Money Guy Show: "Can I Pay My Car Off in Four Years?"
Release Date: February 5, 2025
Hosts: Brian Preston and Bo Hanson

Introduction and Exciting Announcements

Brian Preston kicks off the episode with enthusiastic news about a new show:

"[00:06] We have a brand new show coming out releasing on February 3rd. It's gonna start at 8am every other Monday. It's a brand new show called Making a Millionaire where we get to sit down and talk to millionaires and millionaires in the making."

Bo Hanson adds to the excitement, highlighting the team's continuous growth and the importance of their loyal subscribers:

"[00:26] We love you guys. You guys are a big support system to us. Means a lot to us."

They encourage listeners to subscribe and participate in the new show, providing details on where to find trailers and how to apply:

"[01:12] If you would like to be on that new show, you can go to moneyguy.com apply."

Listener Questions and Expert Advice

The episode transitions into a Q&A session, addressing various financial queries from listeners.

1. Navigating Roth IRA Contributions Over Income Limits

A listener named Mutant P. asks:

"[02:48] I already contributed to my Roth IRA, but my side hustle had a surge of income and put us over the income limit. Is there a way to put it back?"

Brian Preston explains the steps to rectify this situation:

"[03:11] Contact the custodian or broker, pull out those contributions, and any applicable earnings. These will be subject to income tax and penalties if under 59½."
"You never should have been able to make the money anyway. So it's not the worst thing in the world." [03:11]

Bo Hanson introduces the concept of backdoor Roth contributions:

"[04:20] This is when you make a non-deductible contribution to a Traditional IRA and then convert it to a Roth IRA."

Brian emphasizes alternatives if backdoor Roth isn't feasible:

"[05:35] Put those dollars in an after-tax brokerage account and still get them to work for you. Don't just leave them in a savings account."

2. Setting Net Worth Targets Amid Income Fluctuations

Matt, a radar technician, inquires:

"[06:26] How do you approach net worth targets when your income experiences a big change?"

Brian Preston references "The Millionaire Next Door" formula:

"[07:00] If you take your age times your income and divide by 10, that gives you an idea of where your net worth should be."

He advises considering average income over several years to smooth out fluctuations:

"[07:00] Think about the average income over the last three to five years to get a better metric of your saving habits." [07:00]

Bo Hanson recommends using their free net worth spreadsheet for a more detailed analysis:

"[08:51] Download our free net worth spreadsheet from moneyguy.com/resources to get a dashboard view of your financial health."

Brian highlights their proprietary net worth dashboard:

"[10:23] Our journey to abundance quadrant tracks your net worth over time, showing if you're an average or prodigious accumulator."

3. Understanding Hyper Accumulation Before Progressing to Step Eight

Boosted Bricks poses a two-part question:

"[11:57] How would you quantify hyper accumulation before moving on to step eight?"

Brian Preston and Bo Hanson discuss the importance of a 25% savings rate as a benchmark for hyper accumulation:

"[14:26] For hyper accumulation, a 25% savings rate is essential. If your savings rate meets this threshold, you're on track."
"[14:50] If you aim to leave the workforce early, you'll need to save even more than 25%." [14:50]

Bo Hanson elaborates on managing lifestyle increases post significant income changes:

"[15:35] Ensure that increased income is translating into assets and not just consumption to maintain hyper accumulation."

4. Financing a New Car and Planning for a Wedding

Nick S. asks:

"[15:44] I'm 30 years old and buying a new car with four years of zero-percent financing. Is it okay to use all four years? Also, how do I prepare for paying for a wedding?"

Bo Hanson advises caution with long-term financing:

"[16:20] You can take the 0% for four years, but aim to pay it off in three. Cars depreciate significantly, so shorter financing periods minimize loss."

Brian Preston discusses prioritizing financial goals:

"[17:28] Prioritize your wedding savings alongside your car payments by determining which goals are most important to you."
"Determine if you want a massive wedding or a reasonable one to balance with other financial goals like paying off your car." [19:21]

Bo Hanson cautions against overextending with debt:

"[19:22] Avoid assuming you can afford a nicer car and a lavish wedding by increasing debt. Make disciplined financial decisions instead."

Conclusion and Future Endeavors

Bo Hanson reflects on their mission to empower listeners:

"[22:03] Our goal is to make you better with your money through real stories and strategies. We want you to take an active role in your financial journey."

Brian Preston wraps up with a reminder about their services and the emphasis on not offering personalized investment advice:

"[23:09] Abound Wealth Management does not offer personalized investment or tax advice through the Money Guy Show. All information is for informational purposes only."

Key Takeaways

• Roth IRA Adjustments: If over income limits, withdraw excess contributions and earnings to avoid penalties.
• Net Worth Goals: Use average income over several years for accurate net worth targets, and consider tools like their net worth spreadsheet.
• Hyper Accumulation: Maintain a 25% savings rate, adjusting as necessary for early financial independence goals.
• Debt Management: Prioritize financial goals and avoid overextending with long-term debt, especially for depreciating assets like cars.
• Financial Planning: Use disciplined strategies to balance saving, investing, and spending to achieve long-term financial health.

Notable Quotes with Timestamps

• Brian Preston:
  "[07:00] If you take your age times your income and divide by 10, that'll give you an idea of where your net worth should be."

• Bo Hanson:
  "[14:50] If you aim to leave the workforce early, you'll need to save even more than 25%."
  "[19:22] Avoid assuming you can afford a nicer car and a lavish wedding by increasing debt."

• Brian Preston:
  "[10:23] Our journey to abundance quadrant tracks your net worth over time, showing if you're an average or prodigious accumulator."

Resources Mentioned

• Making a Millionaire Show: Launching February 3rd at 8am every other Monday. Apply at moneyguy.com/makingamillionaire.
• Net Worth Spreadsheet: Available for free download at moneyguy.com/resources.
• Learn More: Visit learn.moneyguy.com for the net worth tool.

Final Thoughts

Brian Preston and Bo Hanson deliver a comprehensive discussion on managing car payments, optimizing Roth IRA contributions, setting realistic net worth targets amidst income changes, and balancing significant life expenses like weddings. Their practical advice, backed by personal anecdotes and expert strategies, provides listeners with actionable steps to enhance their financial well-being and move towards financial independence.

For more insights and personalized financial strategies, subscribe to the Money Guy Show and explore their upcoming series, "Making a Millionaire."