"How Do I Buy an RV?" - Money Guy Show

Summary

Money Guy Show: "How Do I Buy an RV?" – Detailed Summary

Podcast Information:

Title: Money Guy Show
Hosts: Brian Preston and Bo Hanson
Description: Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life.
Episode: "How Do I Buy an RV?"
Release Date: December 30, 2024

1. Introduction to Financial Planning for Service Members

The episode begins with Brian Preston addressing a question from Tucker, focusing on retirement planning for service members who retire earlier than the traditional age. Tucker emphasizes the importance of planning for a longer retirement period due to the early exit from service:

Tucker [00:22]: "If you're a service member and you're going to be exiting in your 40s or 50s...you might be having 40 to 50 years you have to plan for."

He further elaborates on the necessity of asset accumulation and leveraging benefits such as pensions and VA benefits to achieve financial independence.

Bo Hanson adds to the discussion by highlighting the critical steps service members should take post-retirement:

Bo Hanson [02:25]: "Expenses drive the process. You have to write down, once you leave service, what do you anticipate your budgeted burn rate is going to be."

Bo also touches on the importance of securing necessary insurance before retirement, particularly life and disability insurance, to protect against potential health issues stemming from military service.

2. Main Topic: Treating an RV Purchase in Financial Planning

The core of the episode centers around R. Paris's question regarding the financial treatment of purchasing an RV:

R. Paris [05:55]: "How should I treat the purchase of an RV? Does this count as a luxury vehicle and I need to pay cash like the 238 rule says, or pay it off in a year?"

Tucker's Perspective: Tucker clarifies that an RV should not be classified similarly to a traditional luxury vehicle:

Tucker [06:38]: "This is not something to get you to your job. In my experience...an RV falls more in the category of like, a home purchase, like a second home."

He advises buyers to assess their financial stage to determine if purchasing an RV aligns with their "financial order of operations." Specifically, he references their nine-step financial process, identifying RV purchases as "step eight."

Tucker [06:38]: "Am I at the stage of my financial career where buying a second home makes sense? If not, then maybe I am thinking about adding a second home prematurely."

Bo Hanson's Input: Bo agrees with Tucker's classification, reinforcing that RVs are lifestyle decisions rather than necessities:

Bo Hanson [09:03]: "I will get some hate for saying this, but this definitely falls in the category of what I consider boats, RVs, off-road vehicles."

He further categorizes RV ownership as an "abundance goal," emphasizing that such purchases should align with one’s financial readiness and long-term plans.

Brian Preston's Agreement: Brian concurs, highlighting that RVs should be treated similarly to second homes in financial planning:

Brian Preston [09:09]: "It's not a vehicle. This is not a requirement living in it, maybe."

He underscores the importance of integrating the RV purchase within the broader context of one’s financial goals and step-by-step planning.

Key Takeaways:

Classification: RVs should be considered akin to second home purchases, falling under "abundance goals" rather than essential or luxury vehicle expenditures.
Financial Readiness: Ensure you're in the appropriate stage of your financial journey (step eight) before committing to such a purchase.
Depreciation and Lifestyle Choice: Recognize that RVs depreciate over time and represent a lifestyle decision that should align with personal financial stability and goals.

3. Personal Anecdotes and Stories About RVs

The hosts and Tucker share personal experiences to illustrate their points, adding relatability and depth to the discussion.

Bo Hanson's Story: Bo recounts a childhood experience with an RV during a Boy Scouts trip:

Bo Hanson [09:57]: "...we take a whole group...snowed up in the mountains...some friends slept in the RV while others endured harsh conditions in tents."

This story underscores the practical challenges and unpredictability associated with RVs, reinforcing the notion that they are significant lifestyle choices rather than mere vehicles.

Tucker and Bo’s Light-Hearted Banter: The conversation takes a humorous turn as Bo jokes about the disadvantages of RV living, prompting laughter and a relatable exchange:

Bo Hanson [11:00]: "Those that were in the RV know who they are. So maybe there is a bias."

This segment humanizes the hosts and provides listeners with an engaging, personable aspect of financial discussions.

4. Handling RSUs and Diversification

While the episode's main focus is on purchasing an RV, the hosts also address a secondary question from "sinking potato" regarding the diversification of Restricted Stock Units (RSUs):

sinking potato [15:00]: "Should I diversify my granted RSU's? How should I approach this?"

Tucker's Explanation: Tucker explains the nature of RSUs and the risks of over-concentration in a single company's stock:

Tucker [15:12]: "A lot of folks...are sitting there saying hold, holy cow, I have a ton of RSUs...you've actually inserted a ton of risk into your overall financial picture."

Bo Hanson's Strategy: Bo recommends creating a diversification plan that aligns with the vesting schedule of RSUs:

Bo Hanson [16:36]: "...create diversification just through the passage of time and creating a system that lets you sell these."

He advises selling RSUs upon vesting to minimize tax impact and reduce concentration risk, reinforcing disciplined financial strategies.

Brian Preston's Anecdote: Brian adds that employee stock purchase plans can be beneficial but should be balanced with diversification efforts to mitigate risks associated with holding too much of one company's stock.

5. Conclusion and Final Thoughts

As the episode wraps up, Brian and Bo reiterate the importance of aligning financial decisions with personal goals and stages in one's financial journey. They emphasize the ethos that:

Brian Preston [21:18]: "True wealth is the ability to focus on what really matters to you and your family."

Bo Hanson echoes this sentiment, highlighting that financial tools and strategies should serve to enhance personal fulfillment and security.

Key Quotes with Timestamps

Tucker [00:22]: "If you're a service member and you're going to be exiting in your 40s or 50s...you might be having 40 to 50 years you have to plan for."
Bo Hanson [02:25]: "Expenses drive the process. You have to write down, once you leave service, what do you anticipate your budgeted burn rate is going to be."
Tucker [06:38]: "Am I at the stage of my financial career where buying a second home makes sense? If not, then maybe I am thinking about adding a second home prematurely."
Bo Hanson [09:03]: "I will get some hate for saying this, but this definitely falls in the category of what I consider boats, RVs, off-road vehicles."
Bo Hanson [16:36]: "...create diversification just through the passage of time and creating a system that lets you sell these."

Final Thoughts

In "How Do I Buy an RV?", Brian Preston and Bo Hanson provide a comprehensive analysis of integrating significant lifestyle purchases like RVs into one's financial planning. They stress the importance of aligning such decisions with one's financial stage and long-term goals, treating RV ownership as an abundance goal comparable to purchasing a second home. Through personal anecdotes and practical advice, the hosts offer listeners actionable insights to make informed financial choices that enhance their wealth-building journey.

For more detailed strategies and personalized advice, listeners are encouraged to visit moneyguy.com and explore their extensive range of free calculators and resources.

Transcript

Brian Preston (0:07)

We do have another question from Tucker, if you're ready for it.

Bo Hanson (0:10)

Okay.

Brian Preston (0:11)

How should service members that have retirement at a much lower age than normal look at retirement and the amount needed at retirement?

Tucker (0:22)

Yeah, so service members are really, really interesting. Your first question is how should people that are retiring early think about their retirement? Well, I think one of the very first things you have to think about is longevity. Most folks, if you think about traditional retirement, they're going to retire at age 65 and they're going to live to somewhere between 85 to 95. So it's like 20 to 30 year retirement period. If you're a service member and you're going to be exiting in your 40s or 50s and you're considering that retirement, then what you're doing is instead of only having 20 to 30 years you have to plan for, you might be having 40 to 50 years you have to plan for. So you better make sure your planning is pretty jammed up. Now, what I have seen in my experience with a lot of service members is that when they leave the service, it's not really full retirement. It is stage one retirement, step to the next thing. It's like the next endeavor. And so one of the things I would figure out is, okay, based on my service, what have I done from an asset accumulation standpoint? Have I built up TSP assets? Have I built up investment assets? And then what sort of guaranteed sources of income will I have later in life? Am I going to have pensions? Am I going to have VA benefits? Like, what are the things that from my service career are going to carry through to later in life? And then from where I am today to where I ultimately want to be one day. So I know where I'm at today and I know the life I want to live. When I'm living my most abundant life, are there steps I need to take to get from where I am today to get there? And what most people find is, yeah, that's when I'm going to shift and I'm going to do some career 2.0. And maybe I do this for 10 years, or maybe I do it for 15 years, but that's going to be a different stage of my career. But because of my service, because of the assets I've built, because of the low lifestyle I was able to have, because of the pension that I have, it's going to give me opportunities to be a lot more flexible. I don't have to go out and make a gazillion dollars a year. I might just need to go out and make enough to cover my expenses and be able to save reasonably. And if I can do that for seven, eight, nine, 10 years, then I'm going to be set off to the races, ready to financially be independent.

Bo Hanson (2:25)

I wrote down some quick notes here. Tucker, by the way, thank you for your service. I love that the Guy show connects with a lot of people in the military. We even have studio tours come through and it's kind of cool. It really makes it really exciting. So that's what. And one of the tours we did last week actually shaped my answer a little bit. So here's what I wrote down. Expenses drive the process. You have to write down, once you leave service, what do you anticipate your budgeted burn rate is going to be? Because now you have the opportunity once you know the expenses you can lower. Because that's the second thing is what fills the gap, the difference between your anticipated pension from what that budgeted burn rate is. And then you have to figure out, how am I going to fill this gap? For a lot of people, it's exactly what both said. They might transition to another opportunity. That's a new job. I've got a cousin that did the same thing, but then that, you know, realize he didn't love that as much. And then you have to kind of lean back on do I have enough assets slash investments to fill it so I don't have to work so hard with my back, my brain and my hands, just like we always talk about with our army of dollar bills. So those are the two, you know, meat and potato parts of the answer. But here's a third one that I thought this was definitely something that service members ought to know. Make sure you get all the insurance you need before you retire. I'm talking about life insurance, I'm talking about disability insurance because there's this weird dance with service members. Is that. And I even saw this with my cousin. Is that a lot. You guys are doing unique jobs and it's really hard on the body in a lot of ways. So a lot of times when you leave service, even though, you know, outward looking you look very healthy, you might have some pretty gnarly, you know, damage to you somewhere else, whether it's your ankles or your knees from doing or your ears and all these unique things from just being in the military. So you're going to have some discussions with the VA to figure out if you qualify for additional benefits because of some of that damage from your, your time of service. Get your, you know, some of that might make you considered uninsurable. So that's why you have this weird dance where you have to get. I would encourage you before you have to kind of start, you know, doing that part of it. Don't do insurance fraud. Don't mishear me. But I'm just saying make sure you have time that out to understand. Maybe it's easier to get my disability in my life, you know, before I have to have those unique conversations with, you know, veteran Affairs.