional travel.

[Abby]

No.

[Joe Salcehai]

100%.

[Paula Pant]

Yeah.

[Joe Salcehai]

The cool thing there is that you will train your spending to be a little more frugal because of the fact that you have money going, going out as a guy who had twins, go to college at the same time, you will have money going out the door, actually.

[Paula Pant]

And as we talk through this, it just occurred to me, if as a university professor, if she were to go to the university that you teach at, and if there is a discount associated with that, does that persist even if you were to retire, is that contingent upon employment? You know, like what are the conditions that the university would set? If that is even a factor at all. I Say this because my, my dad was a professor at the University of Cincinnati and he very much hoped that I would go to the University of Cincinnati, which I did not because, you know, it would have been a lot cheaper if I had. But I very much did not want to go there.

[Joe Salcehai]

It's a great school.

[Paula Pant]

Yeah, it's a great school. But the idea of living at home and commuting to college with my dad every day was like, yeah, you know, I, I think time for the next thing. Yeah, exactly.

[Joe Salcehai]

That was me too. Part of the experience of going to the Citadel was just being halfway across America, you know, and not that I don't love my family, love my family, but I just needed to learn how to be independent.

[Paula Pant]

Right, exactly.

[Joe Salcehai]

Yeah. The reason, Mike, that we're having this discussion, and I don't want to put words in your mouth, Paula, but because you started here, I think you kind of felt like I do. He said we're not really prioritizing that or something to that phrase. When he said 529 plan, we're not really prioritizing that or we're not putting a lot of money into that. And I immediately, the flag went up in my head too, like why this is a big hurdle that you're going to have that's coming up at the same time as retirement. What about his idea of thinking of all assets as one portfolio?

[Paula Pant]

I like that. Given that they are going to be retiring at the same time, you know, or given that that is the plan. I like viewing everything as one cohesive portfolio and planning from that, that framework. There are a couple of things that he said though that I would want to put a flag in. He said, you know, health insurance is covered by Tricare and that's awesome. Tricare is fantastic. But Tricare is not free. So Tricare does have fees and cost shares associated with it. And when you're 65, you're going to be paying Medicare Part B premiums. So you will need to set aside some money for health care costs. Like it's Tricare is wonderful but your health related costs are not going to be zero. I would make sure that you do that planning. The other piece of it though is the $80,000 pension. What is the deal with the survivor benefit plan? If they elect the survivor benefit plan, then the surviving spouse gets a bigger payout. If they don't, then if she dies first, then the plan vanishes. And so that's something that I would be cognizant of planning around like with regard to that pension. What Is the what is the first to die survivor benefit setup?

[Joe Salcehai]

Well, and that's important to know for another. At first I'm like, why is she talking about him dying? But then I realized that what you're talking about is the pension estimate that he's thinking might not be actually what they received.

[Paula Pant]

Well, that's not where I was going with that. I was just going with if she dies first and they don't elect into the survivor benefit plan, then he doesn't get the pension.

[Joe Salcehai]

Right. But the amount that you have on the pension estimate, you want to carefully look at what that assumption is. That's where I thought you were going, which is now where I'm going.

[Paula Pant]

Yeah. And if they do elect for the survivor benefit, how is that going to impact the payout?

[Joe Salcehai]

Right. Because he's thinking that his plan's based on $160,000 a year and maybe it's not. Maybe the pension's going to be less money. I like looking at it as one portfolio for a host of reasons, Paula, the first of which is whenever I saw people's 401k plans, some had areas that were really good and other areas stunk. And what would happen was invariably when people would come to see me, they would have these two perfectly allocated pies. So hers is completely allocated with, let's say large companies, small companies, international companies, maybe some bonds, whatever it is. Right. Just kind of a traditional allocation. And then his would be large companies, small companies, international bonds. But the bonds funds in his stink and the international fund in hers stinks. So instead what we would do is a couple things. First of all, since it's our money, it's both of you, it's both of your money. If she's got a great bond fund and he doesn't then over contribute to and be over exposed to bonds in her portfolio and don't put any in his, and now you get the benefit of the good bond fund in hers and you can just eliminate the bad bun fund. His and likewise with the international. If he's got great international, she doesn't have good international. Now he looks loaded up. So if anybody went and looked at his statement, are you crazy? Look at how much international you have. Well, then you can answer. Well, this is my entire portfolio of international because it's the best international fund we have at either of our workplaces. So I like it for that reason. But I also like it because going back to the timeline, Paula, if you begin lining up money to when you're going to spend it, their age Difference is going to play a piece of this. His money could be the more conservative end of the buckets because they'll be the first money that you go to, which means we shouldn't see anything remotely conservative in hers because of the fact that we have. Now we have to pay attention to your risk tolerance, as I say that. But assuming that you have a moderate talents for risk, your most aggressive money should be in hers because that has the longest time to grow. If you plan on it where you're going to go through our money and his money first and then her money later on because she's younger.

[Paula Pant]

Would you be thinking about asset location based on the name that the account is on, or would you be thinking about asset location based on tax treatment of the account? Because I would. In the hierarchy waterfall, I would be prioritizing tax treatment first. Unless you're specifically earmarking a particular account to to be tapped prior to when she turns 59 and a half.

[Joe Salcehai]

When you get close to the time that you're going to spend the money, most of asset location stuff will tell you not to put your most conservative stuff in the place where you should put it, that it's easiest to get because you're going to cost yourself more in taxes. Yet it's far easier to get at the money in a brokerage account than it is to pull it out of one of these retirement funds. Now, if you're going to live on a fixed income, it's fairly easy. Like we would set something up, you know, where you're taking money every month out of your ira, right? Just the IRA sends off a check, withholds taxes. Boom. So you could do it that way. I suppose, if you're comfortable with getting a check that's closer to a pension or getting a distribution that's much more like a pension. The problem with that approach, Paula, is that we would have people that would set those up because asset location matters. They would then have this automatic withdrawal and then they go through a period where they just don't spend any money. And so they end up costing themselves a bunch of money in taxes by pulling the money out of the retirement account to, quote, spend, and then they don't spend it. So I don't know. I'm not as excited about that part of asset allocation as I am, you know, when I think about this. So I think, number one, the brokerage account, right. Most flexible. So that will probably be your most conservative money. But then I look at his Roth and her Roth and I look at his 401k and her 401k. And I think I'm gonna want a Roth to smooth over tax brackets while we're taking his money out. And then I'm gonna want Roth money to smooth over tax brackets when we're taking her money out. So I kind of look at her Roth as the way we smooth over her money, which I think of as the longest term money. His is the medium money with his Roth and her pre tax, then the brokerage account, probably most conservative because it's easiest to tap. But, you know, I think like anything, as you can see, we're developing questions. How do you live? How do you take money on a monthly basis? Are you somebody that's going to be much better. We're going to cover this again later on in the show with another person where it's your behavior that really matters. Right?

[Paula Pant]

Ah, that's going to be our final question.

[Joe Salcehai]

Yeah, you like that foreshadowing, people? That's what it's called.

[Paula Pant]

Spoiler alert.

[Joe Salcehai]

Yes. This is the way all the pros do it. Right?

[Paula Pant]

Coming up later on this podcast, we will be talking about.

[Joe Salcehai]

So I think for the most part, you still get great tax treatment on those assets. And I think we get better asset allocation because we're focused more on when we're spending the money, when that dollar is going to be spent.

[Paula Pant]

Yeah. I will say overall zooming out in terms of your readiness for retirement. I mean, you're planning on a $2 million portfolio in addition to also having this pension. So I'd say you are easily more than ready, particularly given the security of the pension. And even if you opt for the survivor's benefit and the pension is not 80 per se, the portfolio is already strong enough that you've got the portfolio, you've got the pension. The only thing that worries me is the major thing that worries me is sequence of returns, risk around your daughter going to college. Beyond that, I think it's very strong.

[Joe Salcehai]

I love talking about the Achilles heel.

[Paula Pant]

Joe's like, I disagree.

[Joe Salcehai]

Well, I don't completely disagree, but he did ask the question, like, what's the Achilles heel? And so I think the Achilles heel is two things. Number one is I love the fact that he said our lifestyle is going to be $120,000 initially. Because my first thought is, even during the 16 years that I was in the trenches with people, their financial plan, we saw their spending go up just to keep up with costs. So inflation is a bear. So I don't know if, Mike, if you did this using professional Software, because inflation is surprisingly robust, even if in a 3 or 4% number. And your expenses take more of a bite out of your retirement than you would expect. So that's, that's number one is you referenced inflation. So I think the answer is going to be, yes, I'm going to be fine. And by the way, I do think you're going to be fine. So I should have probably led with that, but instead of doom and gloom, might have led with that. But I want to do that. I wouldn't just take Paul and Joe's word for it. And then the second thing is, you know, what's the second Achilles heel? 7%. I mean, 7%, it, it doesn't matter how low your rate of return is. We've had years where we've had negative 20 before. It has been a long time since 2008. Yeah, we could have another black swan event on our doorstep any day. And we're kind of lucky that we haven't for this long. So 7%, no matter what you do. And by the way, I think it's prudent that you said 7%. I would have done 7%, but it still is an Achilles heel. So here's what we would always do in our financial planning meetings. I would build milestones between here and that 2 million number. Where do I need to be every year to get there? And let's say, Paula, you're my client and we come in and right now you're at 750,000 ish, let's say. And we get together and it's a year from now, and you need to now be at 8005000 and we add up all your stuff and you're at 815,000. Well, now we know we can do a few things. Number one is you could save less money today, which is really cool. Number two is you might be able to project an earlier retirement if you want it. Number three is you could save the same amount, but save it for other things. Let's say you like to travel, you want to travel more today, you're not prioritizing the 529. And you realize, listening to what Paula said at the beginning of this, that you should now you divert some money toward another goal. Or you can just keep the status quo and keep building ahead, knowing that you now have flexibility for what happens in future years. When 7% doesn't happen, you have a lot of options. It's the same if you get behind. So if you have to have 8, 10, and you're only at 780. Well, now your options are, should I save more money? Do I ask for a raise? And then how do I come up with that money? Do we need to spend less money? Do we cancel stuff? Do we go ahead and realize that we have a deficit now? Do I retire later? Right? Do I now retire later? Do we. You know, my daughter didn't want to go to my university where I work, but now she's going to. I don't, I don't know what the, what the options are. But again, you've got a lot of options, and the options are better, Paula, when you're looking at it 10 years before.

[Paula Pant]

Right.

[Joe Salcehai]

That you're not on the timeline than if you wait until two years before. So I love these milestones along the way. And I think that you're still far enough away that having that 7% number, I would just make sure that you're on it. And if you're not on it, what I like is, is that every time you look at whether you're ahead or behind, you then are in the driver's seat versus without that timeline. Here's what, here's what people want to talk about when they came into my office. What's going on with these politicians. There's a new thing about Social Security, what happens about interest rates, all this crap that's out of your hands. And I would go, okay, let's talk about that later. You need to be at 810,000. Where are you? And immediately my client would go, oh, I'm at. Let's see, I'm at 785. Oh, so do you think you should save more? You can control that, right? And then we start talking about how to do it, and all of a sudden you put away all this crap that you can't do anything about, and you focus on you and the goal.

[Paula Pant]

So essentially, Joe, what you're saying is that you've got two levers. One lever is your returns, the other lever your contributions. And so 7% is a great assumption, but check in with it. Make sure that you're hitting minimum seven. And if you're not, then you have to pull the other lever.

[Joe Salcehai]

Yeah, you got it. Course correct.

[Paula Pant]

Right. On the topic, Joe, of what's going on in the news, there is another piece, Mike, that I want you to pay attention to. And it is in addition to the 529 plan, there's also something called the 5 30A plan. 530A is also, depending on what side of the political aisle you fall on, 50% of the population refers to it as a Trump account. And the other 50% of the population refers to it as the Invest America account. If you're in the financial planning industry, you would call it the 530A account. So that's simply how I will refer to it. But your daughter is eligible for that. Anybody with a Social Security number who will be under 18 at the end of this calendar year, it is eligible for. You can open a 530A account for that person. So I would strongly encourage you to open and contribute to a 530A account. Now, your daughter is not eligible for the government contribution of 1000, which is why a lot of people erroneously believe that this account is only for babies. That's actually not the case. The 1000 is only for babies. But if you're a minor under the age of 18, you can have a 530A account. And the tax treatment on this is absolutely incredible. So I would, in addition to the 529, open that account for your daughter, contribute to it. Your family, friends, your workplace, anybody else may contribute to it as well. There's up to an annual limit of $5,000, but it's an opportunity for your daughter to be able to grow massively tax advantaged money. Like just massively, massively tax advantaged money.

[Joe Salcehai]

I love the attention that you've given this, Mike, and the things that you've thought of, you know, the fact that you think that you can exist on 160,000. As we've talked about before, Paula, I believe strongly that staying away from that jagged edge of the safe withdrawal rate just a good idea for being happy because then you don't have to worry about whether your withdrawal rate remains safe as much. So I find that great. I think the questions he's asking are the right questions. Do I think about it? Is our money or separate funds? I like all the planning he's doing good stuff. Wonder about 529 plan like you do, but there's gotta be a reason for it. We just don't know.

[Paula Pant]

Yeah. Well, thank you, Mike. Thank you for the question. And please call us back with an update. Call us and let us know how this plan progresses. We're going to take a moment to hear from the sponsors who make this show possible. When we return, we're going to hear from someone who is planning a wedding in New Zealand, wants to spend $60,000 on it and is wondering, is that smart? Is that a financially savvy thing to do? That's up next. In business, there's no room for guesswork. Every shipment matters. Every deadline counts. When you're trying to keep operations running smoothly, the last thing you need is uncertainty. That's why reliability is at the core of USPS Ground Advantage. From the moment your package is first scanned in, it moves through a secure nationwide network, aiding in a timely and accurate delivery. You get near real time tracking so you can keep up with your shipments. And with affordable upfront pricing, there are no hidden fees or surprise surcharges to throw off your cost sheets. It all adds up to predictable deliveries you can depend on because knowing your logistics are handled lets you focus on everything else your customers, your team, and the future future you're building. Visit usps.com groundadvantage to start shipping with confidence. USPS Ground Advantage We Mean Business

[Mike]

this

[Paula Pant]

episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales using automation, analytics and smarter workflows to simplify campaign delivery and access better data across the business.

[Abby]

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[Joe Salcehai]

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[Abby]

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[Joe Salcehai]

Learn [e-mail] Spotify.

[Paula Pant]

Welcome back. Our next question comes from Abby

[Abby]

Hey

[Joe Salcehai]

Paul and Jo, My name's Abby. I'm a repeat caller. I called you when I first went to graduate school to ask about investing for that and then I also called you after I got my first job and now I'm calling you to ask about my wedding and before you can toast, your spin drifts in support of my nuptials. I was wondering, do you guys have a rule of thumb or advice on how much to spend on a wedding? Perhaps a rule based on percentage of net worth or of income? My husband and I are tentatively planning to have our wedding in New Zealand, which will be at an all in cost of around $60,000 which we can cash flow. We have investments together in the range of $800,000 and we have an income of $400,000. It feels very much against the FI mindset to spend this much on a wedding, but I've worked hard and picked up a lot of overtime to pay for it. However, I know if we invested that money it could be worth in 40 years. Can't wait to hear your advice. Thank you so much

[Paula Pant]

Abby. First of all, I love that I've been there through so many milestones and moments in your life. That is so beautiful to have been part of going to grad school and and getting your first job and now your wedding.

[Joe Salcehai]

Now he's getting married.

[Paula Pant]

Google ran this ad once. It was just an ad for Google. I don't know why they run this. Everybody knows what a Google search is, but they were basically just running an ad for the Google search bar. They ran that ad by showing this set of, like, search queries that was like, study abroad in Paris. And then it was like, how do I ask a girl out in French? First date ideas.

[Joe Salcehai]

Oh, the whole timeline.

[Paula Pant]

Know where this is going? You see the whole progression. Visas to France.

[Joe Salcehai]

Oh, that's wonderful.

[Paula Pant]

Wedding rings, you know, and then. Then the final one was like, how to assemble a crib. Right? So it was like a. This very, very cute ad that showed how you use Google searches across these milestones of your life. And I got vibes from that when. When Abby called and talked about.

[Joe Salcehai]

That's so cool.

[Paula Pant]

Yeah, that's great.

[Joe Salcehai]

I love this question. And before we answer it, though, I do want to talk about something that. Abby, the same thing that you thought always frustrates me about the quote, fire movement is when people see the 5 lifestyle as rice and beans. And there is an element of that, and it is my least favorite part of it. I think we have to dispel this myth that cheapening our existence is a better life.

[Paula Pant]

Right?

[Joe Salcehai]

Whoever started that piece of the 5 movement needs to be shown the door. You need to take them and kick them out of the club. Because cheapening your life does not make it better. It doesn't. Less expensive can be better. We can even talk about that, because that's going to be part of my answer. But cheaper is not better. Oh, my goodness. Stop, stop, stop. But, but, Abby, that's not you. That's. That's my trigger with people who think that fire means I do less than what I could.

[Paula Pant]

Yeah. Abby, so honestly, when you said, you know, I know that that money, if invested at 7% for 40 years, would end up being. And the reason that I want to bleep that out is because it doesn't matter how much that money is going to be. What are you going to do with that? What's it for? The point. The whole point of money is not to amass more zeros in a bank account or in a portfolio in a brokerage statement, right? The point is to have dry powder, to have a set of tools that you can use in order to construct the life that you want to build, the memories that you want to do, the things that matter most to you. Money is a physical manifestation of your values and your priorities and so if this wedding is a priority to you, which it sounds very much like it is, then I don't care what that money would be 40 years from now, because there's nothing that you would otherwise spend on 40 years from now that would be worth more than what that is worth to you today. Let me use another example. I was talking to Joe, a mutual friend of both of ours, and we were discussing this question you often hear in the personal finance community of should you live in an expensive city like New York or San Francisco, or should

[Joe Salcehai]

you live in Texarkana?

[Paula Pant]

Texarkana, Texas. Yes. And he made an excellent point. He said, all right, calculate the differential and then ask yourself, what would you otherwise spend that differential on? If you would otherwise spend that differential on something extremely important, like, you know, if this is a your kids can eat three meals a day versus your kids can only eat two meals a day type of a scenario, and then obviously your answer is quite clear. You go to a lower cost of living place. But if you look at that differential and there's nothing in particular that you would necessarily spend it on, you're. You're kind of like, I guess I could get a nicer pair of jeans. I don't know, I could buy a few extra sweaters. I could order doordash a little bit more often. Like, what the heck are you going to do with that money? My TV would be marginally bigger than it otherwise would is. If you don't have anything that is a bigger priority, then why wouldn't you spend it on this thing that's going to be really influential? And so anyway, in that example, it's, where do you live? But in your example, it's, do you make this memory that you will have for the rest of your life or not?

[Joe Salcehai]

All right, can I have a slightly different take?

[Paula Pant]

Yeah, go for it, Joe.

[Joe Salcehai]

So the average amount of money that people spend, I went and looked it up, Abby, when you called, just because I didn't know. I haven't kept up in a place that many of us have heard of called the not keeps a running index of what the average wedding is in America. It's $35,000 in 2026. So $65,000 wedding should be a very nice wedding. Now, the thing that we referenced earlier in the show is that for 10 years, I was in the wedding industry.

[Paula Pant]

Oh, that's right. As a dj, I did weddings.

[Joe Salcehai]

I did fraternity parties. Like, I did everything. I did all kinds of events. But I saw some really expensive weddings. I was a piece of some really expensive weddings that were not awesome. And I saw some really inexpensive weddings that were super awesome. So what I wouldn't do is make the mistake of equating more money with a better experience, because they can be two different things. And the thing is, I'm sitting in a spot right now, and my daughter won't mind this. My daughter just got engaged. So we're about to have a wedding in our family, and we've been talking about this a lot, and not really about the budget as much as what makes a beautiful wedding, what do you want it to look like? And I think that's where you start. I think you start with, how is this a beautiful thing? Because if you're going to spend $60,000 on it, I would want it to be phenomenal. And I'll give you an example, a different example. I saw a TikTok video last week, Paula, where a guy paid $25,000 so that he could zipline into his own wedding and be unhooked from the zipline. And he said it was worth every penny.

[Paula Pant]

He must be a zipline enthusiast.

[Joe Salcehai]

Well, and I'm glad you made that point, because from where I sit, it looked like throwing money away. Like, seriously throwing $25,000 away for 10 seconds for me. But again, that's me versus him, and there is a difference. And it is your day. All the years I was a financial planner, I've never heard anybody say, I wish I would have spent more money on my wedding. What I have heard people say is, I wish I would have had a more beautiful day. I wish I would have had more fun that day. I wish I would have had more. And what I saw were brides that had spent a lot of money being pushed around by the help that they hired to make sure that it ran. And they were so into. Because they'd spent so much money, they were so into it being the perfect day for everybody else that they forgot that it was supposed to be their perfect day. Spend time making it your perfect day, not making it everybody else's perfect day. I don't have a dog in the fight, about 60,000 bucks. I don't. I have a huge dog in the fight when it comes to that $60,000 and having it work for you if you're going to do that. And I don't know it's as much about more money or less money as it is about, you know, talking to people that have been there, getting different professional opinions about how do I make sure that this is a great day for me And a great day for my guests.

[Paula Pant]

Yeah, I guess start with the wedding that you want and then don't let money be the friction that causes you to shortchange the vision.

[Joe Salcehai]

Yeah, and I also wouldn't have guilt around it, you know, the. To your point again, Paula, just to reiterate this, there's definitely some guilt around. If I, if I invested this money, it would be who cares, right?

[Paula Pant]

Who cares? Who cares? You know, somebody emailed me. This was many, many years ago, back when I used to write online frequently about world travel. I don't do that as much anymore. I mean, I still travel a lot, I just don't write about it. This is before remote work became popular. So at the time the zeitgeist was what was called location independence. And I remember getting an email from. This is back when I used to check my email.

[Joe Salcehai]

Oh, that was a long time ago.

[Paula Pant]

I remember getting an email from this guy.

[Joe Salcehai]

You guys don't know how funny that is. By the way.

[Paula Pant]

It's been like six years since I've checked my email.

[Joe Salcehai]

No idea how funny that is. You checked email?

[Paula Pant]

Once upon a. In my youth, Joe, in my youth. And so he was like, I really want to. I think he was at a transition point, one of those natural transition points in life, like middle zone after undergrad but before grad school, that band of time when you've got a lot of flexibility and what you do ultimately isn't really gonna matter that much anyway. And he was like, I really wanna travel. Like I, I've been reading all of these essays online and I love the idea of just going to Thailand or going to wherever he was like. But I just keep running the numbers and thinking about how if I invested that money instead, it would be worth whatever by the time I'm 65. And this is the shadow side of the personal finance space. You know, we have to simultaneously talk to both audiences. We have to talk to the people who are neglecting the 65 year old version of themselves. But we simultaneously also have to talk to people who are. Who have taken the concept of quote unquote delayed gratification too far and are now simply deferring their life. There is an expression that I love which is plan for the future, don't live in it. And if you overly are living in the future, then you neglect to live in the present. And that only leads to regret because you have certain windows of opportunity in any present moment that will not be there a decade from now.

[Joe Salcehai]

We do underestimate time. We overestimate Assets. And we underestimate time, which is this precious asset, non renewable asset that we, we don't think enough about. I think in this community. I do want to reiterate this another way, Paulo, which is I just had a wonderful discussion with another friend of both years of mine, a guy named Jesse Mecham, who runs Ynab, which is great budgeting software. And Jesse and I were having this chat and he has learned through experience as he's gotten older. And I love how over time we learn these lessons. Right. Where he was very militant about budgets early on, and now he's graduated to what matters most is what the money's for. And he said something very poignant, which was some of the multi, multi, multi millionaires that he interfaces with are very unhappy, are incredibly unhappy people. And he said, because even though they have millions and millions and millions of dollars, they don't know what that money is for. They don't know what it's for. And so you could extrapolate this money, Abby, and have it go to a beeped out number. That's a pretty big number, right? You could have it get to that number. But what's it for here? We know what $60,000 is for. We know what it's going to do. And I would suggest, you know, through my experience in financial planning is. Jesse's. Right on. Once you've assigned a home to that money, then the money becomes fuel and it becomes fun. But until then, it's just a pile of assets.

[Abby]

And.

[Joe Salcehai]

And it doesn't help you with what I think most of us are trying to solve for, which is happiness.

[Paula Pant]

Yeah. So solve for happiness. That's the takeaway. We're not solving for zeros on a brokerage statement. We're solving for happiness.

[Joe Salcehai]

Yeah. Now I will say this. If you had come here, Abby, and told us you want a $60,000 wedding, but your future meals for next week are uncertain, which is what we see far more often, our answer would have been hella different.

[Paula Pant]

Right, right, right.

[Joe Salcehai]

Incredibly different. This is all predicated on the fact that it's not affecting your future.

[Paula Pant]

Yeah.

[Joe Salcehai]

That your future is fine.

[Paula Pant]

Exactly. Exactly. Yes. Yeah. So enjoy the wedding. Send photos.

[Joe Salcehai]

Send photos. Where's. You're gonna have to open up your email to get the invite, Paula.

[Paula Pant]

All right, I'll. I will concede to check email if you send photos.

[Joe Salcehai]

Wow. You heard it here. First hot take of the show afforders.

[Paula Pant]

I will check one email and it will be that one. I'll ask Rema to ping me. She'll be like Abby sent her wedding photos. And then that will be the one email I open.

[Joe Salcehai]

You know, I would like to say that there's a nice chat going on YouTube if you want to hang out with us. We make this on YouTube. We have a lot of fun doing it. But a guy named some dude hanging out with us says my wedding cost about $1,800 in Vegas. Before they closed the chapel in the Excalibur, parents bought us a helicopter ride over the city at night. Fun and cheap. Lots of family made it. You know, it's in the eye the beholder, Paula. It's in the eye the beholder for some people. They'd hear in New Zealand, are you kidding me? Then the whole family can't make it inexpensive thing in Vegas. Then the family can make it other people here. Vegas wedding. I'm out. You know, I'd rather have the destination. So it begins with you and the fact that it is this moment for you and the fact that you can afford it, whatever it might be.

[Paula Pant]

Well, thank you Abby for the question and send photos. We are going to take one final break to hear from the sponsors who make this possible. And when we return, we're going to hear from a listener in Luxembourg who has a question about what behaviorally makes the most sense versus what mathematically makes the most sense. That's up next.

[Joe Salcehai]

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[Paula Pant]

Welcome back. Our final question today comes from what

[Joe Salcehai]

did you know we're international?

[Paula Pant]

We are international because the final question comes from Luxembourg.

[Joe Salcehai]

How about that?

[Abby]

Hi Paula and Joe, thank you very much for this incredible podcast and all you do for the community. I really love the podcast and I've learned so much so far. I've tried to apply some advice on investments even here in Europe. My partner and I are both immigrants that live in luxembourg. I am 28 and my husband is 30 and we have been working in Luxembourg for three years now. Here in Luxembourg there's an option to have an additional private pension minus the state pension which is directly deducted from our salaries. The private pension option allows us to invest in mutual funds with insurance companies and the amount contributed per year is tax deductible from our tax return. My partner and I contribute a total of €534 per month. Out of these, €11 are deducted as charges and also There is a 0.1% fee for assets under management per month, making a total amount of 1.2% per year. But the major benefit of this plan is that our tax liability reduces by about €1,500 per annum and the potential return on investment. The average return from the two mutual funds we are invested in from 2020 to 2024 is about 9% and 10% and we do have a 5050 split in each fund. But the issue is that the contract is for a duration of 10 years. Cancelling the contract before the 10 year period expires requires all tax benefits received to be paid back to the tax authorities and there are some penalties attached. But since we just started the plan last year, the refund and penalty will not be significant if we cancel now. My husband really wants to save keep the plan regardless of the fees since it's a contract and it forces us to invest always, no matter the circumstances and we treat it as part of our monthly bills. But I'm thinking we can automate our investments in ETFs directly and save up on the fees. And also in Luxembourg, if we keep the investments for more than six months, we're not required to pay any capital gains tax too. We both have good investment habits because we have been able to save up to six months emergency funds and we invested more than €30,000 in ETFs and across four individual stocks in three years. So I believe, all things being equal, we will be able to directly invest by ourselves. But I am more concerned that instead of us continuing to invest in ETFs, we will be tempted to play around by investing in more individual companies, which can have a negative impact on our future goals. My question is, does it make sense to continue with the private pension contract or invest directly by ourselves on in ETFs? Thank you so much for answering all our questions.

[Joe Salcehai]

This is a great question, Paula, but we can't answer it yet because we

[Paula Pant]

have to give her a name. She's anonymous.

[Joe Salcehai]

I did some homework. Yes, I did a little bit of homework. I looked up famous people from Luxembourg and there is a phenomenal chef named Leia Linster from Luxembourg has had the gold Michelin star. Has had a Michelin star, which is amazing, since 1987.

[Paula Pant]

Wow.

[Joe Salcehai]

Every year. And to hang on to a Michelin star every year since 1987 because every year you have to get it again is tough. She's also the only woman ever to win gold at the I'm going to pronounce this horribly bacoost or she's the only woman to ever win gold there. And I think that she's cooking up a great question here.

[Paula Pant]

Oh, I see what you did there.

[Joe Salcehai]

So I think we should call her Leia.

[Paula Pant]

Leia. Beautiful name, Leia. The thing that struck me at the end of your question. So okay, yes, the fee is high, 1.12% is a high fee. But fundamentally this is a question about behavior versus mathematics. And the thing that struck me was that you, you said that if you were to self direct your investments, you might be tempted to invest in individual stocks. And that has higher risk, higher volatility, to use the technical term, higher standard deviation, meaning it zigzags a lot more. I think this is very much a question about knowing yourself. Because if Investing directly in ETFs yourself leads to one month saying, you know what, I don't want to go to an etf, I'd like to take a flyer on an individual company, then that ends up hurting you more than it helps. And to give an example of this, and I think I mentioned this on a previous episode within the last week or two, I have a friend. I think I said this either in the last episode or two episodes ago.

[Joe Salcehai]

You said you had a friend.

[Abby]

I know.

[Paula Pant]

Yes, exactly.

[Joe Salcehai]

You open your email and you have a friend.

[Abby]

I know.

[Paula Pant]

Headlines it said, just, wow, somebody alert

[Joe Salcehai]

the media who, who was all invested, didn't have much investments, but had individual stocks.

[Paula Pant]

Yeah. And he's 48 years old, he has almost zero save for retirement. And I tried to get him to go into index funds, and then I followed up with him a week later to see how it went. And he had bought into the SpaceX IPO.

[Joe Salcehai]

Oh, my.

[Paula Pant]

And it was because he just couldn't resist the lure of individual stocks. And so I think there is a know yourself element, because, Leia, if you end up buying into individual companies in a way that is outside of your plan, then that outcome is much worse. And actually, I want to make a statement here for the broader audience. It's one thing to have a plan that you're going to put 95% of your assets into ETFs or index funds and then 5% into individual companies. That's a plan. Right. It's a different thing entirely to have a plan to put money into ETFs and then at the last minute be like, shoot, just kidding, and put it into individual companies instead. So that's the differentiation.

[Joe Salcehai]

Yeah. It's so annoying. I can't stand it when you go first. And we agree so much. I wrote down mixed signals and I put knowing yourself versus knowing the fees. A lot of people know, focus on the fees and then wreck themselves because they're very smart at the fees and they're not smart at what am I going to actually do if I don't pay the fee? She says she's worried that if they don't switch, they're not in the best stuff. And he wants to stay because it's reliable and they built a habit.

[Abby]

Right.

[Joe Salcehai]

He recognizes, hey, we built a habit and we're going to keep doing this. And, and sometimes being locked in is some cool friction. Right. It actually is good. Locked in is not always bad because you keep doing the right thing. Then she says, well, we have good habits, but then turns around and says, but I'm worried that we might not keep the good habit. So I don't know. But what I do know is that just knowing how much knowing yourself matters more than the fees. And in this community, we worry so much about the fees, and yet I have seen people that have paid high fees to possibly the wrong person go far further than they would have had they been left alone far further with the wrong person, the wrong fees, could they have gone faster, better, more optimized? 100%? They could have done even better. But the fact that they did anything at all versus doing nothing. Just won them the day. Won them the day. So our fees important? Yeah, fees are important. But, but doing the. So I would say this Leia, that if you, if you do remove yourself from the program, my question is, is what friction are you going to put between you and your money to make sure you keep doing the thing right? And there's some great ideas if you read James Clear's Atomic Habits, like the way people build these habits, you know, you attach it to other things you attach it to. You give yourself some good carrots to reach these goals ahead of time. Before you know it. It's part of what you do every day.

[Paula Pant]

Yeah.

[Joe Salcehai]

So there's some cool ways to do it.

[Paula Pant]

But.

[Joe Salcehai]

But I, I don't know.

[Paula Pant]

Well, I would say even before habits. So the waterfall of priority is first automation and then habits.

[Joe Salcehai]

Sure.

[Paula Pant]

Habits are, are only behavioral things that you have to do for things that cannot be automated, like brushing your teeth cannot be automated. So you.

[Joe Salcehai]

I get the feeling she's going to automate the money into a brokerage account easily. Like I get this feeling from her. She didn't say it, but when she goes, we have a good savings habit, we can do that. She'll set that up automatically because she knows that it's going to happen.

[Paula Pant]

Right.

[Joe Salcehai]

I think her worry is once it's in that brokerage account, she takes it out of the index fund.

[Paula Pant]

Yeah, the etf. Yeah, yeah. And that's the thing that struck me as well because it's quite simple to automate money going into an etf. But I think the question is the behavioral component of will you then be tempted to touch it. I sometimes refer to that as un. Automating the system. People sometimes set up these great automations and then unautomate their own systems.

[Joe Salcehai]

I've seen people really wreck their plan because they didn't have these checks and balances. The good news is I don't even remember these people's name. Early in my career though, there was a couple and one thing that happened. So the firm that I work for and the time frame that I worked, I started off in the age when there were very few fee only planners. And I ended at a time when there was a collection of everything and I could charge people just a fee for advice and old nothing. I could do fees plus assets, I could do commissions, I could do all kinds of different things. But anyway, early in my career it was all commissions where I was. So we were handed accounts. When people would leave, they were these accounts people Wouldn't return calls to the current advisor, whatever. And they could only. You could only serve so many people. So these advisors would unassign the account, and then they'd hand them to new people. So I get these people's account. Well, for some reason, they answered the phone, and they had this growth fund, Paula, that they had had for many, many, many years, and they had forgotten about it. And the only reason why they answered my call was because I happened to say, you know, there's a lot of money in this fund. And the woman goes, exactly how much money is in this fund? And I said, There's $90,000 in this fund. And she goes, well, way back in, like, 1983 or something, we put, you know, some ridiculous number, like four or five thousand bucks in it, and there's $90,000 here. Are you kidding me? And I go, yeah. She goes, that's amazing. So we get together, we do a full financial plan. They don't need the money. They have done really well without it. And now we put it to. To get an earlier retirement for them. They began calling me every other month because, Paula, there were all of a sudden emergencies that came up. There were reasons why we had to touch it. They drained that $90,000 within three years. It was gone. It was 100% gone. And it was just because they knew they had the money, because we did the entire financial plan. I got to see their financial thing, and they're like, yeah, nothing's going to happen again. There's going to be nothing that comes up a couple months later. Oh, my goodness. You'll never believe it came up. You know why it came up? It came up because you knew you had this money and you couldn't keep your hand out of the cookie jar. Maybe not. Or maybe they were the most unlucky people ever and just became unlucky the second they KNEW they had $90,000 that they didn't know they had. Could be one or the other, I don't know. So I don't want to assume. However, you can hear my dripping sarcasm. Nice people. Super nice people. But I think our brain does that. I think our brain goes, ooh, this money's available. And when it's in the plan, the Luxembourg plan, it's not available.

[Paula Pant]

Right.

[Joe Salcehai]

There's a magic to having it not be unavailable. I don't know, Leia, I don't want to tell you what to do, but I think you guys have to really have it out about whether you are going to touch it or not. If you're not going to touch it, then move it.

[Paula Pant]

Well, I guess the way to conceptualize it then is to think of the fee as your quote, unquote, insurance that guarantees that you don't mess with it.

[Joe Salcehai]

Yeah.

[Paula Pant]

That is like the payment that you make to secure that it's kept safe from natural human impulse.

[Joe Salcehai]

Yeah.

[Paula Pant]

A big part of money management, I think, is being. Is admitting that humans are like human nature is flawed and fallible and imperfect. Designing a financial plan that recognizes that to be human is to be imperfect and that like, recognizes that and sets up the safeguards accordingly. Right. And if you have to pay a small fee that is like the I'm imperfect fee. Right.

[Joe Salcehai]

I love that name.

[Paula Pant]

Yeah. Yeah. Then I think if that fee leads to the outcome that you want, then, then it is well worth it.

[Joe Salcehai]

There are a few things that we don't know about this plan that I think we should bring up. And that is, and I'm only going to bring this up because this is the way that it is in the United States. If you decide to leave Luxembourg. I only say it because Luxembourg is a tiny country.

[Abby]

Right.

[Joe Salcehai]

If you leave Luxembourg for any reason, you know, the average person changes jobs every, what, 4.2 years, I think is still the number. So if you leave Luxembourg for whatever reason, what happens to that money? Does it have to stay in Luxembourg? Is it easy to move? Like, how does all that stuff work? I just want to know these. It almost goes back to Mike's question. You know, every plan has an Achilles heel. If you stay in it, like we just told you what we think the upside of staying in it, and that is the fee is the insurance. But besides that, what are the downsides to staying in it? Like, if you build this up, like if you build up a 401k, you know, you're going to be paying a lot of tax later on. What are the issues with staying in this plan? And I don't know how this plan works. I don't know what the deal is with it. So I think you want to look that up, though.

[Paula Pant]

Well, Leah, thank you for the question. And I love the discussion because this is the root of a lot of financial planning. It's. Do you do the thing that on paper seems, quote, unquote, like, more ideal, or do you do the thing that recognizes your own nature? Let me. Can I just give one more example? Actually, as I'm thinking about this, it's

[Joe Salcehai]

so funny, Paul, because I just thought of an example too.

[Paula Pant]

So one other example, and I think a lot of people in the, in who are listening to this might be able to relate to this, the age old question of do you keep your mortgage or do you pay off your mortgage? Particularly for anybody who has a mortgage with a, an interest rate that's less than 5%. Right. So if you locked in an interest rate that was a three point something percent that you locked in in like 2019 or 2020, do you keep the mortgage? Do you pay off the mortgage? And of course, mathematically, if you've got a 3.5% mortgage interest rate, it makes sense to hold on to that mortgage. Right? It makes sense to not pay it off and to put that money into investments. And so Joe, you. We were just talking about this recently on your show. I made the decision, the mathematically unsound decision to pay off a. Actually not just one, but multiple low interest mortgages. But I did that largely because I understand myself. I understand my own behavior and my own nature and based on the other types of risk in my life. The inherent risk of being an entrepreneur, the inherent risk of running a company as well as just based on like behaviorally, do I just want to deal with the added cash flow management or not? I made the decision to just simplify my life and reduce the amount of risk that I was exposed to by just paying off the mortgages. Right. Does that mathematically make sense? No. Would I be, would I have a greater net worth if I had put that money in the year 2020 into index funds? Absolutely. I would have a much greater net worth today. Do I regret it? Nope. Not at all. If I could invent a time machine and go back, I would have made exactly the same decision. Zero regrets.

[Joe Salcehai]

And that's why you didn't invent the time machine, because it would have been a waste of time.

[Paula Pant]

Exactly.

[Joe Salcehai]

Like why otherwise she would have invented the time machine. You know, it's funny just to take this fee idea too, to the extreme. The fee versus behavior. This is the thing that I saw a fair amount when I was a financial planner and talking to our friend OG about this. He, he still sees this from time to time, which is the person that goes, you know, I can't stand my company. I hate working for my. I'm not giving those people, we'll say the word people, but change it. I'm not going to give those people any of my money. So I'm not putting any money in the 401k. I'll show them. And then they end up, Paula, doing nothing to show the man that I'm not giving you anything. And OG has talked about what? We were talking about this just a couple weeks ago. He's like, you know, the owner of that company is not sitting around going, ah, I wish Joe would be putting Money in the 401k because I'm not eating. It's gonna be horrible. Like, you're not hurting them at all. A. They don't run the 401k. They off it to somebody else. Right. It's a benefit so they can do some cool tax things on their end. But, yeah, you're just hurting yourself by not putting money into the. Into the plan. And that is that, you know, that's extreme. That's lad. Not at all what you're talking about. But it just struck me that sometimes when people are like, I'm not paying those fees, like, the only person you're hurting is you.

[Paula Pant]

Well, so, Leah, thank you for the question. Best of luck with everything ahead with Luxembourg.

[Abby]

You kidding?

[Joe Salcehai]

Yeah, it looks beautiful. Every time I've seen. I've never been through Luxembourg, but, Leia, looks like you live in a gorgeous country.

[Paula Pant]

Absolutely. I'd love to visit someday. Joe, where can people find you if they'd like to know more?

[Joe Salcehai]

You know what's interesting is there was a wild show that everybody's talking about on a different podcast. I know that most people are talking about afford anything, and if they're not, they're talking about stacking Benjamins. But there's a little show called Diary of a CEO, and they had on this gentleman who used to work for OpenAI, the company that makes chat GBT, and his job was to do forecasting for them, and he quit. And they offered him $3 million to shut his mouth about what happened to open AI and he said, no, Paula. So that he could say the things that he thinks. And what he says about AI and where he thinks it's headed isn't good. So we had a roundtable discussion where we asked you, what do you think of what happened on Diary of a CEO? We asked og we asked our friend Jesse Kramer. And I love your opinions. You're not AI experts, but you guys have talked about money discussions, and, you know, let's say that this does come true. It. Let's say it doesn't come true. What do you do anyway? How do you frame this? How do you look at it? How do you live with the fear that this might happen? Like, you guys answer a lot of great questions in that episode, so thank you. Yeah. So go find our. You don't even have to hear The Diary of a CEO episode. We play the open. I really like Paula, your take, Jesse's and OG's take. It was really interesting textured conversation.

[Paula Pant]

Yeah. So it was a reaction episode. Yeah, yeah, yeah, yeah. Roundtable reacts.

[Joe Salcehai]

Lol. About the fourth thing they said.

[Abby]

Yeah.

[Paula Pant]

So that is on the Stacking Benjamin's podcast, which you can find on your favorite podcast player. Thank you to all of you for being afforders. Thank you for being part of this community. We have a free fill out able workbook on the five pillars. Financial psychology, increasing your income, investing, real estate, entrepreneurship. So if you want to, it's like a interactive fill in the blank. You can work through each of the five pillars and work through each of the five concepts and it helps you put some, some thinking and some structure around your relationship. With Double Eye Fire, you can download that. It's totally [e-mail] FII R E. That's affordanything.com fiire. Thank you so much for being part of this community. I'm Paula Pan.

[Joe Salcehai]

I'm Joe Salcehai and we will meet

[Paula Pant]

you in the next episode. Oh, there's one thing we didn't say, which I promised Steve we would say.

[Joe Salcehai]

Steve.

[Paula Pant]

Steve. Hi, Steve. Steve has a webinar.

[Joe Salcehai]

Oh yeah.

[Paula Pant]

Our esteemed audio editor, Steve, the guy who produces this sound effect. Steve is hosting a webinar on Tuesday, August 4th. It's at 3pm Eastern, 12pm Pacific. He's co hosting it with Sean Mulaney, an advice only financial planner on how to legally avoid an expensive tax surprise. If you want to talk about the subsidy Cliff, check out his webinar with Sean Mulaney on Tuesday, August 4th. We will have a link in the description and in the show notes on how you can register.

[Joe Salcehai]

Bam.

[Paula Pant]

Did it.

[Joe Salcehai]

Thanks everybody.

[Paula Pant]

Yeah, thank you.

[Joe Salcehai]

We do underestimate time. We overestimate assets and we underestimate time, which is this precious asset, nonrenewable asset that we don't think enough about. I think in this community. The other thing that I would like to think about is the fact that I can't remember what I was going to say. This is a good YouTube moment right here. I'm still stuck on the fact that you don't answer your email.