Experts Predict MASSIVE Stock Market Drop (Should You Sell?)

Summary

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Money Guy Show - Episode Summary

Episode Title: Experts Predict MASSIVE Stock Market Drop (Should You Sell?)

Hosts: Brian Preston & Bo Hanson

Date: November 12, 2025

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Episode Overview

In this episode, Brian and Bo tackle sensational headlines predicting a massive upcoming stock market crash. Rather than stoking fear, they guide listeners through economic realities, address investor concerns, and reaffirm disciplined wealth-building strategies. They respond to listener questions covering market timing, mortgages, car-buying decisions, and the newsworthy topic of proposed 50-year mortgages, all while maintaining their accessible, practical tone.

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Key Discussion Points & Insights

1. Market Crash Headlines: Hype vs. Reality

• The hosts display recent alarming headlines predicting the "mother of all crashes" or a brutal 2025-2026 bear market.
• Bo notes, “There is always someone out there saying, okay, the next crash is coming, the next downturn is coming. You need to be afraid. You need to be aware.” [00:11]
• Brian warns against letting such voices distract your financial focus: “You have to be careful who you let in your head...you can cherry pick the data on inflation multiple ways.” [02:42]

2. Current Economic Concerns

• They list the top concerns that feed crash hysteria:
  • Slowing Job Market and Lingering Inflation: The policy tools to address these are often at odds, adding to uncertainty.
  • Tax Policy and Trade Tariffs: Unclear future regulations add to investor discomfort.
  • Volatile AI/Tech Markets: The “AI bubble” debate highlights how investor FOMO can go wrong but reinforces the value of diversification.
• On AI and “bubble” talk, Brian shares a personal anecdote about advising a friend to buy the S&P 500 instead of Nvidia: “He brings it up to me constantly. He's like, you realize that $10,000 would now be worth $97,000. Who's keeping track though?” [05:11]
• Bo’s diversification philosophy: “If you're in a well-diversified portfolio...it’s not something that's going to leave you destitute because we know that when the market goes down, there's often a V shaped recovery.” [06:14]

3. Should You Be Worried About a Crash?

• Their Answer: No.
  • Market cycles are normal; downturns and new highs are part of investing.
  • Warren Buffett advice: “When it's raining opportunity, reach for a washtub, not a thimble.” [12:27]
  • Brian: “If your plan was good before, it’s going to be good during and...after. Make sure you're creating a plan of action and not just flopping around based upon what the media tells you.” [10:59]
• Financial Order of Operations: The hosts urge listeners to return to their trademarked step-by-step system for financial decisions.
  • Have a solid plan, emergency fund, and long-term approach to investing, making you “immune” to short-term volatility.

4. Listener Q&A Highlights

a) When to Invest a Lump Sum? (Mason Pease, [14:04])

• Mason asks if he should wait to invest Roth IRA contributions given market fears.
• Bo: “Is the market going to go down? Yes. Is the market going to go up? Also yes...The best time to invest is, is when it is the absolute scariest.” [14:32]
• Brian advises: “If you're worried ...definitely set up a dollar cost averaging structure...What is not the right answer is to do nothing.” [15:54]

b) 15-Year vs. 30-Year Mortgage for a First Home ([20:41])

• Listener asks which loan type is better for wealth-building and future flexibility.
• Brian shares his personal experience: “...that 15-year mortgage kind of bit me...From a cash flow perspective, I had to carry both homes for a period of time...I wish I'd had a little more flexibility.” [20:43–23:46]
• Both agree: Loan choice isn’t “mathematically optimal” in a vacuum. Tailor to your cash flow, financial phase, and the financial order of operations.

c) Should I Repair or Replace My Totaled Car? (Nathan C, [30:15])

• Nathan, already saving 38% of income, wonders if a totaled Corolla should be repaired or replaced.
• Brian: “You have to advocate for yourself, especially if you're not at fault...But don’t use this bad situation to turn into a worse situation by running up debt.” [32:32]
• Bo: Don’t be “penny wise and pound foolish” with cars—consider lifetime cost, not just purchase price. [33:48]

d) High Housing Costs & Retirement Planning ([36:22])

• 35- and 37-year-old listeners worry they won’t have their home paid off at retirement.
• Bo: “Our preference would be...to be completely debt free, mortgage included...But that doesn’t always happen...A goal should be to have the house paid off, but I don’t think that’s going to...decide whether or not I could actually retire.” [36:38]

e) 50-Year Mortgages Debate ([40:00], [46:20])

• With news of possible 50-year mortgages, the hosts consider implications for first-time buyers.
• Brian: “I at least like the discussion piece because this might be potentially a band aid...It’s a tool…If I was at the beginning of my career and I know that my future earning potential is on the upward trajectory, I'm probably looking at this...” [49:06, 55:25]
• Bo clarifies: “We want you financial mutants to own your life. Even if you did take advantage of it [a 50-year mortgage], we want you to have a plan...Because financial independence...is the opposite of financial encumbrance.” [57:46]
• Both warn: Some people will abuse this tool, just like any financial innovation.

5. Philosophy & Tone

• Consistent advocacy for behavioral discipline over market timing.
• Encouragement for building “financial mutant” habits—automatic investing, embracing volatility, and constructive risk-taking.
• Humor and team camaraderie—e.g. memorable “on-air sneeze” moment, playful debates about whether “frugal” is an insult or compliment ([13:03], [34:53]).
• Pop culture tangents, relatable analogies (e.g., “always be buying baby,” “bedazzle your basic life” [62:21]), and regular returns to the Money Guy financial order of operations.

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Notable Quotes & Memorable Moments

• On Crash Fears: “There's always going to be something that is going to scare you financially. I mean, I've lived long enough...” – Brian [07:44]
• Diversification Wisdom: “If you're in a well-diversified portfolio...we know that when the market goes down, there's often a 'V-shaped' recovery.” – Bo [06:14]
• Market Timing: “Don’t get too cute with it. If you have the money right now, I'd love to see you... begin dollar cost averaging or get it to work in the market.” – Bo [14:32]
• On 50-Year Mortgages: “Money’s only a tool...I at least like that it’s creating a conversation on affordability, because I have not seen anybody really coming up with what is the younger generation going to do to start working towards this homeownership problem.” – Brian [49:06, 55:25]
• Behavioral Finance: “Behaviorally, people would be better if we just said no, but we try to treat everybody like, hey, this is how I would approach it with money.” – Brian [61:05]
• Always Be Buying: “That's why I stand by Always be buying, baby—setting up the behavior that you're saving consistently, you're respecting diversification...” – Brian [09:51]

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Segment Timestamps

• Headlines & Market Crash Fears – [00:05]–[04:29]
• Economic Concerns Explained – [01:46]–[06:14]
• AI Bubble & Diversification – [04:29]–[07:32]
• Should You Sell? (Rebutting Fear) – [07:32]–[13:03]
• Listener Q&A
  • Lump-Sum Investing vs. Timing – [14:04]
  • Mortgage Terms Debate – [20:41]
  • Car Replacement Decision – [30:15]
  • Retirement & Mortgages – [36:22]
  • Home Repairs: How to Pay – [41:12]
  • 50-Year Mortgage Discussion – [46:20]
• Philosophical Wrap-Up/Outro – [59:21]–[62:21]

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Final Takeaways

• Ignore the media noise about crashes; stick to your long-term plan.
• Diversification, automatic investing, and dollar cost averaging consistently outperform attempts to time the market.
• Short-term volatility is a feature, not a bug—for disciplined investors, downturns are buying opportunities.
• New financial tools (like 50-year mortgages) require caution and context-specific use; they aren't one-size-fits-all solutions.
• Build confidence by following an orderly, rational, and adaptable approach to your financial decisions.

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For expanded resources, free tools, and archives, listeners are encouraged to visit moneyguy.com/resources.

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Transcript

[A]

Foreign.

[B]

Did you hear the experts are saying the market's going to collapse. What should you do?

[A]

Brian, I am so excited about this because inevitably this happens. There is always someone out there saying, okay, the next crash is coming, the next downturn is coming. You need to be afraid. You need to be aware. And this happens even more as we start tracing new all time highs, as we start seeing new movement in the market. People say, hey, wait, hey, hold on a wait. And if you don't believe us, look at the headlines that we're seeing right now. You can see here's one from October 27th. Will the stock market crash in 2025 for risk factors? Well, little do they know. You know, back in April it crashed like 19% where I seen that. How about this one from the Motley Fool? This is as of November 10th is the mother of all stock market crashes on the horizon. Or this One also from November 10th is a stock market crash coming in 2026. A lot of people worried about what's going to happen with the markets moving forward.

[B]

I'm so glad the content team put these headlines there because when I saw that this is what we talk about, I was like, are there really people? I guess you could probably any day in time we could go and just say what are people saying? Because this is why you have to be careful who you let in your head is because yes, there's always going to be people trying to whisper in your own why you should be concerned about investing. And, and we've done so much content on this. I think it's important first though, we'll level set. I think it's give context. What are the top concerns? I think we have a CFA on staff, you know, right here sitting at the desk with me. Maybe you can add some sanity to the, to the concerns that people are even saying we should be paying attention to.

[A]

Well, there's some economic realities that exist. I mean, right now there is and has been a slowing job market and inflation was sort of a wild concern coming out of the pandemic and it's still been lingering. It's still a, a concern there. And I think what has really got a lot of people uneven is that generally speaking, the solutions that are implemented to combat these two forces are in opposition of one of one another. Oftentimes, okay, if there's a slowing job market, we're going to lower interest rates so that we can stimulate the economy. But if there is lingering inflation, we want to raise interest rates to try to slow that down. So even the solutions are in conflict with one another. And people are saying man, something, something seems awry, something doesn't seem right. And I think just anecdotally people are seeing how well the markets have done. They've seen that, oh they hear all time new highs and whenever we hear all time new highs that must mean that the other shoe was about to drop.

[B]

Well, it's, it's all like I was a kid that, I mean the pre computers and all the mad libs were, you know, you'd pass time on road trips. And I feel like a lot of times headlines these days are just modern mad libs where they say okay, inflation, you know, last year, jobs, you know, they throw all these words together and come up with these headlines because you can cherry pick the data on inflation multiple ways. Yes, there are some very troubling or concerning inflation data points but there's also other things that are as a counterweight coming down in price. So it just, it feels like this is something you can't necessarily control. You can watch but it's not something that I'd be setting my plan off of. How about you hear all the headlines? Taxes are changing, trade tariffs. What's the CFA take on all that stuff?

[A]

Yeah, so we talked a lot about this. We did a mini show kind of looking at the state of the economy. So if you want to just go do sort of like a deeper dive, you can go look at this mini show the state of the economy in 2025. We're kind of dive into that. But we know that in 2025 there have been a bunch of headlines about what's going to happen with tax policy and what's going to happen with international trade and how are tariffs going to be imposed and what are the implications of that going to be. So much so that we already alluded to this in April of this year, between March and April we saw the S&P 500 drop 19%. So this is not new news. These aren't new things we're hearing about. But we still haven't heard how all of this is going to resolve and what the ultimate long term implications of some of the decisions right now being made are going to be. And again, whenever there's uncertainty and we don't know exactly how things are going to shake, shake out, I think investors in the market in general start to get a little uncomfortable.

[B]

Well, I'll do one more and then I want to talk about actually pivot and say what does this mean for you? Because I like people come to us and look For God. And some we want to kind of help you know how to navigate all this. But the, the third one is this AI bubble.

[A]

Oh yeah.

[B]

Now look, this is one because realize I've told. I've been very confessional and I'll make sure I send this clip to my buddies right afterwards because it's kind of my way of, of paying it forward that, that I didn't let them do it is I was at spring training three years ago, three or four years ago and one of my buddies is like, hey, should I, should I go and put $10,000 in Nvidia? And you know what I tell them? No, go buy the S&P 500. Because that's what if you ask me today, I'm going to tell you the same thing.

[A]

And I bet he's so happy about that.

[B]

He brings it up to me constantly. He's like, you realize that $10,000 would now be worth $97,000. Who's keeping track though? But it's, it is one of those things where. But it's back to are we at a bubble? And this is the part I'll just throw in my opinion. Then I'll get the CFA take. We don't know. I keep talking about this concept of law of accelerating returns is that technology is expanding at such a speed that it's hard up with that you don't know what is the new dominant disruptive technology and AI very much. There is a race going on right now to see who can, can get in the forefront and dominate this. That's why I still stand by. I love the S&P 500 because it's going to, it's really going to cut through all the noise. But that doesn't mean, I mean if you got Nvidia and you bought it in spring training four years ago, you're probably going to be okay.

[A]

Well, I think back to the dot com bubble bursting and if you were someone who put all of your money and you were so excited that you went and bought was it grocery.com or grocery stores.com.

[B]

It didn't, it was like web grocer.

[A]

And like it did not play out well for you. But if you were someone who was further along in your career and maybe had a risk tolerance that was slightly inside of the risk spectrum and you had a well diversified portfolio not concentrated singularly in tech stocks, not concentrated singularly in just S&P 500, but you were well diversified and the dot com bubble burst happened. Yeah, you're going to go down your portfolio is going to go down, but it's not something that's going to leave you destitute because we know that when the market goes down, there's often a V shaped recovery. We saw that after the dot com bubble burst in 2003. We saw that during 2009, after the great Recession. We saw it in the midst of COVID and we even saw it after 2022, with 2023 being a fantastic market year. So if you're in a well diversified portfolio, even if some of the AI companies, whatever name you want to throw out there, are perhaps overly valued right now, or there's a little too much excitement, that's one of the reasons why we like a broadly diversified basket of goods, not just across a single asset class like US Large cap, but across the entire equity and fixed income universe. And if you design that well, I don't think you have to be worried necessarily about an AI bubble because your portfolio will be structured to be able to weather well.

[B]

We went, look, we went into the specifics here, but the real question that our audience is going to say, should you be worried? And we'd argue the answer is no.

[A]

Nope.

[B]

And what do we mean by that is. And look, there's always going to be something that is going to scare you financially. I mean, I've lived long enough. I'm about to sneeze. Fighting it. Fight. Oh, did it. You see the elbow? Oh, my. See that? Good form on the sneeze. Did you see how considerate that was? Okay, carry on. Oh, my God. I think that might be the first.

[A]

On air sneeze we've ever had broadcast. 20 years of.

[B]

20 years of broadcasting. First on air.

[A]

Last time I seen him sneeze on air.

[B]

I need to wipe the nose. Okay, hang on. Oh, yeah, I did that on air. Here we go. Let's keep this thing rolling. Okay, what should you do? We have to live show the financial order of operations is your backbone. Of course. Let me touch it with my sneeze hands. There you go. I'm so sorry. All these content writers write all this great content and then I show up.

[A]

Yeah. So, okay, so what should you do? How should you prepare? Why do we say that you should not be worried? Because if you have a plan, then you likely don't need to have the same level of anxiety as someone who does not have the plan. Unfortunately for you, we've built a plan for you. It is the financial order of operations and you can have your very own copy if you want to go to moneyguide.com you think for me?

[B]

Oh yeah.

[A]

Moneyguide.com/resources. It will show you step by step what should I do with my next dollar depending on where I am. Well, if you are concerned right now, if you're trying to figure out am I making the right decisions, am I worried about what's going on? Have I actually followed the financial order of operations? And one of the things that you'll arrive at, you'll say, okay, I don't have any high interest debt. Okay, that's great. I've got a fully funded emergency fund. Okay, that's great. All right, I'm putting money in my Roth IRA and I'm not going to touch that until I'm at least 59. And okay, I'm putting money in my 401k. I don't need to get to that money either for decade. Okay. And it will reframe your mind to think. Okay, I have a plan. I'm putting my money in the right places and I'm doing the things that I'm supposed to be doing. So what if the market has volatility or ups and downs in the short term? Because right now for me, where I'm at, I don't have to worry about what my dollars are doing in the short term.

[B]

Look, I look at the volatility as more of a feature than something you should react to. This is why I stand by Always be buying baby is if you're just automatically setting up the behavior that you're saving consistently, you're respecting diversification and all that good stuff. No matter what happens through the volatility and other things, the financial mutant side of you is going to see the good in it and then you're going to be better for it. Remember, we have done so much content on if you invested during the Great Depression. Yes, it was a 25 year period that the market went from this high, took 25 years to get back to that same high. But if you were buying every year, you annualized the rate of return of around 11%. The same thing happened with the last decade. Everybody talks about how scary it was. I actually was managing money, I was investing money during those times. And once again, and it's amazing how it's pretty close. I think if you were buying every year also annualizes close to 9 to 11%. So these are the things you see how the behavior. Don't let the emotional side of stuff keep you from actually doing good behavior. Because if your plan was good before, it's going to be good during and it's going to be good after. Just make sure you're creating a plan of action and not just flopping around out there based upon what the media tells you or what's, you know, what you're putting in your head. You know, what your relatives are telling you at these upcoming holidays actually have something that reflects what money can and cannot do for you.

[A]

And if you are someone who is in the accumulation stage and you are a financial mutant, it is possible, whether we see a downturn or not, that you can reframe your mentality to get kind of excited when those things happen. If you have your always be buying set on autopilot and you're putting money, your 401k and you're putting money, your HSA and you're putting money in your Roth IRA and you start to see the market kind of start to go down. You start to get a little excited thinking, holy cow, I'm getting a great deal right now. And even start thinking, man, is there a way I could just increase my savings by 1%? I'm putting 5% in my 401k, but the market's freaking out. Ooh, is there a way I can really kind of squeeze, tighten the belt and maybe put 6% in? And it's those kinds of folks who come out of the. On the other side of market downturns and the other side of volatility, saying, man, that was an amazing opportunity. I think it's Warren, you know, it's very bittersweet right now. Warren said in one of his. Warren G. Yeah, Warren G. And Nate Dog, obviously, the two that we often talk about.

[B]

Warren Buffett, of course, he said, when.

[A]

It'S, when it's raining, opportunity, reach for a washtub, not a thimble. Well, when the market has volatility, when there are downturns, if you are someone who is in the accumulation phase, that's the way that you should think about it. And if you're not in the accumulation phase, you are near retirement, you are near financial independence, then you should be thinking, okay, is my portfolio appropriate for where I am? Does my risk tolerance match my risk capacity, and can I weather whatever storm may come my way? And so long as you've followed the financial order of operations and done the things that you're supposed to do, you can likely answer that in the affirmative. What do you think about that?

[B]

I think it's.

[A]

I can't believe you sneezed. It's wild. It was pretty impressive. It's.

[B]

Well, I only have to because he.

[A]

Kept going you know what I mean?

[B]

I only have to sneeze every 20 years of on air is because you saw. I clean. I clean those ducks out really strong when I go.

[A]

What a gross thought.

[B]

Well, I mean, haven't you ever seen people you like? I. I watch people sneeze.

[A]

You don't want tiny sneezers.

[B]

Well, I'm worried that they hurt them. They're blowing. Your seals are not designed to hold that stuff in. So you're just, you know, I just. I let it rip.

[A]

That's what we do here at the Money Guy show. We let it rip. And one of the things we love to do is we love to let it rip by answering your questions every Tuesday morning at 10:00am Central Time. Because we really do believe there's a better way to do money. So if you're curious and want to get our take on something, you have a question for us. We want you right now to get your question in the chat. We have the team, a much larger team today out in the wings collecting your questions. So with that creative director Ribey, I'm going to throw it over to you.

[C]

Yeah, we're going to kick it off with Mason Pease question. I like all the guidance you guys just gave. So this is kind of a. Let's apply it to Mason's question. It says, I just started my investing journey. I have a lump sum set aside to max out both mine and my wife's Roth iras, which is great. Should I wait to invest that? If the market is just expanding, expected to go down, what do you think? What would you say to Mason just starting his investment journey?

[A]

Well, it's really interesting how you, how you frame that if the market is expected to go down. Because here's the question I'd ask you. Is the market going to go down? Yes. That's the way the market works. At some point, it will go down. Is the market going to go up? Answer that question is also yes. So when I think about young people that are investing and trying to put their money to work, whether you put the money in right now and invested that or whether you put it in, let's say, six months in the future, and the market's at a different place, when we fast forward 10, 15, 20, 30 years into the future, will the entry point of that singular Roth contribution likely have made a difference? And I think the answer is no. I think even if you look at a portfolio today, if you maxed out your Roth at the end, beginning of 2008 versus the end of 2008, there's a really good chance that right now, at this point in time, the difference in what you would have made on that singular contribution is inconsequential relative to your whole portfolio. If you've been saving investing. So I tell young people, don't get too cute with it. If you have the money right now, I would love to see you put together a strategy to begin dollar cost averaging or maybe get it to work in the market depending on the size of your portfolio. And go ahead and do that today because we don't know what tomorrow is going to hold. But more often than not, the market goes up rather than goes down.

[B]

What I wrote down as soon as I saw Mason's question was know thyself is. Because what I worry about, I think you're spot on, is that if we look back on this 10 years in the future, the decision of when to buy it right now in one lump sum or dollar cost average, it over the year is just going to be very minimal on your long term success. However, from a behavioral standpoint, you said it yourself, I just started investing what breaks my heart. And I've told stories about neighbors and others when I have neighbors, very successful, they come from other countries and they hear me talk about investing like, hey, I'd like to get in on that. And then when I help them set up their first accounts, but then they experience that first 14, 15% intra year volatility and they, oh, this seems risky. And they immediately shut down the behavior that breaks my heart. So you're right. Ten years in the future, this will not have an impact. But in this moment in time, what do we have to to get you over that behavioral speed bump? For me, that is, if you're worried, Mason, that you would be devastated if you invested all of your Roth and all of your wife's Roth and then you watched the market go down 15% that you would probably have a reaction to that then definitely set up a dollar cost averaging structure. So then it also makes it automatic. What is not the right answer is, what I see a lot of people do is they just, they go to full stop and they say, I'm just gonna wait until, you know, essentially I get a sign from the Lord that I should be investing, that this is the perfect time to be investing. And there's just never going to be, there's always going to be something that scares you. There's always going to be something. So doing something is better than full stop. Now, if you're a person, you're kind of A cowboy you're already risking, you know, because you're young enough. There's nothing wrong. And that's why we did try to. I don't, I don't know if the content team's going to be able to pull it up because we have, we've done shows on all the money got rules. We have like a Goldilocks investing. When you're trying to figure out if your lump sum versus dollar cost averaging, it all is tied to what is this level of money, to your total net worth of investable assets. Now, since you're brand new at the beginning, this might be all you've got, but I still like the thought of you setting up a monthly investment allocation so that you and your spouse actually carry this behavior into next year, into two years in the future, into five years in the future. You are going to make it happen no matter what's going on in the market.

[A]

With volatility as you're talking, I thought about, we have a dear client, Brian, that you and I worked with. And you're gonna know exactly who she is for a long, long, long time. 15, 20 years now. And she told us one time, she's like, guys, I'm really nervous about the market being high right now and I've got some cash and I want to put it to work, but I'm so nervous, I'm so scared. I'm so uncomfortable. Just going to wait until, I'm just going to wait till the market goes down a little bit. And this is what you said to her, you said her name, Mrs. She. You said, you mean to tell me that right now, while the market is making money and everything's happy and everybody's green, you're nervous to invest? But when things start getting scary and the market starts going down and people are getting uncomfortable and all the headlines are telling you how scary things are going to be, that's when you're going to be willing to like, enter in and begin investing. And she was like, oh, no, no, no, I don't. That doesn't sound right either. And that's why we love dollar cost averaging, because it removes the emotion of having to make a hard decision either at the top or at the bottom. All you have to do is make the decision to get my money working now. So I think a lot of people are sitting there thinking today, oh, I'm just going to wait until it looks a little bit more attractive. The absolute best time to invest is, is when it is the absolute scariest. So if you're scared Right now there's a really good chance you're gonna be really, really scared then.

[B]

Yeah. No, that's why you just always be buying. It cuts right through that. It's kind of like, you know, back to the days of Thunder. You just drive through it.

[C]

Drive through it. That's right.

[A]

Get me outta the car, Cole. Let me out of the car. Do you even know that movie, Remy?

[C]

Only because of you two and Hardy.

[B]

Well, you know, I felt like things would come full circle. You could, you guys, you know, Brad Pitt had his Formula one movie. You could then go watch Tom Cruise and Days of Th. You get the full story arc of auto racing there.

[C]

So I've only seen clips of it to be perfectly clear. But I know. All right, Mason P. Thank you for the question. Next question is from Barkley Dale 3551. It says, Would a 15 year loan at a lower rate on a first home be mathematically optimal compared to a 30 year loan if you're planning on staying for a minimum of seven years, since more money goes to the principal to roll into a down payment on a second home.

[A]

It depends.

[B]

Look, I. All I can do is tell you my story is because I was. Look, I've traded in my tightwide card, but I love that when I did a 15 year mortgage on my second house because I had my starter home and then me and my wife relocated, you know, still in the same community, but we just went down like 10 minutes south to a nicer house. And I'll never forget, I did a 15 year loan and I was, I was so proud because I saved a half a percent on that. Fast forward to when I needed to move to the third house. When I moved to Tennessee, I couldn't sell the house in Georgia because it just. Market was horrible in south Atlanta at the time. So I ended up having to rent it out for two or three years before I actually sold it to get the proceeds out of it. Because I had. All I did was I prepaid all the negative equity because the house lost tremendous amount of value during this period. But I ended up. It was. That 15 year mortgage kind of bit me a little bit is because I felt like from a cash flow perspective, I had to carry both homes for a period of time. Whereas we had this kind of conversation. I mean, and I'm not trying to bring it up indirectly, but there was this whole talk about 50 year mortgages. And I know that that's controversial, but it's coming. Well, no, but, but I think that look for a lot of you. I think if we all, when in doubt, zoom out on just life. A lot of life is unfair in the fact that your, your resources, when you're young, in the messy middle is unfair because you're fighting, think about it. In your 20s and 30s, you got all these things happening in your career, in your family, and you're not in your peak earning years, but yet you're expected to get it all to happen. Right now it's back to that analogy I keep because I'm loving this. I' to figure out how to build it into our content is you are definitely putting 10 biscuits in that five can package of biscuits. I mean this is, I'm loving this thing because it's everything southern about me that I love. And that's what, that's life for every one of you guys. So if we could figure out some way to help you navigate that inefficiency of your income structure to when you get older, like when you get in your 40s and you start getting into those peak earning years. And also the kids, yes, they're getting more expensive in the fact that maybe they're going to college, but they also get scholarships and all these other things you go find out all of a sudden, look, money's not as hard as it was when I was in my 30s. I just need to find a solution that helps me build the bridge over that, but still lets me continue to invest, continue to live life to the fullest. And that's why I like the flexibility of the 30 year mortgage. Because looking back with wisdom, yes, I saved a half a percent on that, but man, oh man, did I cause myself some tightness of margin because those, those payments were substantially larger on the 15 year mortgage than they were on that 30 year. And sometimes I just had inefficiency, especially being self employed, being a business owner who had started a company. There were months where, man, oh man, I wish I'd have had a little more flexibility in how my cash flow was laid out.

[A]

Yeah, I think, you know, one of the questions I would answer or ask is where are you in the financial order operations? Because 15 year mortgages are not inherently bad. Don't mishear what you said by us saying we don't like 15 year mortgages nor do we dislike 30 year mortgages. There is a time and a place for each one. I just, I have a really reliable resource. I just googled this to look at where rates are right Now. It's like 30 year rates are at 6.25 and 15 years are at 5.6, that's not like a huge spread. I mean it's, it's okay, but that's not like a huge spread between those. And so if I'm making the decision between a 15 year and a 30 year, I'm going to ask my question. Okay, well, what have I been doing from a wealth building standpoint up to this point? And if, just like you said, if I'm early on in my journey and I'm not maxing out my Roth ira, I'm not doing the hsa, I'm not putting money to work for me, I understand what my wealth multiplier is, then yeah, maybe I think about doing that 30 year mortgage. But if I'm someone who's got a decent sized portfolio and I've been doing the things and I've been in step seven, been in step eight and I decide that I'm going to, you know, move to my second home or whatever and I want to be on a path to pay that debt off. If that's one of your goals, we're not going to fight you on a 15 year. But I think it's much more dependent on your individual and specific situation than oh well, which one is the always mathematically the best one because it changes and it varies depending on your circumstances.

[B]

Well, it's that whole arc I was just talking about is that where I, where I ran afoul of this rule is that I was in the make wealth phase. You're in the early part is that I had income coming in but it wasn't my peak earning years. I had lots of things pulling on that with life, with family, with trying to save and be responsible for the future. I needed something that gave me the margin allow me to invest. Now when I got to the maintain wealth like I said in your 40s, all of a sudden it seemed easy. Now I could de risk by paying down the debt. And that's, that's my own journey that I've experienced is that you see the stat. I'll never forget when I read everyday Millionaires. It talked about how millionaires pay off their mortgages in 10 years. And you read that stat and you're like, well gosh, that means that I should probably pay off my mortgage in 10 years. Well if you're in your 30s, no you shouldn't because you're not going to have the cash flow coming in to do that. That stat is flawed in the fact that for the majority of millionaires, when's the average millionaire get minted, it's age 47. So if you think about it, yes, what is my rule? Once you're over 45, you're more than likely in that maintain wealth phase. Yes, you're going to pay off. I resemble because my third house, y' all know, I paid it off. I didn't live in that house. I was, you know, for 10 years. So I once again resemble the stat that was given. But I have the additional context is this was my third home. It wasn't my first house. It was my third house that I was, you know, now I my income had gotten to a point. And that's why I just don't want you guys to extrapolate that to put the pressure on yourself when you're already limited on your resource, you're in the messy middle and you got your kids pulling on you, you got your career, you got your community pulling on you. And then, yes, you're supposed to max out your Roth IRA and your 401K. You're like, I can't do it all. I'm like, there's a time and a place. You need to know where you are. Are you in the make wealth? Are you in the maintain wealth? There's a time and a place for all these things and that's why we wrote the financial order of operations so you don't have to try to figure out how to do it. We've already built this for you so that you can not feel like you're working against yourself.

[A]

Love that.

[C]

That's great. Well, Barclay, Dale, thank you for your question and thanks for being here.

[A]

Brian. If you had to choose one tool to help you with tasks like writing work emails, planning documents and show notes. And remember, just one tool to help you set the right tone and get your message right. What tool would that be?

[B]

Without a doubt, it's Grammarly. Grammarly has been my best friend when it comes to all my writing done from start to finish. Obviously, I love communicating and it's a huge part of my career. But when it comes to making sure the details, the tone and even the wording are right, I love having a copilot to make sure I get my point across and avoid mistakes.

[A]

90% of professionals say Grammarly has saved them time writing and editing their work.

[B]

For sure it works seamlessly across all of my apps. It's so easy to use. Just open a new doc and start typing or ask Grammarly's AI chat for help anytime. It will help you kick off your ideas or even polish them up.

[A]

Brainstorm, summarize, meeting Notes, get ideas for better tone, wording, and spelling. It is all there. Sign up for free and experience how Grammarly can elevate your professional writing from start to finish. Visit Grammarly.com podcast. That's Grammarly.com podcast.

[B]

Money's just a tool to help you focus on what really matters. And for me, that's making memories with my family. We love to travel together, but between those crowded airports, packing and planning, it can really take a toll if you're not careful. I don't want to stress or have low energy keeping me from being fully present on our trips.

[A]

It sounds like you need something simple that keeps you fueled and feeling good while traveling. If only that existed.

[B]

Oh, it does. That's exactly why I love AG1. I was so excited when they said they wanted to sponsor the Money Guy show. My wife and I have been drinking it every morning for over a year now. It's one scoop packed with antioxidants, probiotics, and functional mushrooms, all supporting energy, gut health and immune resilience. During this busy holiday season, Brian even.

[A]

Got me on board. I've been taking AG1 every morning and you can too. We've got a great deal for our financial mutants who believe that health is wealth and also love a good deal.

[B]

So head to drinkag1.com moneyguy to get a free welcome kit with an AG1 flavor sampler and a bottle of vitamin D3K2 when you first subscribe. That's drinkag1.com moneyguy Nathan, should we talk?

[A]

Oh, well, a lot of people are asking for it. I was just gonna. That's fine.

[B]

Let's.

[A]

Let's keep going.

[C]

What are you referring.

[A]

No, no, you ask another question.

[C]

Because there was a question I was thinking about asking and I didn't know if you wanted to talk about it. So. Is it the same thing?

[B]

I don't.

[C]

I don't know.

[A]

Ask the next question and I'll decide if we're gonna answer that question. Sounds good as we go.

[B]

No question's a good one. We all know we don't let Brian distracted Brian see any questions. So I'm just sitting over here going, I don't know what's going on.

[C]

Nathan C's question is up next. It says, hi, Moneyguy team. I am 27 and have just gotten into a car accident. All are okay though, so that's good. That's the most important part.

[A]

Car accidents worse though.

[C]

I know, right? But the damage it to my 2011 Corolla may have it totaled. I'm saving 38% of my salary. Is it time for a new car or repair out of pocket?

[A]

Man, this is one where we got to ask a bunch of questions. How many miles are on the Corolla? Right. What was the, how's your maintenance been on the Corolla? What, how dependable of a car is it now? Now here's what's likely happening.

[B]

Well, he's not going to get to choose that if the car is total, they're just gonna send him a check.

[A]

Well, that's what he's saying but. Or right. He can repair it out of pocket. Isn't that, isn't that his question? I can repair this out of pocket.

[B]

So you go drive around a salvage titled car.

[A]

Well, that's, that's kind of where I was going with my line of question.

[B]

Okay.

[A]

Is the car like when you actually look at the value of the automo, is the money you're going to put into it actually more than what the car would be worth right now? If the insurance comes out and said, hey, we're going to total this, it's not worth us fixing it. So it's likely not going to be worth you fixing it. But that's a decision you'll have to make for yourself. It certainly seems to me like this may be time for a new car territory. Agreed.

[B]

Yeah. I mean, but there's nothing that says that you can't, you know, because when you're dealing with your insurance company, it's, it's kind of a, somewhat of a negotiation of the fact that you go out there and you look at the market and you say, hey, well there's no really 2011s for sale at this price that were at this level of mileage. But I found this 2013 that's very similar and there's only a, you know, fifteen hundred dollar price difference. You can, you can negotiate with your insurance company or the, you know, if the person, if somebody hits you specifically go advocate for yourself for sure. I mean that's what, don't let this, this is what I always tell people. You have to advocate for yourself, especially if you're not at fault. And I'm dealing with this right now too. I had somebody rear end me and believe me, there's gonna be content coming from this because you know, they're just giving me fits on like rental cars and other things and I'm documenting and I'm going to, I'm going to make sure I come out on the other end of this. Okay. But it's because you have to know what your rights are. You have to advocate and realize these insurance companies don't want you filing complaints with the state insurance commissioner. So you have options, you have rights. You just need to make sure you're advocating for yourself. So I'm not saying. Now what I don't want Nathan to do is to use this bad situation to then turn into a worse situation by going out there and running up a bunch of debt. Because look, we always say think Corolla, not Land Cruisers. Nathan's already, and he's already saving, by the way, 38% of his salary. So we are doing full on financial mutant wear here. So that means there's probably some margin. You just have to figure out this is where the depends comes in. Do you do use this as an opportunity to stay right where you are on the vehicle? Or maybe, I mean, do you have a growing family? Do you have things where maybe this is the moment in time to where you are changing the vehicle that you're driving? I don't know that without more details.

[A]

And I just want to encourage you because 27, you're still young. Oftentimes we see people that are so tight or it's tight has a negative connotation. They're so frugal, they often become.

[B]

Pennywise has a good connotation.

[A]

Yeah, frugal's. That's a compliment, right, team? Oh, look, the team.

[B]

Did you see that?

[A]

Unanimous thumbs up from the entire team saying, absolutely frugal is a compliment. It's better than tightwad. Here's where I'm going.

[B]

We should have been frugal fanatics instead of Tightwad Nation.

[A]

Then that would have been better, right? The man. You made me lose my train of thought. I don't know what I'm saying. 27 years old. Oftentimes I see people that are so frugal, they become penny wise and pound foolish. Say, I'm gonna, I'm gonna go buy this beater. I'm gonna drive this car and I'm just gonna. I'm gonna really, really focus on how much I'm paying to buy and acquire this car. And they don't think about, oh man, it's in the shop every eight months and I gotta get this fixed and I gotta get this fixed and I gotta get the. And slowly this car becomes something that it's $200, $400, $200, $300 over and over and over and over and over again where there's a good chance you might have been better off buying a slightly More expensive car that you have to put less into for maintenance. When, whenever you think about car ownership, we want you to not just think about acquisition costs, but we want you to think about lifetime total car cost. And oftentimes the car with the lowest purchase price does not mean it's going to have the lowest lifetime total cost. Brands also factor in there with depreciation. But it's something that should go into the calculus that you're doing.

[C]

That's great. Nathan C. Thank you for the question.

[B]

No, it's fine.

[A]

Hey, quick poll is frugal. Do we have a poll?

[B]

I mean without a doubt everybody who's tight is going to call themselves frugal.

[A]

But like if someone, if someone referred to you as frugal, would that be like, oh, how dare you?

[B]

Definitely. For the first 20 years out of college, I would say yes.

[A]

Really, Ruby? Is that offensive to you? If someone were to call you frugal?

[B]

I don't think frugal. I mean I'm just, I don't know, I resembled it maybe.

[C]

It depends on the context.

[A]

For me, hey, Ribi, you're frugal.

[C]

Okay, I guess I take that as a compliment.

[B]

You know what that is?

[A]

No.

[B]

You know what that is? That is no different than a southerner saying, bless your heart.

[A]

Oh, okay. Well, all right.

[C]

Well no, but from you guys it is kind of a compliment because you want people to be good with money.

[A]

I thought that's way better than like tightwad is like I don't want to hang out with context matters, but I'd hang out with a frugal person. Right?

[C]

Okay. All right, all right, all right. Ready for the next question? It says it's from TR Hakala. I'm gonna just go with that. It says, hi moneyguide team. My wife who's 35 and I who's 37 live in a high cost, high housing cost area. Most retirement calculations include a paid off home. That isn't possible within the 25% rule. How do you adjust retirement targets?

[A]

Most retirement calculations include a paid off home.

[C]

So do you have to have a paid off home in your retirement?

[B]

That's what wonder they retiring at 40.

[C]

And yeah, there are 35 and 37.

[B]

I mean we are decades from retiring.

[A]

Yeah.

[C]

Wondering what the mortgage looks like in that case too.

[A]

And I want to be very clear, our desire, our preference would be when you get into retirement, when you get into financial independence, we want you to be completely debt free, mortgage included. Like that, that is the like prototype that we're shooting for and aiming for. For retirement. But Brian, we see this and we see this with a number of our clients. That doesn't always happen. That's not always a certainty that that's going to happen. So I hate them thinking, oh man, I'm super discouraged because I live in a high cost of living area. And that's going to be one of the goals we're going to have to have even post financial independence. But I think a goal should be to have the house paid off. But I don't think that's going to be one of the things that's going to substantiate whether or not I could actually retire. You agree, disagree, or want to fight on that?

[B]

Well, I need more context because I mean, if they're retiring 55, 60, I mean we are, we are two decades in the future. And that's just, there's going to be so much that happens that I think everything should be still a variable of what's the savings rate? Where are you going to retire? Because how many people do we know that made all their money out in California in the technology areas, but as soon as they retire with their big pot of money, they typically go relocate somewhere else in the country. Much lower cost of living, take advantage of an arbitrage situation with how much their income has grown versus what their purchasing power is somewhere else. So it's just, there's too many variables. But I do think unless they're planning on retiring at 40, you don't have to think in terms of paying it off. And look, I do have, this is where personal finance is very personal. I have clients that when we get it and like when we look at their cash flow, I want them to be debt free. But when you see that they have a three and a quarter mortgage and you know, they're down to owing, you know, this much money and it, but their cash flow is very clean. This way we're going to be realistic with, we're not going to blow up the plan just so we can check the box on a rule if it doesn't actually fit into what's the ideal, you know, maximization opportunity for them? Even risk adjusted.

[A]

Love it.

[C]

TR Hakala, thank you for the question. So we did poll our audience and so far 88% of people say that frugal is a positive term. So they're with you.

[A]

I'm sorry, what percent?

[C]

88%.

[A]

I'm sorry, I'm so offended.

[B]

He's like, what is. I'm not offended, of course, but we're all, we resemble this everybody in here, you're all watching financial content. Go ask your relatives.

[A]

Let's go.

[B]

Thanksgiving in two weeks. Go home and ask Thanksgiving. Is frugal a good term or are y', all, you know, saying, bless my.

[A]

Heart, don't even ask. Just call them frugal, see what happens. Say, hey, cousin Jimmy, you're looking awfully frugal today. And I bet he's gonna be like, yeah, I've been working on it.

[C]

That sounds bad. See, see, I'll offend you. But not in that context, because it's true. Like something like cheap or penny pincher. Like, those are like different. Those are negative to me. Right? But maybe frugal is just like, that's fine.

[B]

We should frugal fanatics instead of financial mutants.

[C]

I think.

[A]

No, I kind of want to throw, I want to throw a question out there.

[B]

Okay, all right.

[A]

But do we want to talk about it? It's something. It's all over the news right now.

[C]

I think we should talk about it.

[A]

And it's all over the chat. But here's what I want to do, because I think our audience has us pegged pretty good. I want to do one more poll if my team, my poll team ever can do that. Because there's a lot of questions coming out about this 50 year mortgage thing, right? Like, is it, you know, right. A lot of this stuff coming out there. I just would like to do a quick poll as we answer the next question. Are Brian and Beau going to be pro 50 year mortgage or con? 50 year mortgage. Mortgage.

[C]

I like that.

[A]

What's the money guys take? Is it going to be pro it or con? And, but before, don't answer yet because I'll do a poll. We're going to answer a question, then we'll come back to that one deal.

[B]

Now here's the only thing, because the only, only exposure I've had to this entire thing.

[A]

Give them the context after. I just want it because our audience, our chat is so. They're lively about it. I want to know what they think. And then we'll give them the disclaimer and then we'll kind of chat. Some of the conversations you and I have had around this.

[B]

Okay, I'm a cowboy.

[C]

I mean, it's a new thing anyway, so we're just gonna.

[B]

I'm so unprepared for. Because I asked, I even in the content team, I said, hey, bring up where all this is coming from. And okay, we'll do it cold.

[C]

We'll go, you want to do one more question? Then we'll come back.

[A]

Yeah, I want to do a poll. Right. Make that poll. And then while they're answering that, we're gonna answer another question.

[C]

All right. Jarrett N. Has a question. It says, where do home repairs fall in the financial order of operations? We are in the messy middle and need drainage repairs on the outside of the home. Should we sell investments, get a loan, or stop investing to save up?

[A]

Well, so sell investments.

[C]

I think you're not going to like any of them.

[B]

No, but, but here's the thing, but.

[C]

You can give some good context here.

[B]

You know what your, your worst nightmare is with homeownership is water. Water is, I mean, pipes bursting, water coming in underneath the basement. I mean, in your crawl space, water is your least favorite thing. And guess what? This is not a place where deferring, you know, deferred gratification doesn't work with water damage. Problems that are bad today only get worse. Because what happens when you leave water damage, you know, you either get, you know, deteriorates, it creates mold, it. You know, there's all kind of horrible things. So this is a, this is a no brainer. If you have, if you have water stuff going on at your house. This is an emergency reserves type thing because we can't really push this off. It's just like all of a sudden, if your house starts leaking, the roof starts leaking, you're only gonna keep the blue tarp on there for a few days, I would hope. You know, we need to be, we need to be working on something that's a little more long term. So I would address this as an emergency reserve.

[A]

Yeah, it's interesting that was the way that you interpreted the question because it said, you know, I've got some drainage issues going on the outside of my house. I was not thinking about water, like, draining into the house. I was thinking, and this is like.

[B]

Oh, this is like a swampy backyard.

[A]

Yeah, that kind of stuff. And so, so I think that's a great, Some great.

[C]

Maybe not, as it depends on when.

[A]

It comes to homeownership. You as a homeowner have to be sort of an advocate for yourself. What are the things that fall into the emergency realm. And I would argue water in or near the house. Absolutely. An emergency. But if this is another type of home repair, that's maybe not something that's a necessity.

[B]

Just killing the trees.

[A]

Yeah, maybe it's, it's, it's water runoff, or maybe it's something like, oh, man, it's really. We need to update the windows. We need to Repair, like those sort of things. Where does that fall into the financial order of operations? I do think it is something that falls in the like emergency fund, saving up as a sinking fund in addition for those things that are coming. But you have to assess that because if it is an emergency thing, oh my goodness, I have a hole in my roof or I have water damage in my house, then yeah, maybe I need to sell investments to do that. Maybe I need to take out a loan to pay for that. I need to pull my merchant fund. I may, I need to find some way to do that. But if it's a home renovation that is a convenience thing, then it's like an improvement to the home. Like, oh man, we really want to add a back deck so that we can enjoy it next spring. Well, I'm probably not going to sell investments for that and I'm probably not going to go take out a bunch of debt for that. I'm probably going to figure out how can I systematically save for this over time to be able to do the repair. So I think you have to triage house of like we're gonna do. What's the little window called? Oh my gosh. I should be able to think of the name of it. You got. It's important, not important, Urgent, not urgent.

[B]

Fast, expensive or good. Well, no, no, no, no, no. Not. You're doing the Bernie Max. Yeah, we're doing.

[A]

We just decide to do two different matrix. Yeah. So you have, you have sort of this quadrants, right. And you have stuff that's highly important and stuff that's not important. You have stuff that's highly urgent, not urgent. Well, if it is very important, it's very urgent. You got to do whatever you can to solve that. That if it's important but not urgent, you have time to get there. If it's not that important and it's not that urgent, you got a bunch of time to get there. So you have to kind of map out where it falls on that little four paned grid and make a financial assessment based on that. You're talking about you can have things done three ways. They can be fast, it can be cheaper.

[B]

You only get two of the three. You don't get all three. You get two of the three as a Bernie Mac.

[A]

That was a Bernie Mac.

[B]

So I'm not sure. I'm sure Bernie's not the one that came up with it, but it was his show that introduced it to my life.

[A]

That's hilarious.

[B]

No, I agree. I think you have to triage. Where is This I immediately jump to because, look, I've had a traumatic experience where pipes burst when I lived in Georgia and my wife couldn't figure out how to cut off the water, so I had to drive 15 minutes home to. And water's just spilling into that from the, all over the house. And it's just so I have a natural reaction to water in houses. That's why when people tell me, you know, when I watch social media, we live in also a high cost of living area, but these people are building monsters. You know, I guess if you're moving from California or Chicago, you feel like you need an 8,000, 10,000 square foot house. And I always think about how many pipes are in the walls, how many pipes. It's just, I don't want, I don't need that big of a house.

[C]

Understandable, understandable.

[B]

That's just more junk. This cause water damage.

[A]

More junk me out, more junk to break.

[B]

I turn into my dad every day.

[A]

I love it.

[C]

More money, more problems, right?

[B]

Oh, I want it. Look at, look at Reby pulling out some.

[C]

I've been hanging out with you for.

[B]

A long time, Biggie.

[C]

Okay, I have the results of the poll.

[A]

Okay.

[C]

Are you ready?

[A]

I'm ready.

[C]

We said, what do you think the money guys take on a 50 year old mortgage will be? And 83% said against it.

[A]

83% against it. How many were said for it?

[C]

9% or 8% said for it. 9% said not sure.

[A]

So our people are certain, Brian, they are certain that we would be opposed to 50 year mortgages. Now, before we talk about this and we sort of postulate and hypothesize here, I want to be very clear. We don't know anything about 50 year mortgages. We have no idea about what they are or how they're structured or where it's coming from or what it's going to look like or anything around there. But conceptually I think that we can talk about it because we've talked a lot, Brian.

[B]

Well, can I ask some, I need some context because here's my context. Last night I had some business owners who send me Babylon B because there were, you know, because Babylon Bee posted something where Dave was on life support because of 50 year mortgages. That is my only exposure is just people asking me, you know, reactions and I haven't seen. So was this a, was this a tweet? Was this a press conference? Where did the, what's the context that made all this happen?

[A]

I don't actually, to be honest, again, we haven't done any recent.

[B]

I know this is a President Trump thing, but I don't know if. Because sometimes when he's getting on like Marine One, you know, he yell out something. Sometimes it's a truth post that somebody's retweeted. What's the, what created this?

[A]

I don't, I don't know the answer to that and I don't. So I think one of the things.

[C]

Still seems pretty speculative. Yeah, nothing has actually happened.

[A]

But conceptually, I think the. What I want to, what I want to have a conversation around is conceptually if a 50 year mortgage were an option. Yeah, right. If it were a thing that came to be. And let's just assume that it operates in the way that we understand mortgages to operate right now is a 15 year or a 30 year because I don't know if it'd be fixed or whatever. What are our thoughts on that? Because our audience obviously knows that of course we have an aversion to debt. We say all the time that why on earth would you want to borrow your entire life? At some point you have to actually own something. At some point you have to. It's why we have plans and strategies put together where we want our people to be completely debt free. When it comes to buying a car. You know what we think is the absolute best way to buy a car? Pay cash. If you're someone who can pay cash for it. When it comes to having a home and having a mortgage, do we want you to be mortgage debt free and financial independence? Absolutely. That's something that we desire to be true. So if a 50 year mortgage came around and were an option, what are our thoughts on it? I think the, the answer I'm going to throw out there is it's going.

[B]

To be depends because. Because that's what I look at as money's only a tool. Here's what I do know is, and look, I try to. Once again we have this no hypocrisy, not trying to be a hypocrite. And I think about. Because I have a unique context in the fact that I've been broke as a joke, but then now I have resources and I always think about what got me to where I am and how do I navigate these things. And there's a current problem that I see for young people is affordability of housing. And right now, literally this is what I love about our policies. We've always been very honest that on your first house you don't have to put down 20%. Even though talking heads forever we're telling people, you know, save up, put down 20% for. We've been consistent. Well before all these housing problems started happening on affordability, we were saying no 3 to 5% because that's I couldn't afford. I was broke as a joke. I only was able to save up about 3% on my first house. I found out all of our financial advisors did the exact same thing. I'm like, wait a minute, if this is what people who are good with money actually did to get their foot in the door, why are we letting all the talking heads say 20%? So when we designed our rules, we were like, no, don't put that pressure on yourself because like I said, your cash flow over life is going to be so inefficient because while you don't have money and you're young and the money is the most valuable to you to save and invest, it just doesn't exist because you're not in your peak earning years. So you're once again trying to put everything into a period of time where you don't have it. And you fast forward to we just came through an inflationary period where home affordability sucks. It's hard, it's just bad right now, especially in a lot of these areas that people want to live in. So. And I have not seen anybody come up with a really good solution on how we're going to help people navigate this. So at least I like the conversation piece because this might be potentially a band aid for just like the 3 to 5% rule because nobody actually just puts down 3 to 5% and then just sits there with that or you know, even also realize I lived through the interest only loans back that got us into the horrible Great Recession. And I was one of those people also by the way because realize I had started when I bought my second home. I just started my business like a year or two before and so money was tight. I mean this thing was not. We were in that first three year band where this thing was not guaranteed to make it. I was on an interest only loan. And this is back when what was your income? Stated income. Yeah, that'll do. Yeah, yeah. You know you're not gonna verify it. You know it's so I've used these tools to come out on the other side. I would. Doesn't mean that you go and exploit this to your future self detriment where you're gonna use this to go run up more credit card debt to go buy a nicer car. But if you were just trying to because what breaks my heart is what happens when I tell somebody you only have to put down 3% to get in your first house. But yet the housing market appreciated so much last year that you Saving up that 3% now is just the increase in purchase price. So I at least like the discussion, but I think that it's going to come up to once again, where are you at in your phase? Are you in the make wealth phase? Are you in the maintain wealth phase? Are you in the multiply wealth phase? For those of you who are in the messy middle, this might let you get in into the homeownership train to where now you're not going to be subjected to rents going up through inflation and other things. But that doesn't mean I want you to stay in these things. You have to treat it as a tool and who knows if it happens. I at least like that it's creating a conversation on affordability because I have not seen anybody really coming up with what is the younger generation going to do to start working towards this homeownership problem.

[A]

I think I saw this last week and content team, you can correct me if I'm wrong on this, but the average age for first time home buyers just hit 40. Like you know, it was really mid to late 30s last year it was 33.

[B]

Just a few years ago.

[A]

Yeah. And so what I think this is the way that I see a 50 year mortgage practically playing out. And I'm thinking about people that come here. If you're someone out in some other part of the country and you want to come become an advisor, you want to work on the money guy team here, you have to move to Franklin, Tennessee. It's where we're located, it's where we want you to be. But cost of living here is hard. So we have a lot of folks that are coming here and they're starting their careers and they're having some success, but housing is expensive and they want to start families and they want to set roots and that sort of thing. Well, if we're telling people, hey, at the beginning of your career, it's great, do all this stuff, make all these great decisions. But hey, the average first time home buyer can't buy a house until 40. That stinks. And so what? How does a financial mutant actually do this? Okay, well maybe 26, 27, 29, 30, maybe I start and I go get my starter home and I do a 50 year mortgage. And you guys are right on the mathematics. Yes, it's going to be mostly interest in the Beginning and you're not going to build up a ton of equity but it is going to allow you to get on the ownership side of the equation. And what happens is through price appreciation on those homes, maybe over the next five, seven, eight, nine years, you are paying down some debt. It's small because it's 50 year mortgage, you are paying down some debt. Hopefully the house is going to increase at the pace of inflation somewhere between 3 to 5% on average. So you are building some equity and then when it's time for you to go to your second home, you do, you do have the ability to build up a down payment, you have some equity building this house and what ends up happening is then when you do the next mortgage, you're probably in a 30 year mortgage.

[B]

So we would have to create some nuance just like we've done.

[A]

That's right.

[B]

It's only, it's a band aid to get you in this. It's a tool.

[A]

It's a tool.

[B]

Just like 3 to 5% down payment is not on every house. What do we tell you? We always have that asterisk that Sundays on your second house, when you upgrade to the larger house outside of the starter house, we always say you got to take the equity from the first house and put it in. That's the 20%. This would be the same thing. Because I do not like debt. But I do think this is a unique thing that I'm not going to lie. If I was at the beginning of my career and I know that my future earning potential is on the upward trajectory, I'm probably looking at this and going, this gives me some options to respect that 25% of housing towards. Because right now we have so many people that have 40% of their lives of their cash flow going to housing. How do we fix that? It's hard, you know, how are you supposed to fund your Roth IRA and all these other things? I at least like that we're having the conversation about it because it might create a tool for a moment in time.

[A]

But also, don't mishear us, I think a lot of people would potentially do 50 year mortgages and they would take advantage of it and it'd be a, it'd be exploited and it'd be a bad financial decision and it would not be great. But also the people buying way more house than they can afford and having way too much problem too, they're also going there. So what I see 50 year mortgages potentially being is a bridge solution for financial mutants that would be able to get on the homeownership side for young people who can't get there just yet. That might be the solution.

[B]

From a society standpoint though, there's going to be a lot of running amok. But isn't that every financial tool out there? I mean we are in the generation of buy now pay later on every.

[A]

That's literally about a 50 or more. It's like just a super expanded buy.

[B]

Now it would be. So you have to just know what it could and could not do and where the dangers are. And it's no different than me in this interest only loan I'd used back in. When I started the company and I moved to that second home, I was scared to death of it because I was like, you mean to tell me that I'm going to buy this house and all I have to pay is the interest on it? I'll never own this house. I always felt very convicted about the fact that this is. I'm going to use this product but I'm going to dislike using this product until it gets me out of it. And I think that that's the way you'd have to use this, this tool if it ever became to mark it came to market.

[A]

Yep. And most people who, most people have done 30 year mortgages. I can, I can, I'm trying to think through people I know have not actually paid on a mortgage for 30 years. That's not the. Nor most people end up paying on a mortgage and then they move and they get another mortgage and they move and they get. And that's kind of the way that it happens. So the idea that someone's going to buy a house today on a 50 year mortgage and 50 years from now they're still going to be paying on that mortgage seems low probability. Just the way that the normal housing life cycle works. But I don't know because you know what they may do. A 50 year mortgage and 5 years fixed rate and 45 years variable. Well that's not great. You know, we're assuming it's a 50 year fixed mortgage. Probably wouldn't be, probably would be some sort of reset periods in there or something. But it's interesting, it's an interesting conversation to have. We want you financial mutants to own your life. So even if it did happen and it were a thing and you did take advantage of it, we want you to have a plan of how you actually build wealth and get outside of debt. Because financial independence, Brian always says, is the opposite of financial encumbrance.

[B]

And so being you don't want to have obligations when you're supposed to be at financial freedom. And then this is why we talk about debt is always chainsaw dangerous. If you're not scared while you're using it, you're probably using it wrong.

[A]

Do you think was that okay? Do you think we did okay on that one?

[C]

I do. I think you may have surprised people, but I think we also knew you were going to say it depends. Well, like that's not surprising. I did confirm. New York Times released an article just a few days ago that says 40 is the new number for 2020 for.

[A]

The first time home buyer age.

[C]

So I think that's another thing.

[B]

That's why I look like the rabbit conversations on it. Because that is a. That is a problem if people are putting off y' all know as I get because I've done some of my Walking tangents videos. I talk about how sentimental I've gotten now that my kids are getting older. And I'm just worried that between AI. Between housing affordability we're just gonna quit having kids. They're just all the old man in me that's like population and sentimental. You know, family and other things. I'm like, all these things are just. People are just gonna keep pushing off life and I don't like it. I don't think that's a positive thing.

[C]

Always so sad. Yeah, yeah. No, I get it. No, I think it's good that y' all talked about it. Obviously we don't know a lot about it. We don't know if it'll even happen. But it's an interesting thought. Expert.

[A]

That's what I want everyone to take away from. No one knows if this is actually even thing. It's kind of like this made up thing that we just had a conversation around. But I do think it's viable to think through. I love it. We just want to see potential solutions introduced out in there to help solve some of the very real issues that a lot of young folks are facing.

[B]

We just had a big team meeting with the primary advisors yesterday and it's kind of the guidance I said is like there's a system within our financial planning firm that I was like, I think this is the right path because it's nimble. It does this. It does this. And I was like. But I'm always open if you have a suggestion for making it better. Not a complaint. I don't like complaints without solutions because that's just you complaining. But I think I at least give this credit is that let's come up with creative ideas, think about it. Let's figure out how we help the next generation kind of navigate these things.

[A]

Love that.

[C]

Yeah, no, fair enough. Good conversation. I'm glad that we got to chat about it. Something a little different, a little spicy. But we do love talking about these things and hopefully helping you build confidence on your financial journey. This is what it's all about. So be sure to go to moneyguy.com we'll be back every Tuesday at 10am Central, but moneyguy.com is always there for you. So we've got tons of free resources archives of all of our shows. So if you want to know more, like about our home buying rules, we have a whole free download that walks you through our thoughts on buying a home. We also have a home buying calculator that will let you know how much house you can afford with MoneyGuy guidelines. So be sure to check that out. MoneyGuy.com resources to continue the conversation.

[A]

Is all the new search stuff up there? Is all that ready to go or not yet?

[B]

It is.

[C]

And I was gonna have visuals next week to tell everybody about it, but.

[B]

Way to ruin it.

[A]

No, no, I'm just saying if I, if I were a Monday guy together enough that I've been listening for years or for months or maybe for weeks and haven't been to the website in a while, I go check out moneyguy.com because the website has had some massive overhauls that Reev is going to talk about next week.

[B]

It's dangerous to ask a question on it with a hot mic because I could probably ask this as soon as we cut off the cameras.

[A]

First to sneeze now.

[B]

No, but it is tomatoes wise. Are people throwing tomatoes at the end? Because that's the thing. It is so personal finance. Sometimes I get caught up in the fact that we are math nerds and we're always trying to give people the the best answer for maximization. But then I know and that some, sometimes behaviorally people would be better if we just said no, you know, but you know, but we try to treat everybody like, hey, this is how I would approach it with money. I'd be curious what's the initial feedback from the audience?

[C]

I mean, I don't think anybody's like throwing tomatoes. I think we had a lot of people very against it when we were first in the poll. Understandably, like, we get it, it's not optimal.

[A]

No negative reaction to our response though.

[C]

But yeah, a lot of people said like, like, yeah, it depends. I knew they were going to say that because. And that's kind of why we're all here. Right. Like we understand that there's some nuance or like it's a conversation worth having.

[B]

Yeah. I mean a lot of people will run amok with this without a doubt. Can you imagine? I mean, yeah. Like it's not, it's only a matter of time. If they had a 50 year mortgage that now you'd be able to buy your vacation property with 50 year mortgage. And if you know you have a.

[A]

Whole industry, 20 year car loan.

[B]

Oh, you know. Yeah. You once again, you will never own anything in your life. We'll just amortize a it all out so you can afford anything. 200 bucks a month.

[C]

Right. But that's not the goal.

[B]

Yeah. Buy now, pay later. Yeah.

[C]

For housing.

[B]

Guys, we love creating content and can't you tell, what I love is that I don't even, I didn't even get to see all the context. But, but we love you guys, how you bring ideas and you bring topics to us that we're willing to let you see behind the curtain and we'll talk about this stuff in real time. So you know, right there in the moment, see how our brain works. And I think you can just see the root seed that sits at the nucleus of all this is that we really do want to help you become just better with your money and know how to navigate this because money is only a tool. But I at least want you to maximize. I want you to bedazzle your basic life. I want you saving a little bit today so you can of course build your great big beautiful tomorrow and live your best life without regrets. I'm your host. We're all about the education, all about helping you become the best financial mutant you can be. Brian, Bo, Reby and the rest of the content team moneyguy Team Out.

[A]

The Money Guy show is hosted by Bryan Preston and Bo Hanson. 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.