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- [00:00]
A
The content team has been busy. They've been out there raking through TikTok YouTube, harvesting the best videos they could find for us to share with you guys.
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B
Everyone.
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C
I am so excited. This because we never know what the Internet has in store for us. Let's see what the content team has done today.
- [00:17]
D
Controversial Things I do According to real comments I've gotten wearing nice brands like Patagonia or North Face, people seem to think that being frugal means being cheap but or that you can't own nice things, but it's about being mindful of what you buy. And personally I enjoy having a high quality coat when I live in the rainy, windy and cold Pacific Northwest. People also ask why I hire a nanny once a week because frugality isn't about deprivation and not being able to enjoy luxuries that add value to your life. I budget for a nanny because I value being able to have time for myself to focus on my passion projects and it's within our means. Another comment that caught me off guard was buying clearance and how by me taking advantage of clearance I could be taking away from someone else who really needs it. And while I understand their sentiment, having wealth doesn't disqualify you for using smart money habits. Still, being frugal and shopping clearance and saving money is exactly how we got here in the first place and I'm always mindful of how much I take. That way I'm not hoarding everything and I leave some for others and similarly participating in my local buy nothing group. This comes down again to that sentiment of taking from others who really need it. I give far more than I request or take in those buy nothing in groups and sometimes I use them just to borrow something instead of having to buy it. I never try to claim essentials like diapers or food because I know that would better serve other families. But for non essentials or things that have gone unclaimed then I will ask to be considered.
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C
I didn't see anything wrong here and I love what Emily said was hey, the decisions and the behaviors that we did that got us to where we are. By the way, if you want to see where they are, we actually had her and Kenji on making a millionaire. It was super, super fun. They're in a fantastic spot. I think there's nothing wrong. Even if you've had some success, even though your financial situation might look differently today than it did 10 years ago, it's still okay to make wise, sound financial decisions.
- [02:10]
A
Emily, don't let them haters get you Down. Look, there are just trolls out there under all kind of bridges. The thing that got me there was buying stuff on clearance is bad. You realize all you're protecting is that stuff from ending up in the trash. If you don't buy that muffin on clearance, it doesn't mean somebody doesn't get to eat the muffin. And by the way, it's probably better if I eat the muffin than somebody who came because it's not like this is good for you. All it's doing is keeping it out of the landfill. I see nothing wrong with that. Don't let those the haters get you down.
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C
If buying on clearance is wrong, I don't want to be right.
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E
I keep my food outside just so I can save extra money. So I like to come to the home.
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A
This is my mother in law.
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E
I can save money on cooking this actually at home. So what I'm doing here is I am my salmon so I can get it going and cook everything right for my family. Now it's time for the most important part about all of this. You're going to have to clean your fish. Now a lot of people don't really like to clean their meats because where they actually cook them. But I have my stuff here. Now we wait. I know it may not work for most, but it works for me and I'm able to save money. So I'm fine with that.
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A
In earlier days of this react boat, you and I had some of these, this TLC cheapskate show and I kept saying this is all orchestrated, this is.
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C
I don't understand.
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A
They went into a home that had just been closed. I've caught on already. I love to see there's somebody out there in the public that was so annoyed with how just choreographed that series was that he went to like Home Depot, Walmart. I don't know where he filmed that at.
- [03:40]
E
I like to come to the Home Depot.
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A
To the Home Depot. He's at Home Depot.
- [03:44]
C
There are times where we can take frugality or being quote unquote a cheapskate too far. Now obviously this was comedy, this was a farce. But in reality we see people do this. We see people cut corners like not replacing the tires on their automobile or not providing daily or basic essentials that they need in their home. Don't let yourself be that kind of person. There's nothing wrong with being frugal. There's nothing wrong with being responsible. But don't be penny wise and pound foolish when it comes to making those decisions.
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E
What do you think is the best investment vehicle for a middle class American
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F
that is risk adverse, an inflation index bond, which is index fund tips, treasury inflation protected securities because it will guarantee you a real return. And I don't think that you should be speculating in the markets because there's a zero sum game and you'll probably be the loser.
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A
It's not a zero sum game.
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E
Ready to celebrate next year, the 250th anniversary of this country? Are you optimistic about our future or is the debt problem so concerning to you?
- [04:51]
F
You're not optimistic about our future? I think it's a time horizon we're going to go. I think, I think we can deal with this. I think it comes down to how we are with each other. But we will go through this. And he hasn't said anything to the other side.
- [05:08]
C
What was the original question the interviewer asked?
- [05:11]
A
I think that's what I was going to say, this whole thing, because index funds would have been the answer. But he said for a risk adverse investor and because of the balance. That's why when he went into tips, I mean technically that's not a bad answer because he said what's the middle class family that doesn't want essentially any risk? Well, that's the thing with any investing. If you're going to get a risk premium or a return that's greater, large enough beyond inflation and so forth, there's going to be some form of risk involved with it. And that's why I think that a diversified portfolio, but a diversified portfolio still, especially if you're starting your younger years, that leans heavily into index funds, say total market return or S&P 500. That's going to serve you well in the long term.
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C
Yeah, I think a risk averse investor might even like a closer dated target retirement index because then you're going to get diversification, but you're not just going to have fixed income exposure, you're also going to have equity exposure. So I think maybe that was a little misleading and I'm not like Ray Dalio, but that I don't know that I love that answer.
- [06:10]
A
Well, an index target retirement fund. Because I can see as soon as you say target retirement. Oh no, he's talking this fees are too hot. No, not go look at what Fidelity, Vanguard, Charles Schwab are doing out there in the index target retirement space. The last thing you're going to complain about is the fees.
- [06:25]
B
Can you afford a $300,000 home if you make $75,000 a year? Well, let's Go through the numbers. If you buy a $300,000 home, let's say you put down a 3% down payment plus 3% of closing costs is going to be $18,000 cash upfront. Then you get a 7% interest rate would put your principal and interest payment at $1,936 plus 550amonth for taxes and insurances bringing you to a grand total of $2,486 a month. Now let's look and see what you can qualify for. Lenders typically going to use about a 40% debt to income ratio, meaning that you would have a 30,000 do thousand dollars allowance divided by 12 putting you at $2,500 a month. So you barely qualify by 14 bucks. But you do qualify. That's if you have no debt. Now here's the next step. Can you afford it? Because if you make $75,000 a year, your take home pay after taxes 401k and health insurance is going to sit around 4300. So this 2486 payment would take up 57% of your take home pay. So make sure you sit down with your lender and your family to make sure you can qualify and comfortably afford the payment so you don't end up house.
- [07:23]
C
Based on his numbers, he came up with 40% of GR income. You know that our rule when it comes to buying a house is we want you to follow 3, 5, 25 and he almost got us there at least 3% down. But you don't have to do more than 3% down. You want to make sure you can stay in the home for at least five years and then you don't want the total housing cost to be more than 25% of your gross income. So in this scenario they're at 40% of gross. I would argue this is a little more house than this person would be able to.
- [07:54]
A
Yeah, and that's why he even got, because he even did after tax, you know, net of taxes I should say. And it was 57%. You are life, your life poor and house and house rich at that point. And that's, that's, that's the fear you have to have. Now what I would challenge on this is that somebody who's making 75,000, I'd love to know what their income trajectory is going to be for the next three years because I know in my own career you hit 75. Maybe the next year it's 84, 85. Next year it's close to 100. You know, if you're on an upward trajectory, you know, income trajectory, and you're in a good field like public accounting, engineering, other things. You're probably going to be able to stretch things and be okay. But I still like the idea of having some grounding. And that's where 3, 5, 25 really can help you. But also understand that even having good solid rules like that, your situation is going to be very specific. That's why we always say personal finance is very personal.
- [08:48]
G
If you have $1, you can buy a bottle of water. If you have $10, you can buy a burger. If you have $100, you can buy a pair of shoes. If you have $10,000, you can buy a luxury watch. If you have $100,000, you can buy a sports car. If you have $1 million, you can buy a house. If you have $10 million, you can buy a mansion. If you have $100 million, you can buy a private island. If you have $10 billion, you can buy every Formula One team. If you have $100 billion, you can buy a small country. If you have $1 trillion, you can buy Amazon. If you have $1 quadrillion, you can buy the Earth. And if you have $1 sextillion dollars, you might be able to buy a Starbucks coffee.
- [09:32]
A
Okay, that was a, that was a big build up to get to that point.
- [09:35]
C
I was waiting for the payout.
- [09:37]
A
I was with you. I was like, what a creative thing. Because from a content creation standpoint, I was very excited, just moving the zeros each time and what, what he was using to show a relative value for each of those changes. Well done. And we've watched, we've responded to his content in the past.
- [09:53]
C
What he's suggesting here is that Starbucks as a cup of coffee is an expensive cup of coffee. What you spend your money on is subjective. What you want to make sure you're not doing is spending your money on things that you don't care about to impress people whose opinions don't matter. Rather, you should spend your money on the things that you care about that you find value in. So if buying a Starbucks coffee is something that you enjoy and you place value in and it's not derailing your other financial goals, I think that's okay. Even if it's possible to go out and spend a lot less on a different cup of coffee somewhere else.
- [10:28]
A
Well, time and place, the latte effect is very important when you first start out on your journey. You should be watching where your money goes, even on little things like coffee. When you're starting out, by the time you get to level three of the five levels of wealth, which is security, you don't have to sweat the small stuff anymore. And that's what I'm telling you. Time or place in the beginning latte effect matters. As you make progress in your financial journey, you're gonna be less and less like a tight wad. And that's a. Okay.
- [10:54]
H
Six ways to increase your life quality on a budget. Outdoor walks.
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A
It's Jason free.
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H
They get you out of your own head and they can take you to number five.
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A
I agree.
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H
Public library. Not only do you have free books
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A
and BO doesn't hang out in the
- [11:04]
H
library, you also have free classes to grade skills and free events to stay entertained. Almost as entertaining as number four, trying a new recipe. Cooking at a lame. If you're not making anything fun. So check your tiktoks and Instagrams for more recipes. 3. Online workout. If $200 at club is not in your budget, then a free YouTube class is. Right in the comfort of your own home. 2. Calling up a friend. They'll appreciate it, you'll appreciate it. And no one's going to be lonely today. Number one, reading. It's a lot healthier than doom scrolling. So make sure to follow and then go find a book.
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C
Oh man. You know what made that video better? If instead of pulling up one of Pat Flynn's books, he would have pulled up Millionaire Mission. If he'd have pulled that up and started reading, that would have been ideal. But I do love this. There are very inexpensive ways to find things that you enjoy doing that can increase your. Your happiness without breaking the budget.
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A
JC put so many Easter eggs in that little video he had. He had his Dave Ramsey mug. Did you see that? We needed. We got to work on seeing how we can get him into. Oh, Millionaire resume. It's actually in the frame. Oh yeah. We made it. Thank you, Jason.
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D
We were literally.
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A
We were just.
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C
We were two books too fast. Just gone over and got that one.
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A
Look. I lost all train of thought because I saw a Millionaire Mission golf club.
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I
Wow. I got a ten thousand dollar bonus at my first job. I'm going to 500 and put up my Roth IRA and then never contribute another dollar until I hit 65.
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A
We see that.
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F
Wow.
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I
I also got a ten thousand dollars bonus at my job, but I'm gonna use it to go on vacation. I could die tomorrow. I have the rest of my life to invest. Well, I guess I should start saving for retirement now. I'm gonna put 500 in my Roth IRA every year until I hit 65. What about you?
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J
I don't know.
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I
I haven't touched my Roth IRA since I put that 6500 in it when I was 21 years old. I've been investing in other things, but not my Roth. Well, I've put $10,000 in my Roth IRA. Let's see what we got. $25,000. Okay, what do you have? You only put like 6,500 in there when we were kids. Let's see. My Roth IRA is currently worth $178,000.
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D
Wow.
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I
I made $170,000 completely passively and it's tax free. I should have invested sooner.
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C
She's right. You should start saving early. That's a wonderful habit. But we don't want you to stop. We want you to start saving early and we want you to keep saving. Keep saving. If you could have combined person A and person B into person C. Person C has a beautiful financial future.
- [13:21]
A
I do like the set it and forget it. It kind of, you know, automatic for the people on the always be buying. It's going to protect you from just the market volatility. It's going to protect you from just your desire to go spend more. You're going to set it and forget it. And you're going to be much better in the future if you just go with that type of strategy. Acc. Bro, can I have your receipt?
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B
Thank you, bro.
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A
I appreciate it.
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G
Have a good one.
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A
Hey, I've been waiting a bit for
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C
my order on this receipt. No, thank you so much.
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F
Yeah, that's me.
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A
That's, that's thievery right there. That's, that's, that's just totally legal.
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E
You're stealing right to jail.
- [14:01]
C
That's not a money hack. That's, that's stealing right to jail right away.
- [14:05]
J
Gonna be so controversial. But I love living a frugal lifestyle and living so far below my means just so that I can reach my financial goals. Like, I don't need the overpriced coffee every single day. And I've seen videos of people like talking about how they're cutting out getting coffee every day in the small purchases. And then people in the comments are like, you know, the small purchases don't matter. Like if you have to cut, they
- [14:26]
A
do in the beginning.
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J
Just don't know how to manage your money. Well, with me cutting these small purchases out of going to get a coffee every single day, I've been able to put an extra $150 towards my financial goals. Every single month, $150. Cutting out all of this spending has honestly made me so much happier because I'm seeing how much money that I'm putting aside for my future and for things that I have planned. I enjoy living my degree and I know that I love that I'm not spending $150 a month on overpriced coffees. And I'm putting that towards my future instead of now.
- [15:03]
C
No, I couldn't help myself. Cause she said $150 at a $5 coffee. That is 30 days of $5 cost. It's a coffee every day. That's aggressive. That's aggressive. But I think there's probably a middle ground because I love what she said. If you can cut back on that stuff, if you can put that money to work, if you cannot fall into that consumption trap, then you absolutely can deploy those dollars to work for a better future for you.
- [15:30]
A
Look, I'm all about this type of lifestyle because I think you're trying to set good habits. You're trying to get your army of dollar bills working for you while they have the biggest wealth multiplier possible. But there is a something you have to be careful. It's too much of a good thing. As you get older and have more and more success is there's a fine line between financial mutant and financial miser. So enjoy this hobby or habit that is going to help build the foundation of your financial empire. But I want you also to be healthy. And if you get enjoyment out of a cup of coffee, like full disclosure because I had to pick on Bo. Cause he'd have a Starbucks coffee here right now. Bo loves a cup of coffee.
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C
I'm a big coffee guy.
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A
I mean, he drinks a lot of coffee and likes good coffee. It's okay if Bo gets a ton of enjoyment and if he orders coffee. I think that's why you get so excited, you know, bothered by the latte effect. Because you feel personally attacked by it.
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C
Yeah, but it's back.
- [16:22]
A
There's a time and a place. In the beginning, you should be budgeting and knowing where every dollar is going to. But as you have enough success, you can graduate beyond budgeting. You can have a cash management plan where the primary focus through forced scarcity is, you know, automatically what's going into savings and investments. And once you've crossed into the barrier, this is enough for what I want to have in the future. Go live your life without regret. And I think if you open it up, your loved ones are going to enjoy hanging out with you, your friends are going to enjoy hanging out with you more, and you'll just get a lot more out of life as well. So avoid, avoid being a miser. Go more for the financial mutant when
- [16:58]
C
it comes to making financial decisions. When it comes to having financial advice, there is good financial advice out there and then there's not. So good financial advice. And you have to discern which camp each thing you let into your mind falls into. But one of the things that we're going to do is we're going to keep loading you up. You can go to moneyguy.com resources, you can check out all of our free resources, all of our tools, all of our calculators, because we really do believe there's a better way to do money.
- [17:25]
A
Overall, I thought the content team gave us some pretty good batch of not bad advice there. And we love creating this type of content. So y', all, y' all keep creating the content, we'll keep reacting to it. We're gonna keep going beyond common sense to help you know what to do with every dollar. I'm your host, Brian, joined by Bo, Moneyguy.