Are You Making This Mistake With Your Cash?

Summary

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Money Guy Show: “Are You Making This Mistake With Your Cash?”

Hosts: Brian Preston & Bo Hanson
Date: April 22, 2026

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Episode Overview

This episode centers on the critical role of emergency funds in personal finance. Brian and Bo tackle a common and major financial misstep: either not having sufficient emergency cash reserves or misusing them for non-emergencies. They analyze recent troubling statistics, explore why Americans are trending in the wrong direction, and clarify best practices for building and safeguarding your emergency fund. The hosts also answer live audience questions about saving, financial priorities, and smart money habits, maintaining their signature blend of practical advice and relatable, sometimes lighthearted banter.

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Key Topics & Discussion Points

1. The “Massive Mistake” with Cash Reserves

[01:03 – 02:51]

• Many Americans are underfunding or misusing emergency reserves.
• 29% have more credit card debt than emergency savings—almost one in three people!
  • Quote (Bo): “I could not imagine constantly living in that place.” [01:54]
• 75% have less in reserves this year compared to last, or none at all.
  • Credit cards are being used as “emergency funds”—a risky behavior leading to desperate financial decisions.

2. Why Emergency Funds Are Shrinking

[02:51 – 03:47]

• Inflation increases the “burn rate” (cost of living), so emergency funds should rise accordingly, but instead, reserves are shrinking.
• Bankrate study: What Americans used their emergency funds for.
  • 51% used it as intended (unplanned emergencies)—that’s okay.
  • Some used it to pay down debt—acceptable if for high-interest debt only.

3. Breaking Down Appropriate and Inappropriate Uses for Emergency Funds

[03:47 – 08:06]

Acceptable Uses:

• True emergencies (car repairs, medical costs, job loss).
• Paying down high-interest debt if it’s a major obstacle (see their “Financial Order of Operations”).
  • Aggressive payoff only for high-interest credit card debt, not low-interest student/auto/mortgage debt.

Gray Areas and Missteps:

• Using emergency funds for regular monthly bills or lifestyle costs:
  • Quote (Bo): “You are likely living beyond your means…allowing your past self that saved up to subsidize the life you’re living right now.” [06:26]
• Funding vacations, discretionary shopping, or helping family/friends at the expense of your own stability.
  • Quote (Brian): “You always put on your oxygen mask before you put it on for your kids or family members.” [07:06]
  • Quote (Bo): “You’re robbing your future self.” [08:06]

4. How Much & How Should You Fund an Emergency Reserve?

[08:06 – 09:58]

• 3-6 months of living expenses is standard; adjust as your “burn rate” (expenses) increases.
  • Check the actual current cost of your lifestyle—don’t rely on outdated numbers!
• Don’t over-fund: Some ‘financial mutants’ overdo it, keeping upwards of a year’s cash reserves or maintaining excessive “sinking funds,” which could instead be investing.
  • Quote (Brian): “There’s too much of a good thing…that may keep you from loading up your 401k or Roth IRA.” [09:36]

5. The Two-Step Approach to Emergency Money

[10:54 – 11:30]

1. Step One: Highest deductible insurance coverage for immediate emergencies (auto, health, home).
2. Step Four: Build 3-6 months’ reserves after getting employer match and paying off high-interest debt.

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Listener Q&A Highlights

Q1: How long should it take to build an emergency fund?

[12:33 – 14:24]

• There’s no fixed timeline; as fast as realistically possible, but avoid dragging it out for 5+ years.
• Increase income or reduce expenses to create more savings margin.
• If emergencies keep setting you back, congratulate yourself—the fund is doing its job preventing debt!
  • Quote (Brian): “If you didn’t have this emergency fund…how bad would your credit card debt be?” [14:28]

Q2: Roth 401(k) Rollovers and Early Retirement

[17:03 – 21:43]

• Review flowchart at moneyguy.com/resources for “what to do with an old 401k.”
• Roth 401ks can be rolled to Roth IRAs tax-free; beware of “unvested” employer contributions or non-Roth monies which must be rolled separately.
• Check if new plan allows roll-ins; if not, a Roth IRA is a good home for old Roth 401k dollars.

Q3: Do Sinking Funds Count Toward the Savings Rate?

[22:27 – 26:18]

• No. Sinking funds (for car, vacation, house down payment, etc.) are for spending in <5 years, not long-term financial independence.
• 25% savings rate should be for retirement/investments, not near-term expenses or overfunded cash reserves.

Q4: 23/8 Auto Rule for a Business Box Truck

[27:56 – 32:18]

• 23/8 rule applies to personal cars, not business purchases.
• For business, apply “3D glasses”: dream plan, down-to-earth plan, and “doo-doo plan”—analyze potential best/worst case impacts.
• Match loan terms to useful asset lifespan; beware of overleveraging and chasing tax deductions over sound decisions.
  • Quote (Brian): “Don’t let the tax tail wag the dog.” [31:56]

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New Segment: “From the Wings” – Hosts React to News Headlines

[34:00 – 44:35]

Example Headlines & Reactions:

• SEC Approves Removing Day-Trading Limit for Small Investors:

  • Noise for most listeners. Day trading is risky and not a recommended wealth-building strategy.
  • Quote (Brian): “If you’re day trading, you’ve lost the plot.” [36:27]

• Stock Market’s Rapid Bounce-Back:

  • Bo: “News” (teachable reminder markets can recover very fast—don’t try to time).
  • Brian: “Noise” (short-term swings are rarely actionable for long-term plans).

• Adjustable Rate Mortgages Making a Comeback:

  • News—with rates fluctuating, ARMs can make sense if used carefully and for the right timing/horizon.

• World’s Oldest Octopus Fossil Isn’t an Octopus:

  • Hosts run with the humor: this is definitely noise for financial planning, but fun trivia!

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Notable Quotes & Moments

• “You're not living at your means…you're allowing your past self that saved up to subsidize the life that you're living right now.” — Bo [06:26]
• “It opens you up to serious future financial risk.” — Bo [08:06]
• “There’s too much of a good thing…that may keep you from loading up your 401k or Roth IRA.” — Brian [09:36]
• “You always put on your oxygen mask before you put it on for your kids or family members.” — Brian [07:06]
• “If you're day trading, you've lost the plot.” — Brian [36:27]
• “If you sit at the poker table and don’t know who the fish is, you’re the fish. Same with trading.” — Brian [37:00]

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Practical Steps & Takeaways

• Emergency Fund: 3-6 months of living expenses, recalibrated as costs rise.
• Right Use: Fund only for true emergencies or high-interest debt (not vacations, bills, or gifts).
• Review & Update: Don’t let emergency reserves become stagnant (know your current burn rate).
• Balance: Don’t over-fund at the expense of investing for growth.
• Saving Rate: 25% for investments/retirement, NOT near-term “sinking fund” goals.
• Joint Finances in Marriage: Think as a household for both savings milestones and investment strategy.

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Fun & Personality

• Ongoing banter about Brian’s raspy “Barry White” voice, octopus trivia, and song lyric references.
• Interaction with chatroom audience—answering both classic and quirky finance questions.
• “From the Wings” segment mixes current event analysis with their practical verdict: is it actionable news or distracting noise?

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Important Timestamps

• Emergency Reserve Stats & Core Message: [01:11 – 08:06]
• How Much Emergency Fund/Funding Philosophy: [08:06 – 09:58]
• Nuance: Overfunding vs Underfunding: [09:32 – 09:58]
• Listener Q&A (Emergency Fund Timeline): [12:33 – 15:42]
• Sinking Funds vs. Savings Rate: [22:27 – 27:27]
• Business vs. Personal Auto Finance: [27:56 – 33:07]
• "From the Wings" Headlines Segment: [34:00 – 44:35]

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For More Resources:
Visit moneyguy.com/resources and join their Discord-based community, “The Money Verse,” for personal finance camaraderie and celebration.

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Bottom Line:
Don’t make the mistake of neglecting or misusing your emergency fund. Know your numbers, stay disciplined, avoid lifestyle creep, and use practical, not emotional, judgment with your cash. As Brian and Bo emphasize—your future self will thank you!

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Transcript

[A]

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[B]

Are you wow. Are you making this massive mistake with your cash? Couldn't have planned that, right?

[A]

I am so excited because I think a lot of people are indeed making this mistake and they shouldn't be. And I think a lot of times when folks fall into a bad behavior, they often don't get caught in the bad behavior. So it makes them think it's okay, it's okay, it's okay. And what ends up happening is it's okay until it's not. And I think what we're talking about today, a lot of people are in that place.

[B]

Yeah, I mean your emergency reserves, this is the part that's gonna keep you from making desperate decisions. It's that margin or layer of protection. But yet we're finding out that most Americans are not respecting this. You know, recently came out Bankrate released their emergency savings report and there's some really disturbing things that came out of this.

[A]

Yeah, this first one I think was maybe the most frightening. Did you know that right now 29% of Americans, almost one in three Americans have more credit card debt, more balance that they are carrying from a month over month basis than they actually have in emergency savings. I got to we see a lot of our stats, Brian, about how, you know, 1,000 bucks. This is one of the most frightening I think we've shared because I could not imagine constantly living in that place.

[B]

Well, and we're in a trend where it seems to be getting worse. If you look at the fact that and this is another thing that came out of this bank rate report is 75% of Americans reporting having less emergency reserves than they did this time last year or none at all. And I think a lot of people are right there on that razor thin margin of basically doing all the desperate decisions using the credit cards. That's what that stat showed to me, is that people are using credit cards as their emergency reserves instead of having that peace of mind.

[A]

Well, and what's really interesting is this says that the emergency reserves has actually been decreasing. If you think about it just the nature of inflation, what inflation is, is that the cost of goods, cost of services increases through time. Thereby our burn rate likely increases through time. That would suggest that our emergency fund should actually increase through time. And yet most Americans are moving in the wrong direction. Rather than their emergency reserves increasing, their emergency reserves are actually decreasing. That means that they get it wrong. And so one of the things that was interesting to study is we read this stuff and we come across this and we begin asking, okay, why? What was the reason? What was the purpose? Why is this happening? And they actually had a chart and the question that Bankrate asked was, which of the following did you use your emergency fund for in the past year? And I thought the results were sort of interesting.

[B]

I was actually happy that they put this question in there because when I see decreasing data, I'm always like, well, what changed? Why is it so good on them that they actually put the question in there? And there are two of these that we wanted to highlight that we think are a. Okay, is 51% actually had unplanned emergency expenses? Well, hey, that's what the money was there for.

[A]

Why the emergency fund?

[B]

The other one was they were paying down some debt. You know, and if you pay attention to the financial order of operations, you notice that step three, high interest debt is definitely before you fully funding your emergency fund. We're a okay, if that's what you got stuck in, where even there's some gray zone areas too. I think we put these as orange.

[A]

Yeah, I think, I think you mentioned high interest debt. That's the thing. It has to be. Because what this says is, this is not specifically say that people were using their emergency fund to pay down high interest debt. They just said pay down debt. And that can be okay if it is a step three thing. But if you're using your emergency fund and you're paying off student loans, you're paying off auto loans that fit inside of 23, 8, you're paying off a low interest rate mortgage, there's a chance that you're doing it wrong. So we want to remind you when it comes to your debt, not all debt is created equal. Some debt should be considered high interest step three. But other debt should actually fall into step nine, the low interest debt part of the food. So if you're someone in your 20s and you have student loans that are below 6%, perhaps it does not make sense to pay those off aggressively. If you're in your 30s, that's 5%, in your 40s, the number drops to 4%. If you're someone who has an automobile and you have followed 23, eight, you've done what you're supposed to do there, even if it has a higher rate, even if you're a 20 year old and you have an 8 or 9% auto rate, but it fits inside of 23, 8, perhaps it does not make sense to pay that off aggressively. Certainly not with your emergency fund. For your 30s it drops to 9%. 40s, it drops to 8%. And then credit cards are never okay. You should never carry a balance on a credit card. Even if it's 0%, you should be paying it off. So if you do have emergency dollars sitting there, but you also have credit card debt that is rolling over month over month, that would be an acceptable place, an acceptable reason to actually use the emergency fund to satisfy that debt.

[B]

So now let's look at where are the places people are using their emergency fund that we have issue with. And the first one I thought was, you know, monthly bills, day to day expenses, that's, that's kind of, that's, that's more of lifestyle or showing that you're not living on less than you make. You're not actually creating the margin in your financial life.

[A]

Yeah, I think if you are doing that in your day to day, month to month, week to week expenses are coming out of your emergency fund. What that suggests is that you are likely living beyond your means. You're not living at your means. You're allowing your past self that saved up to subsidize the life that you're living right now. And so one of the things you ought to immediately do is recalibrate, okay, why am I spending money this way? Where is the money going? Is there a way that I can get my monthly bills or my day to day expenses down as low as possible so that I can then be inside my means, not beyond my means.

[B]

And then if you move on to the next category, now this one, look, I think it's noble, but remember, you always put on your oxygen mask before you put on for your kids. You put on for family members when you're on the airplane. They want you protecting yourself first. And that's when we see people helping a family friend or a member. It's noble, but man, if you're already in a dire situation for yourself, it could be pretty dangerous.

[A]

That's exactly right.

[B]

And then discretionary shopping, that's definitely a no, no. How about vacation? That's a no no. If you're running debt to build a vacation, that's not really a vacation. You're just building up a problem for yourself in the future. And then discretionary experiences. I don't even know what that means. What is that? What is discretionary?

[A]

I'm assuming that's entertainment, concerts, those sorts of things.

[B]

That's. That's yolo, right? You only live once. Go take advantage of that. I know that's a 2012 statement or whatever, but who cares? I'm telling you, discretionary experiences seems like a bad decision in the masquerade that I've got to live for. The moment when.

[A]

When you tap into your mercy fund for these type of things, what you're doing is you're actually taking advantage of your past self that save for these expenses, and you're actually robbing your future self who had that money there for that unknown, unknown expense. So what's the better way? What's the way that you ought to think about this? Well, first you have to recognize why the emergency fund even exists. If you are underfunded. You know, we say all the time we want you to have three to six months of living expenses in a fully funded emergency fund. If you're underfunded, what that then does is it opens you up to future financial risk. Maybe you're that person that says, oh, you know what? I'm going to keep one month of expenses in my Mercy fund, or I'm not going to keep any cash. I'm going to be investing and I'm going to do this and all these other things. And then something happens. The car breaks down, you have the medical expense, you have the job loss. Well, now all of a sudden, this optimized machine that you were trying to operate in your financial life gets thrown off kilter. And now the only solution, the only recourse you have is to start swiping, to start racking up debt. It really opens you up to serious future financial risk.

[B]

Well, and also, I want to say, don't go too far in the other direction either. We are financial mutants. I want you to have that nice layer of protection by having an emergency fund, but don't go too far with it. I mean, all the time when we're doing episodes of Making a Millionaire. It's not uncommon to find financial mutants that are creating sinking funds for the craziest things, like, you know, paying their

[A]

annual $11 for auto registration, auto registration

[B]

fees, or things like that. Where you go so far and you add it up and you find out not only do you have the three to six months of cash reserves, but then you have a whole nother year of cash just with these sinking funds. Be mindful that you can. There's too much of a good thing also, because that may. If that's keeping you from loading up your 401k or loading up your Roth IRA, you might be doing it wrong in the wrong direction.

[A]

Yeah. And then I think one of the best ways that you can protect yourself is you have to know your own numbers. Are you at the place where you actually understand what your burn rate is far too often? I'll see somebody. I'll have a prospect reach out. Hey, I've got, you know, $30,000 in cash, and I'll be okay. Great. How'd you arrive at that number? Well, okay, well, you know, when I set up my emergency fund, I was spending $5,000 a month, and for six months, 30,000. Like, okay, well, how much are you spending right now? Like, what's it cost to live the life you want to live on your terms? Oh, 8,000 bucks a month. Whoa. Just because the emergency fund used to satisfy the person you were in your 20s and your 30s, doesn't mean it's the right amount to satisfy the person you are now. And you're 30s, 40s, and 50s. And so make sure that you are keeping an eye on what your actual burn rate is so you know where your true lifestyle footprint exists. So that way you can make sure you have an emergency fund in place.

[B]

And then the last thing we'll close this out with is, remember, this is a two step process. What do I mean by that? We actually have two steps of our financial order of operations dedicated to emergency reserves. Step number one, highest deductible coverage. This keeps you from just the emergencies, the bad things from a health care, from your auto you get in a car accident, homeowners, we got you covered with your highest deductible covered. And then once you get through, you're getting the free money from your employer, you pay off the high interest debt. We want you to have that three to six months of cash reserves. That's what's going to help you live your best life and sleep peacefully at night.

[A]

I love Brian, that we get to sit in this position that we get to share this kind of information with you guys. We love that we get to do that. You know what else we love? We love when you subscribe, when you click the subscribe button so that we know that you are out there, that you are dialed in if you subscribe. We promise we're not going to load up tons of content and blow up your feed. Every time you get a notification for us for subscribing to this channel, it is going to be brand new content, stuff you've not seen, stuff you've not watched. So if you're not subscribed, please do that right now so that we know you're out there. And what we like to do every Tuesday morning at 10:00am Central, Brian, is we like to answer questions.

[B]

That's exactly right.

[A]

We like to load you guys up because we really do believe that there's a better way to do money. So what happens is, if this is your first time, we have the team out in the wings right now collecting your questions. Make sure you get your question in the chat. If you have something you want us to weigh in on, you want to get our take on, you just want our thoughts on it. We would love to load you up. So with that, creative director Ribi, I'm going to throw it over to you.

[C]

We're going to kick it off with a emergency fund question from Heather F. Since that's what we're talking about this morning. It says, good morning. What is the typical timeframe of building an emergency fund? My husband and I have been stuck on this step for two to three years. We've had emergencies and it's taking forever to get to step five. Very real question. What advice or motivation or thoughts do you have for Heather?

[A]

I know, Brian, as I've experienced this in my life and as I've also kind of walked through with clients or their young people, it's. It's hard and long in the beginning often. Right. Like a lot of times it takes some time to get there. But the great thing about the emergency fund is once you have it, once you've completed it, once you've got that three to six months, you get to check the box, like, okay, I've done it, now I can focus on the other stuff. And so what's the appropriate timeframe or the right timeframe? Whatever you can do. I don't want to suggest that, oh, okay, you got to get an emergency fund built exactly inside of three months because that may not be the case for you. But I also don't want to say, well, don't worry, just build it up over the next five or six years. Because in reality, if it's taking you a long time to build the emergency fund, there is an opportunity cost that you're missing out on, having those dollars working. So one of the things or one of the things we often tell people is when it comes to making financial decisions, really, you have two levers that you get to pull. You can either increase your income or you can decrease your expenses. Well, doing either one of those will help you create additional margin in your life to build up that emergency fund. So I would argue, and look, emergencies happen. Unknown unknowns come your way. Things that we did not plan for come to fruition. That's what it's there for. If you have to use it and then rebuild it and use it and rebuild it, that's okay. Figure out how you can build it as quickly as possible.

[B]

Well, just by the way Heather wrote the question, I can sell that there's some frustration.

[A]

Sure.

[B]

Because they've had some emergencies. I want to reframe this in a little different way. Is that, Heather, I want you to give yourself some credit that if you didn't have this emergency fund that keeps getting used for emergencies, how bad would your credit card debt be? How many bad things would you now have just hanging over your shoulders if you didn't have this peace of mind money? I think it's actually, it's done exactly what it's supposed to do. It's been that layer of protection. It's frustrating to you because you're just stuck in step four, but you want to move on to the wealth building side. Step five and six and beyond. But let's celebrate the fact that you actually had the margin, didn't have to make any desperate decisions because now when you hit a good stretch, because it will, there will be some daylight that comes your way where all of a sudden now maybe you go three months, six months, nine months, where the sky's not falling anymore, you start catching traction, you start building assets. That's when you'll be ready to know what to do with your next hour with the financial order of operations. But I think the system has done exactly what it's supposed to do so that you're poised to take the next step to build wealth instead of just scrambling and always feeling in this state of being in desperation or debt that the majority of Americans are struggling with because they don't have that layer of protection.

[A]

Love that.

[C]

Heather F. Thanks. So Much for the question and just the conversation about where you are in the food. That's great.

[A]

Can I tell you two interesting things you read for this?

[B]

Yep.

[A]

One, there's a lot of people in the chat that are worried about you. Right. They say, hey, is Brian okay? He sounds like he may be under the weather. That's the first thing. I think you should address that. Second thing, a lot of people out there are saying, I kind of like this Brian voice. Could Brian bring this voice to every single Tuesday?

[B]

Let's see if we can do something here to show some value with this voice. Okay, Elvira. Anybody who's my age knows exactly that. 33. It hit a little differently when that bass dropped in.

[A]

There's a lot of people in the chat who have no idea what that

[B]

was, so that's all right. They're gonna go figure it out right now. I him enough clues. That's hilarious. The reality is, is I felt much worse yesterday. I'm actually on the the mend. I feel pretty good today.

[A]

But you're not sick.

[B]

I woke up.

[A]

Tell him you're not sick.

[B]

No, I was under the weather, definitely. You know, I even told you. I said, hey, you might want to keep a little space for me. But. But, you know, my voice is. It's a. It's a. It's a lagging indicator. It's not actually on the front end of the recovery. You know how these things work. It takes a little bit to get all the stuff out of the system.

[A]

What a nerdy joke.

[C]

So he's gonna be just fine. Do we have cold medicine, Brian, today here?

[B]

No, actually, for the sacrifice of the show, I wanted to make sure not only did I load this thing up with all the supplements I take to make this whole brain work, but I actually avoided the cold medicine so that I could give you all the best version of myself.

[C]

Sharp. Brian is here today. I like it. All right, let's go to the next question from Tracy. It says, I started a new job and can't roll over my Roth 401k contributions from my previous employer's plan, which is the majority of my retirement savings. What should I do with those dollars if I want to retire at 55?

[A]

All right, I'm going to read this back slowly to make sure I've got it. I've got a new job, and I can't roll over my Roth 401K from my employer. Why? What should I do those dollars if I want to retire at 55? Well, a lot of times we tell people when you, when it comes time to roll over an old 401k, you have a couple different options. If you've not seen our flowchart, we have an amazing flowchart. You can go to moneyguide.com resources and download it. What to do with an old 401K. And one of the things we often talk about is hey, be real careful if you're going to roll over a 401k into an IRA rollover. Because if you're someone who's carrying out something like a backdoor Roth conversion and now you have IRA assets, you have now muddied the waters where you have to worry about the pro rata rule and you run into some issues. But Tracy's was a little bit different. Hers was asking about, well, it's Roth,

[B]

she's got Roth 401k dollars. They're not going to have those same limitations.

[A]

So one of the questions that I would have is what is it? Or why are you under the impression you're unable to roll those dollars over? Perhaps what you could do is go open up a Roth IRA at any of the custodians you like, the fidelities, the Vanguards, the Charles Schwab's. You can roll those Roth 401k dollars over into your Roth IRA. It's a completely tax free transaction. So you're not going to generate any taxes or anything like that. And then you get to control what you invest in and what you do with the money and where it's at. Now. One other thing that could be happening, Brian, and I wonder if this is the case. Perhaps she looked or he or she looked at their account and they noticed there were some like non vested dollars and hey, I can't roll it over because I might lose the money if I roll it over now. It'd be really interesting if that being the Roth portion, that means that you would have had to have convert some employer money into Roth at some point. But oftentimes when we leave a 401k, we might not have access to all of those dollars. Some of those dollars might be unvested. If it's some sort of matching or some sort of profit sharing and you think, okay, well I'll just leave it in there and I'll have those dollars when I return. That money's not your money, it's not your money now. It's never going to be your money unless you go back. So even if you roll out and you have to forfeit those non vest, those are going to be forfeited anyway. So don't let that be something that is inhibiting you or stopping you from rolling those dollars over.

[B]

Well, I think Tracy definitely go take advantage of that resource. I mean we legitimately have made it to where you just basically answer questions and follow the flowchart because you're going to quickly decide, hey, maybe your Your old Roth 401K was spectacular and you just want to leave it there. Nothing wrong with that. If it's as long as you go through the work and make sure it's really a good plan. Or you can if you check your employer measure twice, cut once, make sure your employer you sure they don't take rollovers? Because a majority of plans do take rollovers. I would want to confirm that. And if that's not the case and you don't like your old employer's 401k because maybe it's expensive or it's a bunch of sub account fees and other things, then yeah, you can. I, I find it hard to believe that you couldn't then go set up a rollover Roth, you know IRA that you could transfer the money in. It's not even really a rollover. You're just a Roth ira. Set it up and transfer those assets in there and do a trustee to trustee transfer.

[A]

Somebody said this, maybe the issue is the new employer won't accept roll ins. That could be, that could certainly be a thing. But that's why you can open up a Roth IRA and then you have your access free and clear. One thing to be mindful of, if you do have two different sources inside your current 401k, say you have your Roth dollars but then you also have employer money pre tax money. Don't just like carte blanche, roll all of the assets into Roth. Because if you do that you could create a taxable event across the employer dollars. Oftentimes when you want to roll those dollars over, you have two checks issued or two aches sent. All the pre tax money to a pre tax rollover. All the Roth money to a Roth rollover. So that way you don't have any unintended or unplanned for tax concepts.

[B]

We've even split it where you can roll your Roth portion to an IRA. Roth IRA. You can do your pre tax to your new 401k at your existing employer. And that way you keep all the things separated.

[A]

Love that. You got to keep them separated.

[B]

That's exactly where I was going with little offspring there.

[A]

How many song lyrics can we get in today's show? Y' all ready for that one.

[B]

We didn't even try this game, but we're doing pretty good at it so far.

[C]

Great. Is anybody keeping score?

[A]

I think we're at two.

[B]

Well, I think I'm at two.

[A]

Okay. Okay.

[C]

This isn't a team sport. It's MO against Brian, apparently. Well, Tracy T, thank you for the question. We really appreciate you being here and talking personal finance with us today on the show.

[B]

How many people knew it was the Oak Ridge boys?

[A]

Somebody called it Oak Ridge, Preston. So, yeah, we got some folks out there.

[C]

They were out there.

[B]

Oh, that's a difference. Hanson.

[C]

I don't think that voice works for that song. I knew that one.

[B]

That's three, by the way.

[C]

Oh, man. Well, hey, we're gonna do a couple more questions and then we are going to try a brand new segment for of the show today. So be sure to stick around for that. But in the meantime, get your questions in the chat because we're still going to be answering several more throughout the duration of the episode. All right, Next One is from Bentcan 14. It says, Are sinking funds included in the savings rate? I have 401ks, Roth IRA and sinking funds, but it feels like I'm doing something wrong if I include them in my savings rate just to spend those dollars later.

[A]

What say you?

[B]

I, you know, this is because we ran into this without making a millionaire episode is that somebody was telling me that their burn rate was like $10,000 a month. And I was like, wait a minute, four grand of that is going into sinking funds. You're not really spending that.

[A]

Right.

[B]

So your burn rate is not $10,000 a month. So I don't. It depends on the end. If it's foreign expense that will happen this year, then yeah, that's not a savings rate. If it's for something like a house down payment, I mean, or something like that, it's in the gray zone. But really, when we say savings rate, can I be. Let me give you the clarifying thing. It's the 25% that with the 20 to 25%, depending upon how old you are, is really for retirement dollars or money for your army of dollar bills that's going to work for you in the future for retirement. So these sinking funds are going to be used in the next three to five years. They're never going to get invested to be part of your army of dollar bills for retirement, then? No, I don't think you can count it.

[A]

Yeah, I would say that a pretty hard line. I do not count sinking funds in My savings rate, even if I'm doing something like saving up for the down payment on a mortgage, that's incredibly noble. Noble. But I can't. What I can't say is I'm saving 25% and it's going into my down payment from my mortgage. I think what you're doing is you're saving some number less for financial independence. Maybe it's 5, 10, 15%. The rest of the money is going for this like prepaid expense that you have coming. But when it comes to 25%, we want that to be for future financial independence. Sinking funds is more paying for intermediate term goals or short term goals. It does not count that. Now, don't mishear us. That doesn't mean that they're bad, doesn't mean that they're wrong, doesn't even mean that you shouldn't do them. It means you should do them with the understanding of, okay, this is causing me. If it drops me below a 25% savings rate for the future, I'm now living in that gray zone where I'm under saving for what I should be saving for financial independence. I want to get the sinking fund funded. I want to save the dollars, I want to have them there, and I want to get back to 25% going to my future self as quickly as possible. And that's totally okay. That happens. That's part of the journey.

[B]

But I want to give the corrective advice that we see people all the time that they use, because sinking funds are just a component of helping you be disciplined, to build the margin in your life so you live on less than you make. But a lot of times they get that good habit and the good feeling you get from doing that good habit, it kind of gets too good, too big, and it overwhelms your step four emergency reserve. So we find out that people have not only six months of emergency funds, but they have these huge accounts with these sinking funds. You're like, well, wait a minute, isn't that part of your emergency fund? And they're like, oh, yeah, well, I guess I'm double counting. And we're like, well, yeah, you've got weight. You've taken a good thing and turn it into foolish behavior. And the fact that you built up this emergency cash way too big. And the corrective action is. Then we say, okay, why don't we take some of those sinking funds that should be part of just your emergency fund, and let's actually deploy them into the financial order of operations, like into your Roth IRA or other Things. There is a way to correct this that actually does create army of dollars and wealth for the future. But you got to go through the effort of figuring out where how much of this is supposed to be just emergency funds.

[A]

Yeah, a lot of people are asking. Well, hold on, wait, wait. So shouldn't the emergency fund count towards the 25%? Isn't that a thing you have to. Don't miss here? Well, here's what we're saying. If you don't have a fully funded emergency fund and you're past step one, two, three, it should be all hands on deck to fund them. It's not like, okay, well, I'm going to save 25% towards my emergency fund and then I'm going to go spend all the rest until I get that. No, you should aggressively save as much as you can, as fast as you can, as hard as you can to get the emergency fund built up. And then once you've done that, that's where the 25% starts. Okay, now when I'm working towards 25%, I've got the emergency fund built. Now I'm going to look at Roth IR for me, Roth IRA for my spouse, HSA 401k contributions after tax brokerage account. Those are where the 25% happen. Your emergency fund is something that should be like a. Oh, I got to get that in place. 25% doesn't factor in. That's as. As much as you can possibly save to get there as quickly as you possibly can, assuming you're past 1, 2, 3.

[C]

Very thorough and good answer, guys.

[B]

You acted like you just did a. You got squeezed on the.

[C]

I know. Like at the end he was like, let me just throw this in there real fast. This is not rapid fire. Well, Ben can 14. Thank you for the question. Appreciate you being here. Next one. I am interested to see what you say. It's a 238 car question from James L. I need to buy a box truck for my next job. Should this follow 23 8, do I make the eight part follow my current income or projected income with the new job? Thank you.

[B]

I think it's more of a 3D glasses situation than it is 238 because this is a business asset.

[A]

Yep, that was.

[B]

And business assets are completely different. 23eight is designed for your personal car. And really we're trying to just keep your ego in check with what you can actually afford. A business is a completely different thing because you have to make decisions that are right for the business, but you have to make sure you can truly fund it. And that's why when I say put on my 3D glasses or your 3D glasses, it's do the dream plan. Essentially do a five to seven year spreadsheet with the dream plan of what you think all the cash flows are going to look like. Do the down to earth plan and then don't forget to do the doo doo plan of how bad and then put this in there and see if it works and see if this actually makes you more efficient and more profitable and it's good for the business. That's, that's why I think it's, you're, you're using the wrong metric on this.

[A]

Yeah. And, and when it comes to like business expenses and spending, businesses and personal finance are different. But oftentimes the principles that we apply to our personal finances, if they were also applied to business, would likely pan out pretty good for you, right? When you analyze this, think about it. I'd love if you're going to buy a box truck and depending on the size of the business and whichever paying cash is wonderful, like if you can pay cash and buy that equipment outright, it's a fantastic thing to be able to do. But if that's not possible, then one of the things you have to figure out is, okay, if I have to take on debt to go satisfy this, what's the appropriate amount to take, appropriate amount of debt to take on, and how does that cash flow affect future business operations? It's a little bit different than just, okay, what's it, what am I doing for my personal finances? Because I don't know how long this box truck may last. If box trucks for you last 10 years, then that's a great thing. If you have to replace these because they're used super hard every three years, well then it's a different metric you're going to use to figure out what's the appropriate way to fund that expense. You can apply personal finance principles to business, but business finances work a little bit different.

[B]

I think you make a good point is you don't want to because here's what I think. Business people get themselves in trouble sometimes. You're going to be able to take accelerated depreciation and get a huge deduction. When you, in the year that you buy this box truck, you just need to make sure that your financing aligns to the life expectancy reasonably well. Because what you don't want to do is what Bo is saying is that you finance this thing over six or seven years, but yet you ride it so hard that it's basically worthless in three years. You realize what you've just created is a bunch of negative equity that hurts you. So it is your friend. Nothing wrong with using a little leverage, but make sure that it matches up nicely. I prefer the shorter the use of leverage, the better in the health of the business in the long term.

[C]

Well, great. Thank you so much for the question, James. I hope that helps you think through it not just as a vehicle decision, but also as a business decision. So thanks for the answer, guys.

[A]

Can I throw one other thing in there? I'm sorry. These things are just hitting me great. Far too often I see people who have like this unbelievable metric when it comes to their personal finances. Like, I'm going to be very responsible and do this. And it's almost like they lose that in the business side because there's this guise of, oh, it's for the business.

[B]

Huge. I was thinking the exact same thing

[A]

because I've got some business owner friends who. Their personal balance sheet looks fine when I look at their business. My holy. Why do you. Why do you have all these lines of credit? Why do you have all this debt? What? It's just how disconnected.

[B]

Yeah.

[A]

Justification around.

[B]

What's funny is I'll watch somebody who's cheap with their personal life, but then they'll say, but I can spend $110,000 on this piece of equipment because that's deductible to the business. And I'm like, yeah, but you realize that's only saving you. Essentially, if you say the taxes are 30%, you're still having to come up with these 70 cents on the dollar. So if you overspend $50,000 and you multiply 50,000 times 70%, you can say you still pull $35,000 out of your future back pocket.

[A]

That's right.

[B]

And not even taking into account the carry costs and all the other things that go into it. So don't let the. Just like we say, don't let the tax tell wag the dog, you know, don't let the deductibility of something make you make bad decisions. You realize every dollar should be viewed as a dollar bill in your army of dollars. I think you'll just. If you have that visual, you'll think about things differently.

[A]

That's right.

[B]

Good point.

[C]

That was a great add on.

[A]

Thanks, raves.

[B]

No, it is a good one because I see people lose their minds.

[A]

Man, it's so nuts.

[B]

I mean, I've had. I've had friends and neighbors say, I'm gonna start. I'M gonna go buy an airplane, okay. So that I can. Because I can rent it back to a flight school and I can take all this accelerated depreciation. It'll practically be free. And I'm like, I bet there's. But there's more to it than that.

[A]

So many business owners, or so many people that want to be business, they like, they view deductions as like the main course. Oh, let me go get some deductions. Being able to deduct expenses is. It's like, it's a feature. It's not the main thing. Like, it's. It's a thing that you can do for realistic expenses. But some people just lose their minds. Oh, I can deduct. I can. And they get themselves in a world of hurt with very little liquidity and a whole lot of debt. And that's just. That's not where you want to be.

[B]

Well, so I always think in the long term is that if I'm going to be successful for the long term, there's going to be probably two years out of every decade that it's just going to feel scary. Just as a. And you should. If, especially as a small business owner, you should be naturally double scared, is that I've got to position myself in a way that when the bad times happen, I haven't been so willy nilly with my decisions that I put myself in a really desperate bad moment in time. That's right, because that's where failure occurs. That's where you get yourself out of. In a hole you can't get out of.

[A]

Yep.

[C]

Very good stuff. Thanks, y'.

[A]

All.

[C]

Okay, it is time to introduce our newest segment to add the Ask the Money Guy show. It is called from the Wings. The content team from the Wings has put together a list of current or recent headlines for Brian and Bo to react to.

[B]

And by the way, they did not share any of these with us. So I have no idea what they're going to say.

[A]

You know, current events is not my strong suit.

[C]

Oh, yeah, they're all. Well, you'll see. Anyway, they probably took that into account

[B]

that you're barely literate. I'm just kidding. By the way, Bo's a cfa. He's actually very literate.

[C]

He's very literate.

[A]

Can neither read nor swim.

[C]

Oh, my God.

[B]

No, you definitely can read. No, I'd never take away from your iq. You're extremely. You just don't choose to read for pleasure. By the way, Bo's leaving for the beach soon.

[A]

Literally.

[B]

Yep. And I asked her. I Said, what book are you taking on your trip?

[C]

What was your answer?

[B]

And he says, I just sit there and watch the ocean go in and out.

[A]

And I can't wait.

[C]

For hours.

[A]

I'm just gonna listen.

[B]

No books, no reading.

[A]

It's gonna be wonderful. Maybe I'll take a. A copy of Millionaire Mission with me. Maybe I'll take that.

[B]

And you've read that book?

[A]

I have read that.

[B]

You've read that book. You've edited that book?

[A]

I did. I did.

[C]

All right, well, let's dive into some headlines. So you tell us, first of all, is this news or is it noise and we shouldn't pay attention? And then give us your take if you have any reactions to it.

[A]

No time, no timer. Just like our thoughts.

[C]

We're trying a new segment.

[A]

Got it.

[C]

More relaxed segment. We'll see how it goes.

[B]

Bo, you can go first.

[C]

Okay. The first headline says, and I'm very curious to see what you say about this. SEC approves Plan to Remove Day Trading Limit for Small Investors.

[A]

SEC approves Plan to Remove Day Trading. Well, that just sounds bad, Right? One, I am not a huge fan of day trading. I don't think there's a lot of success in it. I think oftentimes it can be more like gambling. And when I read this headline, it says, scp Plan to Remove the limit for Small investors. Meaning if you're a small investor, we're going to raise how much you can trade on a daily basis. If I'm understanding what the headline is saying now, I want to be news or noise. Oh, is that what I'm supposed to be doing first?

[C]

That's the first thing. And then your thoughts were great too, though. That was correct.

[A]

It depends. For, For. For our purposes, noise. I was trying to explain it, but for.

[B]

No, you're right.

[C]

I like your thoughts, too.

[A]

What I imagine is when it caught. When it says small investors, it's probably not talking about retail investors. It's probably talking about small institutions would be my guess in terms of that. But either way, it's. I think it's noise to our audience.

[B]

I mean, I think it's noise because if you're day trading, you've lost the plot. So I would. I would not do it. Now, look, I don't know the merits of this. I haven't read this article, so. But it sounds like, hey, there were some protections out there to keep people from themselves. But I'm going to tell you, a financial mutant is not day trading. It's a. By the way, not only is it a Fool's errand. But also you'll create a big burden for yourself when you do taxes. And it's just, I just don't, I don't think it's. That momentum play is not as effective as people think it is. And if, you know, it's kind of like you sit down at the poker table, if you don't know who the fish is at the table, then you're the fish. It's the same way with trading. There's a reason that a lot of these, when you go with these brokerage companies, you know, the Robin Hoods and elsewhere, you realize a lot of the big fish are paying for access to those investors because they can play on the other side of it and make more money.

[C]

All right, next one. Is this news or noise? Stock market notches one of its fastest turnarounds in years from Yahoo Finance.

[A]

Ooh, I got a thought.

[B]

I mean, these are all noise. I saw this one as it came across and it's because, you know, with all the geopolitical stuff going on, it's like, it's like a boosh, caboosh, kaboosh, kaboosh, you know, depending upon, you know, what's going on with the strait and if it's open, is it closed, you know, what did the president say? It's all noise. Just, you know, know where you are in the financial order of operations. And I think you will be a. Okay. It's okay to pay attention to this stuff just because like I said, when the market's down 20%, I want you to know, hey, what do I do to maximize this moment? And when we go through these periods where we hit all time highs, that's also, it's good to know what's going on in this moment. But this is still noise to me.

[A]

News.

[C]

Are we wanting one to fight territory?

[B]

Let's hear what you say.

[A]

I think this is news. I think you should pay attention to this because it is a reminder to us how quickly the market can turn, how quickly something can shift. And all of a sudden things are scary, scary, scary, scary, and there's a rapid turnaround, I think you should pay attention to that. So what that should tell you is, oh man, if I'm one of those people that gets real nervous in the downturn and I'm thinking, oh, you know what, I'm just going to, I'm going to sit on the sidelines and I'm going to wait for things to feel better and then I'll get back in. When things feel a little more Comfortable. It doesn't often happen that way. It often happens in a V shape. It hits the bottom and it bounces right back up. I think you should pay attention to this. That two, three weeks ago the headlines were terrible and scary and horrifying and now they're, oh, turnaround, things are great. You want to be careful being on the sidelines when that happens. So I'd say pay attention. Remind yourself when things are bad, they could just as quickly become good as they became bad.

[B]

And ABB always be buying, baby boom.

[C]

All right, good takes. You kind of did two sides of the same thing.

[B]

I'm not even mad at him.

[C]

I liked it.

[B]

It's fine. I think he said that just to be controversial. He's about to go on vacation, so he figured he'd get. You need to bite into me a little bit.

[C]

All right, next one says, tell me, is it news or noise why adjustable rate mortgages are making a comeback?

[B]

I think that's, I think you could use that as newsworthy because a lot of times, you know, look, Americans, we always lock ourselves into 15 year, 30, primarily 30 year mortgages. But a lot of times people, you know, we found out in our most recent housing show, people flip houses every 12 years. That's considered the long term. But a lot of people, like, if, you know, you work for a company that's going to relocate you every five years, you ought to probably make sure you understand with those financial products because you might be paying a premium for something that you're not even getting the benefit out of. So paying attention to what's going on in the cycle with interest rates is important.

[A]

There was a long time, I mean, probably a decade or so where adjustable rate mortgages just didn't make a whole lot of sense. Fixed rates on 15 and 30s were so low, if, if you were getting adjustable, you were kind of just being foolish by not locking that in.

[B]

That's a good point.

[A]

Now that rates have come high and adjustable rates are somewhat attractive, assuming that you're in the right position, right circumstance, you kind of go through the 3D glasses, you understand what you're doing. An adjustable rate mortgage could indeed likely make sense for you. But you have to know what the risk is. With adjustable rate mortgage. Whenever that, whatever that period is, if it's 5, 1, 7, 1, 10 1, whatever that is, whenever that ends, you better have a plan for that. You know what you're going to do and when you're going to do it and how you're going to do it, or what you're going to do before you get to that place. But we always want to know about what products are available and what tools we might be able to use in our tool belt. So then we can determine if it makes sense to use those or not.

[B]

And if you are going to use an adjustable rate, go ahead and do the. The work of reading the fine print to see what is your exposure when the rate adjusts at the end. Because sometimes it's not as bad as you would.

[A]

That's right.

[B]

You're like, okay, if I get stuck and I'm in this area longer than I thought that it can only go up this much.

[A]

Yeah, like a 2% increase.

[B]

Yeah, it's. It's not as big of a risk. But then other times you're like, holy cow, that's. That's a risk that I probably. I better either make sure I'm not here any longer or, you know, or be very cautious about using this product. Go ahead and read the fine print on that so you know what's happening at the end of this term, just in case you get stuck.

[A]

Yep.

[C]

Good discussion. All right, overall newsworthy. All right, this last one, I don't think you're ready. I need to know, is this news or is it noise? The world's oldest octopus fossil isn't an octopus after all. Scientists say what?

[B]

Who put this in there? I want to know. Afterwards, we're going to find out which team member put this in there so we can take corrective evidence.

[C]

This was from the wings.

[A]

I. I want to know, what is it?

[B]

Is this.

[A]

Ken, I'm on the edge of my seat. If it was not. If it's not an octopus, here's a

[C]

quote from the article. It says, this has too many teeth, so it can't be an octopus. And that's how we realize that the world's oldest octopus is actually a fossil.

[B]

Nautilus I can confuse. Because now when you go to your weekend dinner party or you're hanging out with your relatives or your buddies, you can be like, you know what? That oldest octopus fossil, did you hear? It's kind of like Pluto. It's not a planet anymore.

[A]

No, that's back in Pluto. Back. It came back. Right.

[B]

I mean, these are things you should know if you want to be the most intriguing person at your dinner party.

[A]

Octopi have teeth. I didn't actually know that they had teeth. Are they. Are they not that.

[C]

Not as many as this fossil had, apparently.

[B]

Now you know.

[C]

Now you know.

[A]

You can't say. You left this live Stream and didn't learn something today because I bet you that was not on anybody's being.

[C]

It was not on anybody's radar.

[B]

Put in the comments if you already knew that or if that came across your newsfeed because you, you're in the right place.

[C]

Has been from the wings. If you have a headline article, something happening that's related to personal finance that you would like Brian and Beau to react to in this segment in the future, drop it in the comments of this episode or post it in the money verse and we will check it out.

[B]

I think I like this segment because it. Look, there are sometimes I I would encourage because we have so much volatility going on. Not that I'm trying to influence our team, but you all should sometimes. Like Yahoo, they give me notifications like the sky's falling. And I'm like, are you freaking kidding me? The market's not even down like a half a percent. But they have this crazy scary headline. I think those would be useful to kind of because every now and then I tweet if I'm not being lazy, I'll tweet that out and say, look, this is why you have to be careful with you letting your head.

[C]

The last time you tweeted, I mean,

[B]

it's probably been a year or two. You know, this is what happens when you've been doing this over 20 years. You, you, you know, it all runs together.

[A]

Do you know that? Octopus. Octopus.

[C]

Knew he was researching.

[A]

Octopuses don't actually have teeth. They have beaks.

[C]

They have what?

[A]

Beaks. Like a duck? Like a bird? Our chat said it, I googled it. It's a thing. They actually have beaks. I was this many minutes old when I learned that.

[B]

So here's what I'm sitting here thinking. Like, I eat calamari, which is squid, right? But then octopus, I eat its tentacles. Because if you go to fancy restaurants, they actually serve you like an octopus tentacle. I just think it's interesting. This is all still part of the food supply.

[A]

That is interesting.

[C]

Interesting.

[B]

By the way, we're probably in the chat.

[C]

Did say quote, doesn't matter because I'm not going in the ocean, Bo Probably.

[A]

That's true. That's true. What I think is wild is I was, I was at soccer practice because this is silly, right? This is fun stuff. I was at soccer practice and I started getting. My phone started buzzing and I was getting notifications from the money verse. And this was like 7pm at night. It wasn't like a lot. And people were Just like asking some questions. Hey, what? I was like, you know what? I'm going to dive right in. And it was wild. Even at 7pm on a Wednesday night. This was last week. We still get to hang out with you guys. So if you've not checked. If you've not checked out the money verse. Moneyguy.com moneyverse it is like a 24. 7 live stream where not only do you get to interact with us, and yes, Brian is in there. There's a whole thread.

[B]

I've been nervous. Well, I've been. I've been. But here's the thing. I'm kind of playing the part of just. I've been nervous to post.

[A]

Why?

[B]

I don't know. So new. I'm old.

[A]

Do you know what's what? A lot of people think that you're lurking and they're making of who. Like they think you're posting under a super.

[B]

Well, they can't see me. People posted anything.

[A]

Listen to me. I'm telling you this. You got to listen.

[B]

Listen.

[A]

A lot of people think that you have a. You are someone else in the money verse. So, like, there's some folks in there, like penguin or Mr. Sky or Panda, all these folks, they think that you are that person pretending not to be you. And I had to tell them it's not.

[C]

There's a lot of concerns.

[B]

I've been lurking. I haven't been posting.

[A]

So if you.

[C]

Well, there you go. You've heard it here first.

[A]

If you've not checked out the money verse, it's a great place, one you can interact, you can talk, we can goof off. There's also unbelievable. Celebrating milestones.

[B]

That's the one I was gonna say I've worked the most in, in the celebrations. I think it's really cool.

[A]

It's awesome. Awesome.

[B]

I just feel weird about jumping in on some of that stuff.

[C]

Interesting.

[B]

Y' all need to educate me.

[C]

You never know.

[B]

Maybe hold my hand as we do it.

[C]

Noted. Well, you want to answer some more personal finance questions right now? I have a few more queued up.

[A]

Let's do it.

[C]

All right, we've got.

[B]

I will say. Can I say one more thing about the money verse?

[C]

Of course.

[B]

So my daughter, she brought her boyfriend to dinner with us like two weeks ago or something like that.

[A]

It's a big deal.

[B]

And. And he. He heard that we had like this Reddit threat, I guess with the youngsters, this Reddit stuff is legit. And I showed him how big the way the money verse was and it was like Whoa.

[C]

Do you mean discord?

[A]

Are you talking about Reddit or Discord?

[B]

Discord.

[A]

Discord. Yeah.

[B]

See, no, but.

[A]

No, but our Reddit thread is also incredibly active.

[B]

Whatever. Money Verse is on Discord.

[A]

That's right. Yep.

[B]

I showed because I'm a lurker, so I have the app. So I showed them the thing, and their mind was like, it's. It's literally like, so for the youngsters, we're doing something right.

[A]

And what's great is there's. There's always people out there, like, you got a question, you want to get somebody's thoughts, you want to celebrate something, you just say, hey, I just paid off my car. I can't tell my family and friends because it seemed like I was bragging. You can come tell the money verse. And we love to celebrate with you. We love to be excited for you. It's a cool thing. So if you've not checked it out, go check out the Money verse. It's awesome.

[C]

Moneyguide. Money Verse. I loved it.

[A]

There was some bench press content in there this past week, which was awesome. Some deadlifting stuff in there. It was.

[B]

It's great. That's. This stuff just surrounds. But we had a. We had a. We did recorded a Making a Millionaire. And the question after the cameras went off, but what's your. What's your bench press? Max these type of questions. I love it.

[C]

Always. All right, speaking of questions, Brandon S. Has one for you. It says, My company matches 6% and offers both 401K and Roth 401K. I'm currently doing 12% in the 401K and 3% in Roth 401K. Is there a guideline on what I should contribute to more? Should it be a 50, 50 split?

[B]

Bo, there's a lot going on in the world right now that affects small business owners like us, and much of it we just don't have control over.

[A]

That's right, Brian. We can't control things like interest rates or tariffs, but we can control how efficiently we operate. And automating things like payroll and HR is one of the best way ways to get your time back and focus on what actually moves the needle.

[B]

And that's why we love Gusto. Gusto is an online payroll and benefits software built for small businesses. It's all in one, remote, friendly, and incredibly easy to use, so you can pay, hire, onboard, and support your team from anywhere.

[A]

Gusto helps you save time with payroll, direct deposits, health benefits, even 401ks. And they have options for pretty much every budget.

[B]

They Even make it quick and easy to switch to Gusto. Just transfer your existing data and you don't pay a dime until you run your first payroll.

[A]

Look, you can't control everything, but you can control how much time you save by automating payroll and HR processes.

[B]

So try Gusto [e-mail] MoneyGuy and get three months free when you run your first payroll. That's three months of free [e-mail] Moneyguy

[A]

Brian, I think one of the biggest surprises when you start a business is realizing you're responsible for everything.

[B]

That's exactly right. At the beginning. You're the marketing department, operations, hr, customer service, all of it.

[A]

Yeah. And it can be exhausting if you don't have the right systems in place. Which is why having the right tools and the right partner can be a game changer. That is where Shopify comes in.

[B]

Shopify is the commerce platform behind millions of businesses around the world and 10% of all e commerce in the US from startups to popular brands like Allbirds and Untuck it.

[A]

And they help you get up and running fast. You can build a great looking online store with ready to use templates and their AI tools can handle things like product descriptions and even improving your product images.

[B]

Shopify can even help with the email campaigns and social media so you can actually reach customers instead of just building something and hoping people find it.

[A]

And everything from inventory to payments to analytics is all there in one place. So you're not wasting time trying to connect a bunch of different tools. And that's huge because it means you can spend less time on the mundane tasks and more time building something meaningful.

[B]

So start your business today with the industry's business. Best business partner Shopify and start hearing. Sign up for your $1 per month trial at shopify.com moneyguy go to shopify.com

[A]

moneyguy that's shopify.com moneyguy Brandon, we need to know a little bit more information. Can you let us know your household income? Because oftentimes when it's one, I love hearing that you're getting the full match. It says my company matches six. And so I'm assuming that if you're putting in 15% total, you're probably getting that full six. So step number one, Brian, hold that thing up for me. You are hitting step number two. You're getting the full employer match. You're getting all that 6%. Well, the next question you have to figure is, okay, if I'm going to put more in my 401k. Should I do Roth or should I do pre tax? And in our opinion it probably most likely depends on what your tax situation looks like.

[B]

Yeah, this is, but this is one majority of time. I don't want to say always is nothing. This isn't bad, but it's not maximization because typically once we figure out that you've crossed the threshold that you're a high income, high tax situation, you would do a hundred percent into traditional. If you're one of these people that's young and you're in a low tax situation and you want to maximize the tax free growth of the Roth accounts, you'd be 100% in the Roth side of things. So that's why if you, if you go deeper into our content, you'll see we're typically instead of dabbling in having feet in both sides of this, you need to squarely do the exercise to figure out where you are from with the tax system and where you are the savings and compounding growth and make the decision, are you Roth where you get tax free growth over the long term or are you traditional? You know where you take the tax deduction now, but you get tax deferred growth but then when you pull it out in the future you pay ordinary income tax rates on it. Then you have to figure out am I going to have a tax arbitrage situation in retirement? Because maybe when I'm no longer have my earned income in my total income, my income goes way down into the basement and I'm once again back in a low tax rate and I can do an arbitrage in the future to take advantage of the lower tax rate in retirement.

[C]

Well, Brandon S, thank you for the question. Appreciate you being here. Next one's from Sherry. It says I'm on track for coastfi. Should I put continued savings in a brokerage account or in a Roth ira? Because I can always access my contributions if I need the money. What do you think?

[B]

This is a good question. I mean I'm going to give off the cuff. By the way, my favorite child, when you're looking at the three bucket strategy of Roth accounts which are tax free growth, tax deferred, which you know, you get deduction now but they grow tax deferred and then you pay ordinary income tax or after tax. Roth is always my favorite child because they have a huge legacy component to them. I love that you get to stick it to the man and potentially grow a seven figure tax free account. There's just a lot of benefit. And once again she is exactly right. You can pull the basis out. Well, you could pull the, you could pull the whole account out after enough time.

[A]

Yeah. If you're on track for coast fire. So the idea of coast fires. I'm going to save, save, save, save. I'm going to build up a pot of money and I'm going to just let that pot of money coast until I get to full financial independence and the pot of money will have grown to be enough. Well, I'm going to argue if you're already in that position and you're already on track for that, you've probably been saving really, really aggressively anyways. So if what you're asking is okay, while I'm in the coast phase, I just can't help myself, I still got to save more. I agree. Brian. I love the idea of putting money in the Roth. Not because you can get access to your contributions tax free and penalty free before 59 and a half, but for the reason that it grows tax free and tax free growth is really, really awesome. Now, if you're in a position, Sherry, where you know you're going to exit the workforce early and it's going to be pre55 and you're going to have to have access to dollars, while yes, you can access the Roth dollars, I don't know that that's the best choice because now, again, if you're pulling out of your ROTH at age 52, 53, 54, you are short changing those dollars, 10, 20, maybe 30 years of tax free growth. What I'd rather see you do is put money in the Roth, let that grow, Let that be the money that you pull out much later in life after it's grown a ton. And also fund that after tax account so that when you're at 52, 53, 55, whatever your number is, you can then begin to pull dollars out of that after tax account. So it's a best of both worlds. And this one, I don't think it's a. It's not either or. I'd love for you to do both.

[B]

That's exactly I was about to say this is not an or question. This is an and question is because we know for anybody who's in the fire slash fine movement next endeavor, this is just the coast version of fire is that most people to be part successful in the fire movement, you have to have a savings rate beyond 30%. And because people have savings rates, sometimes 30, 40%, you're going to blow through what you can put into Roth accounts. You're going to blow through what you can put into a 401k account. And that's why it's a perfect setup for people. That's why it's always step seven. When you're really thinking about these things, load up that after tax account because that's going to be your bridge account for anybody who's retiring between 50 to 55. You're going to love that you have those after tax assets because that's going to be the easy money to pull out of without you kind of losing sleep on the fact of, yeah, I could get access to my Roth basis, but man, oh man, is that an incredible legacy building thing to let those Roth assets. That's why you love this child so much. This Roth account, you're going to hate using that money. This is typically the account you're going to fund first and then try to die with it so you can leave it to your heirs.

[A]

That's right. That's exactly right.

[C]

They like that question. Good question and great answer. Thanks so much for asking it, Sheri. All right, next question is from Top Notch.

[B]

I think it says, can we just give a plug?

[C]

No, I don't think so. This is just a bunch of letters I was trying to make sense of as a username. But okay, the question is, we're 30 with a newborn. I have a bit over 1 times saved. My wife has under 20, has 20k under 1 times on Foo. Step 5, should we focus on catching her up or continue equal percent investing? I make about 30k more than her in salary.

[B]

This, this is. I already see the problem.

[A]

Well, so it sounds like what you're trying to do is hit some of our milestones. One of the milestones, if you've not, if you're not familiar with this, you haven't heard this before. We think that by the time you get to age 30, we want you to have one time your annual household income saved in investments, not net worth, but in your liquid investment saved up. Well, well, if you're at one time on your end and she's at almost one time on her end, what that means collectively is that y' all are at almost one time as a household. My opinion is, and I only say opinion because I don't want to like project my bias onto you, but when it comes to being married and it comes to hitting these milestones, I think rather than thinking about, okay, you need to hit one time and then I'm gonna hit one time and then I'm get to three times by 40, then you're gonna get three times. If we can think about it as a household and think about total household income, then what we're able to do is when we approach the financial order of operations, we can save in the most efficient and effective manner possible. Because let's assume that you have access to a 401k and she doesn't have access to a 401k. What does that mean? That you should just not put a ton in your 401k and she should just start doing after tax? Maybe not. That's going to get the financial order of operations out of whack. So if you can think about it, but as a household, lay out all the income in front of you, then lay out all the accounts and vehicles you have at your disposal. Then pick and choose, okay, which ones make the most sense for both of us collectively and the household to achieve those goals.

[B]

Look, when I have a couple come to me, and a lot of times, like older marriages and other things, they're going to have complications, whether of children from previous marriages, they're going to have assets that were built up because, you know, earlier in life and. Or maybe they inherited some assets. There's complications out there that. Because of the legal protections and then just because of the legacy of what you've built already in the earlier parts of your life, separate assets makes complete sense. And we protect that. We do a good job of helping our clients with that. However, I do think when two become one through marriage, all of your money set up a joint account, and the money coming into the household should be going into that account. And then y' all should be making collaborative joint decisions. Because, by the way, you just had the key point in there. Was it you make 30 to $40,000 more than your spouse. That already is going to create a strange power dynamic. And here you are running a metric saying, well, I'm doing what I'm supposed to be doing. But yet she's underfunding what she should be doing. And by the way, I make $30,000 more a year than she does. Do you see the double whammy about the power structure you just created there? Where is that? Is that healthy? And I don't. I don't think so. I mean, I know that. Look, in my household, we get in fights. You never talk about divorce. You also. In fights, we never talk about who makes what money, because the power has to come out of who makes what in a relationship. Otherwise, this is just gonna get worse and weird. And I get it. I mean, we've had guests on and I have bias. I don't even try to hide it is that I think two should become one. Not just for the marriage bed, but also for your checking account.

[A]

Love that.

[C]

Well, really good questions today, everyone. Thank you for joining in, letting us

[B]

know how we're gonna end it.

[A]

Wow.

[B]

I felt like, boom.

[C]

Where's that light drop?

[B]

I lit the fumes and we just threw that bad boy out there and now I'm hiding over here. I'm not even hiding. I'm just gonna let it blow up in my face.

[C]

You said it. So confident. I was like with that.

[B]

All right, that's where we'll go.

[C]

Let's wrap this thing up.

[B]

Boom shakalaka.

[C]

Boom shakalaka. But truly, let us know what we should include in our next from the Wing segment. Thank you so much for getting all of your questions in the live stream. Even though we turn off the cameras here, moneyguy.com resources is full of free stuff just for you all about personal finance. And you can continue to have discussions and ask questions in the money [e-mail]

[B]

Moneyverse Guys, thanks for putting up with my Barry White voice today. Hopefully. I don't even know how this is gonna come off. I mean, might go check out this episode so I can hear how this sounds sound through the microphone, see how it modulates, see if that bass is as good as I'm hoping. But we'll play it out. Not only can you get entertained from what's going on with our voices, but also with what our knowledge is on personal finance. I'm your host, Brian, joined by Mr. Bo Reby and the rest of the money guy Cre. Money got out.

[C]

The Money Guy show is hosted by Brian Preston and Bo Hansen. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance and compliance with the securities laws and regulations, Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment or legal advice. All investments involve a degree of risk, including the risk of loss.