How Much Do You Need to Retire (By State)?

Summary

Money Guy Show Summary: “How Much Do You Need to Retire (By State)”

Released on July 30, 2025, the “Money Guy Show” hosted by Brian Preston and Bo Hanson delves into the intricacies of retirement planning, emphasizing how geographical location plays a pivotal role in determining retirement needs. The episode offers valuable insights, practical strategies, and engages listeners through insightful Q&A sessions.

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1. Introduction to Retirement Costs by State

Bo Hanson kicks off the episode by highlighting a common query among listeners: “What do I actually need to retire?” He underscores that the answer significantly depends on where you choose to live during retirement.

Brian Preston adds context, explaining the challenge of projecting long-term retirement expenses, especially when considering diverse locations across the United States.

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2. Visual Capitalist’s Profile on Retirement Costs

Bo Hanson introduces data from Visual Capitalist, which breaks down annual retirement costs by state, encompassing expenses like food, shelter, transportation, healthcare, and utilities.

Key Findings:

• West Virginia emerges as the most affordable state for retirement, with an average annual spending of $58,000.
• Hawaii stands out as the most expensive, requiring approximately $129,000 annually.
• The national average for retirement spending is around $71,640 per year.

Brian Preston further analyzes these numbers using the 4% withdrawal rule, translating annual expenses into the necessary retirement portfolio. For example, the national average suggests a portfolio of nearly $1.8 million.

Notable Quote:

“What do you have coming in? And what are you going to be able to use to build that awesome retirement?”
— Brian Preston [04:38]

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3. The Impact of Pensions and Social Security

Brian emphasizes the importance of income sources like pensions and Social Security, which can significantly offset retirement expenses. Using Hawaii as an example, he illustrates how a combination of pension and Social Security can reduce the required retirement portfolio from $3 million to $2 million, alleviating financial pressure.

Notable Quote:

“Don’t let this panic you. You just need to take inventory.”
— Brian Preston [04:54]

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4. Tailoring Retirement Needs to Individual Goals

Bo Hanson stresses that the amount needed to retire is highly personalized. He advises listeners to budget, track expenses, and understand their unique retirement lifestyle to accurately determine their financial requirements.

For younger listeners in their 20s or 30s, Bo suggests aiming to save 25% of gross income, leveraging the power of compounding interest over time.

Notable Quote:

“Your number should be 25%.”
— Bo Hanson [05:48]

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5. Homeownership and Financial Independence

A significant portion of the episode debates whether homeownership is essential for financial independence. Bo Hanson advocates that homeownership is not a necessity unless it aligns with one’s personal goals. He shares anecdotes of clients who achieved financial independence without owning a home, maintaining flexibility and focusing on investment growth instead.

Brian Preston counters by acknowledging the traditional American path where home equity constitutes a large part of net worth, urging listeners to not rely solely on home ownership but to actively build investment assets.

Notable Quote:

“Homeownership is not a requirement for financial independence.”
— Bo Hanson [07:28]

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6. Listener Q&A Sessions

The show transitions into an engaging Q&A segment, addressing various financial concerns submitted by listeners:

a. Never Buying a Home

Amber H. asks about the implications of never buying a home on net worth and retirement. Bo Hanson reiterates that financial independence doesn’t mandate homeownership, highlighting the importance of saving and investing to build a robust portfolio.

Notable Quote:

“You just need to do saving and investing, live on less than you make.”
— Brian Preston [09:09]

b. Maximizing Retirement Accounts

Danny Tsunami inquires about prioritizing Roth IRA contributions over employer 401(k) plans. The hosts explain the flexibility and control offered by Roth IRAs, such as selecting custodians and investment options, while also encouraging the use of both accounts to maximize retirement savings.

Notable Quote:

“It's not an either or, it's really an and.”
— Brian Preston [12:10]

c. Inherited Bonds Reinvestment

Febreze seeks advice on reinvesting a $10,000 inheritance from bonds. Bo Hanson recommends assessing one’s financial position using their Financial Order of Operations guide and suggests options like Roth IRAs or 401(k)s based on individual circumstances.

Notable Quote:

“Use it to put more money in your 401(k) or your Roth IRA.”
— Bo Hanson [37:18]

d. Medical Debt and Emergency Funds

Matt C. questions whether medical debt for his child’s braces is “good debt” and whether to use his emergency fund. Bo Hanson advises paying off the debt swiftly, especially if it comes with 0% interest terms, while Brian emphasizes the importance of maintaining an emergency fund to avoid financial strain.

Notable Quote:

“It's a finite plan about how you're going to knock this out.”
— Bo Hanson [49:15]

e. HSAs for Disabled Veterans

Anthony F. asks if he should enroll in a high deductible plan to open an HSA despite utilizing VA healthcare and opting out of employer health insurance. Bo Hanson advises evaluating the benefits of current insurance versus potential HSA advantages, suggesting that for some, maintaining superior insurance coverage may be more beneficial than opening an HSA.

Notable Quote:

“Assess what’s best based on your specific medical uses.”
— Bo Hanson [55:20]

f. Balancing Retirement and Starting a Family

Milkman's concern about being on track for retirement while planning to start a family prompts Bo Hanson to highlight the importance of saving 25% of gross income to alleviate financial stress during life transitions. Brian Preston shares personal anecdotes to emphasize balancing financial discipline with life’s personal milestones.

Notable Quote:

“Follow the order of operations even when you're in the messy middle.”
— Rebi [63:41]

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7. Closing Remarks and Resources

As the episode concludes, Brian and Bo encourage listeners to utilize the resources available on moneyguy.com, including free downloads and calculators to better manage their financial situations. They emphasize that money is a tool meant to provide freedom and fulfillment, urging listeners to focus on what truly matters in their lives.

Notable Quote:

“There’s a better way to do money.”
— Brian Preston [65:20]

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Key Takeaways:

• Retirement Needs Vary by Location: Your state of residence significantly impacts how much you need to retire comfortably.

• Flexibility in Financial Planning: Individuals should tailor their retirement strategies based on personal goals, leveraging tools like the 4% withdrawal rule and considering income offsets from pensions and Social Security.

• Homeownership is Optional: While beneficial, owning a home is not a prerequisite for financial independence. Focus on saving and investing to build a diversified portfolio.

• Maximize Retirement Accounts: Utilize both Roth IRAs and employer-sponsored 401(k) plans to optimize retirement savings, taking advantage of their unique benefits.

• Strategic Debt Management: Evaluate the terms and implications of any debt, especially medical or related to major life expenses, ensuring it aligns with your financial stability.

• Adapt to Life Changes: Whether inheriting assets, starting a family, or dealing with medical expenses, maintain financial discipline and use available resources to navigate transitions smoothly.

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For more detailed strategies and personalized financial advice, visit moneyguy.com and explore their comprehensive resources.

Transcript

[Brian Preston]

This episode is brought to you by Lifelock. When you visit the doctor, you probably hand over your insurance, your ID and contact details. It's just one of the many places that has your personal info, and if any of them accidentally expose it, you could be at risk for identity theft.

[Bo Hanson]

Lifelock monitors millions of data points a second.

[Brian Preston]

If you become a victim, they'll fix it, guaranteed or your money back. Save up to 40% your first [e-mail] podcast terms applying. Hey, we got some interesting information to share. How about how much your retirement's going to cost you by where you live?

[Bo Hanson]

Brent, I am so excited to talk about this because it's one of the questions that a lot of people have, okay, what do I actually need to retire? What do I actually need to experience financial independence? And the this won't come as a surprise, but where you live will actually likely have a huge impact on what the answer to that question is.

[Brian Preston]

And it's not, you know, one of the biggest things when we do content shows, one of the hardest things for us is we have to use some number for people who are not retiring for 20, 30 years.

[Bo Hanson]

That's right.

[Brian Preston]

Sometimes we use a percentage of income to assume expenses. But that gets to the point that what's really the most important, it's not really what you make, it's what you actually spend in retirement.

[Bo Hanson]

So Visual Capital, Visual Capitalist came out with this really interesting chart that shows the entire United States. And it shows the annual retirement costs by state. And this is again is across food, shelter, transportation, health care, utilities, and then like a little bit extra to kind of show you, okay, well, what would be the annual retirement spend, the annual living retirement need by states? And unsurprisingly, there are some that are relatively low and reasonable, and there are some that are pretty high and a hard, hard level to get to.

[Brian Preston]

Well, let's compare and contrast here. If you want to know, on the low side, where would you have to live? It's West Virginia with $58,000 in average annual retirement spending. And if you want to know the highest, we've got Hawaii at coming in at $129,000 and the national average is 71,006,40. So then we said, hey, let's in money got fashion. Let's take this in a different way because I love what Visual Capital has put together here with the go Banking. Go Banking rates data. But we're like, okay, what would you actually have to have in assets to replace this level of expenses? And we came up with using the 4% withdrawal rule. A whole spread here for you. Yeah.

[Bo Hanson]

If we think about just the average, the national average we said was 71,640. That means that on average, you would need almost a $1.8 million portfolio across the country. But if you want to get specific, we said, okay, if we take that same, that same thought process and apply the 4% withdrawal rule to all of these states, what are the lowest 10 states in terms of the size of portfolio you would need? And what are the highest 10? It was kind of remarkable that if you look at the bottom 10, this is West Virginia, Oklahoma, Alabama, Indiana, Iowa, Kentucky, the portfolio value falls somewhere between 1.4 to $1.6 million would be what would be necessary with a 4% draw rate to reach that average standard of living in that state.

[Brian Preston]

Now, here's the thing, because a lot of people are going to see us and be like, oh, no. I mean, I just don't know that I'm on track to have a million and a half dollars, much less $3 million. And that's why I think it's important. And this is why, when we've done content in the past, we've tried to take a percentage of income or other things, because there's always typically an offset.

[Bo Hanson]

Yep.

[Brian Preston]

And let's face it, when we think about offsets, a lot of you, especially if you're retirement age, you might be old enough that you will qualify for a pension. You know, because the pensions did. They were much more prominent in the past. And most people, especially those approaching retirement, qualify for Social Security. That is going to have a direct offset to your expenses or cash flow needs. And that can have a dramatic need. Think about for somebody in Hawaii, $3 million. That's a lot of net worth that you would have to have a big lift to save to build that type of net worth or basket of holdings. But if you had a pension that was going to provide her Social Security and those two in combination were $40,000 a year, all of a sudden, instead of being around $3 million a need, you might be $2 million.

[Bo Hanson]

That's right.

[Brian Preston]

You just trimmed a full million dollars off of that. So don't let this panic you. You just need to. It shows how important it is. Take inventory. Because once again, personal finance is very personal. What do you have coming in? And what are you going to be able to use to build that awesome retirement?

[Bo Hanson]

And of course, the actual answer for how much you need to retire is dependent solely on you. Just because someone else might be able to live at a stated standard of living does not mean that's a standard of living that you want to or need to live in in retirement. So as you get closer to retirement, we want you budgeting, we want you tracking, we want you having a really good understanding of what your retirement expenses will be. But Brian, we have a huge audience out there and they say, oh, okay, I'm in my 20s, 30s, 40s, and I want to know what my number is. How should I be trending to? How should I be thinking about this? And you already said this. One of the most difficult things that we do is try to project what living expenses will be 20, 30, 40 years into the future. And so when someone in their 20s or in their 30s asks us, hey guys, I'm trying to figure out my number, what should my number be? We say your number should be 25%.

[Brian Preston]

Well, yeah, you can quickly see this is the personal and personal finance is that if you go look at our and I love the intersection point. How much should you save in retirement? If you have not checked this out, go to moneyguy.com resources. This is going to let you now look at, hey, okay, I'm in my 20s because I'm starting this much earlier than the average American who doesn't start saving and investing for the future is usually in their early 30s, early to mid-30s at this point because it changes from year to year. If you're in your 20s, you're getting a huge head start and you're giving your army of dollars that much more compounding interest opportunity, your savings rate might be able to be well below 20%. So that's why go check this out. Individualize your journey. But the big thing is don't let studies like this on how much things are going to cost in retirement. Focus on what you can control. And your savings rate is a big factor in that.

[Bo Hanson]

I love, Brian, that we get to share this kind of information. We get to help you dream and plan for what retirement and financial independence look like. But I also love that we can speak to things that are going on in your life right now, today. It's why we show up Every Tuesday at 10am so if you have a question you want us to answer right now we have the team out in the wings collecting your questions. Make sure that you get them in the chat because we believe that there is a better way to do money. And so we want to load you up. So with that creative director Ribe, I'm going to throw it to you.

[Rebi]

Yeah. Amber H. Has a question for you, she says, what are your thoughts on never buying a home? What are some considerations on how this may impact your net worth and your retirement? What do you think?

[Bo Hanson]

So I think this is a take that a lot of people will find interesting. We subscribe to the idea that home ownership is not a requirement for financial independence. Homeownership is not a requirement for retirement. Homeownership is not a requirement for anything financially related unless owning a home is a goal that you have. Now don't mishear me when I say that we love homeownership and there are certainly tons of value to owning a home and being able to have something that you've paid off and is yours, but it's not an absolute necessity. And we have a number of clients who maybe at some point in their life prior were homeowners, but now at this stage of life or where they're at, they've made the decision, hey, I don't want to be tied down to one specific location. And they actually don't own a home. And they're still financial independent and they're financially independent. They're still have flexibility. They still can live the life that they want to live on their terms. So I do not think that homeownership is an absolute necessity for everyone.

[Brian Preston]

But Amber, I'm going to be completely transparent, honest with you is that if you look at the data from the Fred, that's the Federal Reserve, they publish data on changes of net worth. Sadly for the typical American, all of their net worth is tied up in their house. It's almost like this big financial transaction that people do is what unfortunately is all that drives their long term success and the growth of their net worth. They chose it because this is, I guess, part of the American dream of the past. So I will tell you with that type of knowledge and understanding is that doesn't mean that has to be your story or your path. It just means more responsibility falls on your shoulder to actually not be that stat, actually start saving and investing, live on less than you make, actually start putting a little bit of your money to work so it can start growing on its own. Because it just depresses me that we create all this content, we try to motivate people, and then you just die. We don't see the needle move with the typical American on building assets that can work harder than they can with their back, their brain or even their hands. It's because people just let life happen to them. So Amber, I have no problem. And we have a lot of very successful Especially if you live, think about people who Silicon Valley are on the west coast, the east coast where there's super high cost of living. We know some very multi seven figure families that we've helped out with that never own their homes until retirement. You can still, you know, do all the things of set roots, create community but you know, you still, it falls on your shoulder. Make sure that all of your net worth when you track it is, is actually growing in the background by saving and investing in the future by putting it to work into your army of dollar bills.

[Bo Hanson]

Now if you are someone out there who is interested in homeownership and that is a goal that you have, we have tons of resources out there for you. If you go to moneyguy.com resource you can check out our home buying checklist, you can check out our home affordability calculator, you can check out all the housing shows we've done to help walk you through how to make sure that when you make this huge life decision, you make it well and you take into consideration the factors that should be affecting that decision. So if it does make some, if it does make sense for your situation, we've got tons of resources out there for you.

[Rebi]

That's great. Amber H. Appreciate you being here and thanks for the question. Danny Tsunami is up next. It says I've completed steps 1 through 4 of the foo and I have enough funds to max my Roth IRA. No HSA available. Why is it recommended to match my Roth IRA before maxing out my employer 401k plan?

[Brian Preston]

Well, maximum flexibility. Plus it doesn't have to be an either or. I think it's look, we like the IRA first because guess what, you have complete control. That's right. You have limited control with your employer. Yes. You get to determine how much you can save in your employer plan but you don't the investment options. What if it was the golf buddy of the owner of your company who set it up and it's got all these sub account fees, it's got, you know, it's not index funds, isn't even an option. There's lots of things that are outside of our control. Whereas that Roth ira you get to choose the custodian that you go work with. You get to choose the investment you go work with. And then guess what, even if you change your, your, your job, you don't have to go to HR to move those assets out. You actually still have control of every bit of that. That's why we like the Roth IRA first. But ultimately the goal is that you go do both.

[Bo Hanson]

That's right.

[Brian Preston]

I'd love for you to load up step five, max out the Roth ira and then, yes, move to step six with loading up those retirement assets and topping off with that 401k.

[Bo Hanson]

Yeah, we love Roth assets because Roth assets are a great tool where you can put money in. Today you don't get a current year tax benefit, those dollars grow tax deferred. And then when you go to distribute them in retirement, assuming that certain qualifications are met, you get to pull that money out completely tax free. So that's why it's the tax free growth, why it starts earlier in the financial order of operations. Because that can be wildly valuable for you. It's even you may be someone who says, oh, but guys, I've listened to your stuff and it says, okay, if I'm in a higher tax rate, then I should do pre tax and a lower tax, I should do Roth. So should I just skip the Roth and then go to the four? No, not at all. If you're in that situation where you're in a high tax bracket, we still would love to for you to do backdoor Roth conversions even before you go back to your employer sponsored plan because we know that that tax free growth is so, so, so valuable over the long term. But I love what you said, Brian. It's not an either or. Hopefully, as you're working through the financial order of operations, Brian, you know the thing up for me. Hopefully as you're working through the financial order of operations, you're not stopping at step five, you're continuing on through step six and you're doing both of them.

[Rebi]

That's fantastic. Well, Danny, Tsunami, thank you for the question. I hope that helps you think through that.

[Brian Preston]

And I like that name, by the way.

[Rebi]

I know, isn't that a good one, Danny?

[Brian Preston]

Tsunami.

[Bo Hanson]

Tsunami.

[Brian Preston]

Feels like you ought to, you know, have maybe a DJ booth in front of him and you know, design like a dead mouse type, you know, helmet to wear with it and he could mix it up.

[Bo Hanson]

Okay, Danny, if you need more career.

[Rebi]

Advice from Ryan or design, fashion advice, costume advice. All right, well, I was thinking like a surfer.

[Bo Hanson]

I wasn't thinking dj. I was thinking like, yeah, in my mind, Danny, Tsunami kind of looked like Johnny.

[Brian Preston]

Surfers want to talk about tsunamis?

[Bo Hanson]

Well, no, no, I just thought like when I think of tsunami surfing.

[Rebi]

Yeah, yeah. Something ocean side. If you like that username, you're gonna like this one. Tragdor. The Burninator has a question for you.

[Bo Hanson]

Is that a reference? I don't get.

[Rebi]

I don't get it. And I'm a little bit nerdy, so I don't know. You tell me.

[Brian Preston]

Let us know.

[Rebi]

In the chat, he says, hey, bnb thoughts on keeping a first home with great equity and a low interest rate when buying a second home, it should stay cash flow positive, but I'd likely put down less than 20% on the new one. And in case anyone is new here or needs a refresher, you guys typically like putting 20% down on your second home. It's part of our home buying guidelines. So what would you say to Tragdoor the burdenator?

[Bo Hanson]

A lot of people have found themselves in the situation. They bought a home a number of years ago pre 2021, 2022, pre run up and they've seen their house go up a ton in value. Perhaps it was in a great location. There were a lot of reasons to hold onto it. And they have a super low mortgage on that. And they think to themselves, man, I've got this house that has all this equity in it. I got a great deal on it. I bought it at a great time. I've got this low interest rate. I've got a good mortgage on it. Man, I hate to see that go. And the rental market in my area substantiates that. I can actually put someone in this home and their rental payment could even cover the mortgage so I can get even more price appreciation over the long term while having someone else pay the mortgage. And frankly, we love that idea. We think that's great. And we've seen tons of clients that have done that. We actually. We have a Making Millionaire episode coming out. It's not come out yet, but it's coming out in the next few weeks or months of someone who. That's actually the very way that they built their wealth. That's one of the ways they built their wealth was by buying a house and then moving out and renting it and moving out and renting and kind of rinse and repeat that process. So I was all with trog door. Trog does say that, right Track door. Trog door. I was all there until the part where you said, oh, but you know, it's gonna. I'm gonna have to run afoul of one of the rules when I go to buy my second house. I'm not gonna be able to put 20% down. In my mind, I had some just yellow flags go up on that because there's some things I'd like to see differently if I had my preference.

[Brian Preston]

Let's Go through the mind map on this is. Cause I think there's some really cool things that is unique to this moment in time is that without a doubt now when you sell a house or you're considering moving or looking at should I sell or turn it into a rental, the, the interest rate you have on that current mortgage is valuable because it's, it's just like when you buy bonds. If you, if you have a, you know, 7% bond and now the bonds are all at 4%, then every you have a premium in the value of that bond. Well, it's the same thing your mortgage. If the market is 6.5 to 7% and you have a 3.5% mortgage, there is some built in value or a premium that you have that lower interest rate and that actually moves the needle over to, in some cases to you keeping that and turning it into rental property. But you have to offset it. I'm just going through kind of the decision matrix here that the government gives you a very unique opportunity. When you live in a primary residence for two of the last five years. If you're single, it's 250,000. If you're married, it's $500,000 of tax free gain. There's not many things in life that the government says, you know what, we're going to let you make hundreds of thousands of dollars and take it out completely tax free. I mean that's a, that's a unique thing. So you can see how these two things now are in complete conflict with each other. So that's why I'm going to tell you I have no problem with you because there is a premium now on where the interest is. If you look at that and go, man, I couldn't replace this. And then, but also the offset of that is the tax free growth opportunity. So it's going to come down to what you desire and want to become. If you want to become a real estate maven, then maybe that pushes it more towards the interest rate. But if you're one that says no, I like the hands off, let my money maximize and grow and I'll just take these proceeds or I'll put them into the new house and then I'm going to load up the index funds. I'd love to have that $500,000 of growth opportunity, then that's going to push it the other way. But Bo is exactly right. I, you know, and I will say like this, making a millionaire, they did foolish in some ways, but they had a reason. So I'm not going to go out. I mean look, you can, you can break rules and sometimes you'll still get rich. You don't get caught because the tide didn't come back in and catch a skinny dipping. You know, you weren't caught swimming naked. But, but we're trying to give you rules to protect you from taking on too much risk to where you get caught and it becomes catastrophic. And that's what happens. And Beau is spot on. I like on that second home you putting down 20% because let's just play this out the other way. Now. This, like this, this person we had on Making a Millionaire, they had a little thing that not. It is not reproducible for everybody. They were in the military and the military was subsidizing each move that they did. So it was creating an automatic transaction every three to four that allowed them to buy a new house, get some subsidy in it and then they kept doing this and it stacked just like all good things with compounding behaviors that are, that are good for wealth building. They work together. You're not going to be able to do that. But what happens if you keep the existing house? Now look, the carry cost is going to be much lower because probably you're in a super low interest rate. But you go buy this next home, you only, you know you're paying six and a half percent mortgage.

[Bo Hanson]

What if the tenants don't show up in?

[Brian Preston]

The tenants. But that's exactly right. What happens? All of a sudden the tenants leave and it's just like even this couple that we're going to have on making money, their very first rental property. He says, look, I didn't do very good in the screening process.

[Bo Hanson]

Don't tell them, don't tell them what they were.

[Brian Preston]

But there was a unique thing somebody and it's not. Their story is not unique. I have it. I've seen people get into rental property not know the ins and outs because all good things. Sometimes a little bit of experience is required for you to become an expert and you find out no, not only do people quit paying rent, but they might also destroy the property on the way out the door. You've got to cover that plus the mortgage payments, plus your mortgage on the new property. Just make sure you don't get caught swimming naked.

[Bo Hanson]

I love that.

[Rebi]

If you want to see that episode of Making a Millionaire where Brian and Beau sit down with a real life person and talk finance. We just recorded it and it's not out yet. So that's why you need to subscribe to this YouTube channel. Right now. So that you will get updated every time we release a new.

[Brian Preston]

See, this is why we need real time. Like, throw the screen up. Because Trog Door is an old Internet meme from 2000.

[Rebi]

I was about to say I was.

[Brian Preston]

Googling it like, we are content team. Can we not worthy. Can you bring that up in real time? If you want to know if this is a live show, is that just.

[Bo Hanson]

For us, or do you bring the other.

[Brian Preston]

There you go.

[Bo Hanson]

Is it a snake? Is it a snake with a big arm?

[Brian Preston]

The dragon.

[Rebi]

The dragon. Okay.

[Bo Hanson]

I gotta be honest. I love that he lives. That's all I could see.

[Brian Preston]

I was like, all right.

[Bo Hanson]

Trog Door.

[Brian Preston]

Lot of arm curls in that on that meme.

[Bo Hanson]

So it's just. It was a meme. It wasn't like a cartoon or anything.

[Brian Preston]

It's like a Internet cartoon skit.

[Bo Hanson]

Internet cartoon skit.

[Rebi]

Part of a popular website series.

[Bo Hanson]

Now I. The. The. The.

[Brian Preston]

Now you know. Now you know.

[Rebi]

Wonderful. Well, this Trog Door, the burner. Nator. Thank you for the question and thank you for being here on the live stream and for the amusement.

[Bo Hanson]

Did y' all know that or did y' all go Google? Oh, you knew it.

[Rebi]

I had to Google it. Although once I Googled it, I did recognize some of the channel, like the Runner channel. So I was like, oh, I have seen this around.

[Brian Preston]

You would not be surprised. I never seen that in my life. I'm fully insulated now.

[Rebi]

You have. All right, next question is from Mi. Football.

[Bo Hanson]

You were hard, messy middle in 2003. Yeah, like, hard, messy middle years.

[Brian Preston]

The only thing nerdy about 2003 for me was while I was, you know, helping my wife, waking up in the middle of night, a lot of Stargate Atlantis.

[Rebi]

Oh, okay.

[Brian Preston]

Jason Momoa, if he will always be Stargate.

[Bo Hanson]

That's where he was from. He was from Stargate.

[Brian Preston]

Well, he was also Baywatch, like Hawaii years. I mean, it's. It's funny. I don't know why we're talking about Jason Momoa, but there you go.

[Rebi]

Now, I don't either, but that was great.

[Brian Preston]

Okay, let's go back to the question. So football. Michigan. Football. Football feels respect.

[Rebi]

What I thought.

[Bo Hanson]

Yeah.

[Rebi]

How does the food change if you have a Roth 401K and an HSA? Does the IRA become less important further down the list? I save about 24% and do not max out my 401k yet.

[Bo Hanson]

So the real question here, I think, and tell me if I'm understanding this right, is, hey, what's the difference in Roth 401k and Roth IRA. Why would I prioritize the Roth IRA over the Roth 401k? And there are a few reasons why you might want to do that. Now don't mis here. We love both of them, right? But when it comes to a Roth ira, you can choose where you open that account at. Do I want a Fidelity Roth IRA or a Vanguard or a Charles Schwab or a fill in the blank with your 401k, you are held captive to wherever your employer has that plan. So it might be at a expensive insurance company or there might not be very good investment options or there might be limited investment options in there. So when you choose your own Roth ira, you get to pick where it's held. You also get a wide array of investment universe that you get to choose from. So maybe your 401k doesn't have target date index funds, but inside your Roth IRA you really want to go buy target date index funds. So I don't think it's an either or. Like I have to choose one or the other. But there are a few small reasons why Roth IRA in our mind comes up a little bit before the Roth 401K.

[Brian Preston]

And by the way, if you think about step two is employer match. Get that free money is you can do Roth 401k contributions into that. Fill up the free money bucket. But then yeah, get to step five. Love the hsa. And then I love the thought of you thinking about this. Not an if, an either or, it's it is really an and because you're going to do the Roth IRA next. And then after you fill that bucket up, then jump over to step six and you're gonna load up that Roth 401k over as part of step six as well. So don't think about it as either or. It's more of an order of operations, hence financial order of operations so that you can get take advantage of all of these great tax favored, heavily incentivized options to build your great big beautiful tomorrow.

[Rebi]

I hope that helps clarify some things in my football. Thanks for asking the question. All right. Austheboss 1216 has a question for you. Hello, money guy. I plan on being a homeowner in the future five plus years. Is it a good idea to bank with a credit union now so I could get a mortgage there and have the best chance to do a rate modification? Thanks.

[Brian Preston]

Oh wow, man.

[Rebi]

Thinking about really thinking ahead.

[Bo Hanson]

Holy cow.

[Rebi]

Yeah, really thinking ahead.

[Bo Hanson]

Let me start with, I'm going to start with what is a rate Modification and why does it matter? So for those of you that aren't familiar, a lot of people think about, okay, if I go buy a home now and I've got this interest interest rate, the only way that I can improve my interest rate at some point in the future is if I refinance my mortgage, which means I have to go through another new closing with a new mortgage company and new terms and all that stuff. But what you may not recognize is that a lot of times when it comes to a loan, if the prevailing interest rates have dropped, you can reach out to your current mortgage lender and you can say, hey, rather than me refinancing this whole loan, or rather than me changing providers, would it be possible for me to do a rate modification where all the terms of my loans stay the same except for my interest rate? Now I want to modify my rate from where it was when I originally closed to where rates are now. And usually there's just a few pieces of paperwork and a couple hundred bucks to knock that out. So it's a lot more cost effective than doing a true refinance. Well, what OS is referring to is that oftentimes credit unions, if they're holding your mortgage, might be, because it's more of a relational interaction, might be more susceptible and more agreeable to doing a rate modification. So with that context, should he go ahead and begin establishing a relationship with the credit union now? And I think it may even be interesting to talk about like the difference in like credit unions and big banks. I know a lot of people know.

[Brian Preston]

I think this is probably from, from a. Educational of what's happened in the wonderful world of finance post Great Recession. A lot of your banks have now become, they're not relationship focused. I mean, I think that the Great Recession really broke the banking situation because you had a lot of consolidation where a lot of local banks got completely busted up, meaning they just went, they, they went bankrupt or, you know, they couldn't make it. So the bank had a lot of shotgun. The federal government came in, did a lot of shotgun marriages, created a lot of consolidation to where you have a lot of big banks now. And unfortunately with big banks, and we've seen, I'm not going to say the names, but you all seen the scandals where artificial accounts not focusing on, not your relationship. I'm just being straight up. And I've even experienced that with you have a great local bank and then they get gobbled up by a big national bank. And then all of a sudden you see they cut staff a Lot of the service goes away and just that special connection is lost. So here's the way I would tell you, and I love where your thought process is, is you're thinking ahead at least three steps here. I love credit unions. I will say that. I mean, one of our dear, dear friends, I even gave him a complete shout out in Millionaire Mission because of what he's done in my life. And I've told this story before, is that, I mean, one of my early clients back in the early 2000s when I went on my own was a school bus driver who had come into a large sum of money, seven figures plus. And I thought it was. I'll never forget, I got a phone call one day when this person had just signed the contract. And then I get the phone call and it's the president of a credit union in Georgia saying, hey, I've got a member who's coming to a large sum of money. I know this member and I'm just a little nervous. I want to find out who's going to be helping her out with her decisions because make sure you're not a crook. And if you're worried he was trying to keep the money. He was not. Because he was like, look, we can't even keep this money because it messes up some variables. And he gave the whole reason. He just wanted to make sure that I wasn't going to take advantage of his member. And he was very sincere. So this phone call, I was so impressed with it, we ended up, it turned into like a 45 minute to an hour phone call. Created a friendship, which is kind of crazy if you think about it from a serendipity providence type standpoint. And then we ended up starting doing work and other things with that credit union. But I think it just shows the heart. And so I think if you go now, look, there might be credit unions because, look, their game is very much like the bank game is, the bigger, bigger, bigger. Sometimes they might lose focus of the mission as well. But I think you can go quickly interview, see how serious or how good they treat you. And there is nothing wrong with you going ahead and setting up a relationship. If you get those warm fuzzies when you, when you meet this credit union or even I was going to say, look, we've. Because Bo and I, we own businesses and we. So banking relationships mean a lot.

[Bo Hanson]

They matter. Yep.

[Brian Preston]

So we've, we've always focused on going and interview the banks, seeing if they're, if they're gonna be in our corner. And I even have like in the last two weeks we have a bank that we're changing some things around account wise and structure wise. And there was a. An oopsie. Meaning that I had a draft system that was changed and they didn't. The vendor didn't update things even though they had sent me a confirmation email saying no, we've got this upd to the new account. Well, it was like a 10, 11, $12,000 draft that hit. Well, there wasn't enough money in the account because of the structure. They covered it, said, hey Brian, I know that you and Bo don't want this thing to bounce. So we went ahead and covered it. You need to, you know, can we make sure that there's. And I was like, yeah, I'll immediately. And I tried, but it was a relationship. I mean they very quickly could have easily just let that bounce. It have been embarrassing even though it was just an error and that stuff happens to. To everybody. So you have to go figure out what you want from the relationship interview and then just see are you just a number or are you going to actually be able to build a relationship here that has value and can they can be on this journey with you.

[Bo Hanson]

Can I go just a little bit longer on this one for a moment? I think it's interesting. Most people don't realize because I want you to tell one more story if you're up for Brian story time. Most things in this world are negotiable. A lot of people don't realize but like if you actually have a relationship and can talk to another human being, you can negotiate. I'm thinking about your very first car loan. Do you remember this? You remember this story?

[Brian Preston]

Yeah.

[Bo Hanson]

Tell about that and tell because that was because of a relationship or you were setting the foul because I was.

[Brian Preston]

Trying to set the foundation. So now look, this bank is now gone because they've been gobbled as part of this great recession. They've been gobbled up. And now I know which bank they're a part of. I'm not going to say the name of them because they have a storied history with them too. But it's. I went in after I got my first job. I had not even started this job, but I had the offer letter and I was trying to. You guys, I've told the story. I drove around. It's a raggedy car all through high school and college. I got. Got my first offer and I knew I immediately needed to get a car. So I had this used car that I was going to be buying for $10,100. It was a Mazda 626, 1994. Oscillating fans. I love those oscillating fans. I still had a five speed. It was a really slick car. And I went to this bank and they immediately said, hey, I had my offer letter and they were like, this is, you know, you don't have enough credit. We're going to need you to have a co signer. I was, I came back, I actually went home and then I thought about it and I went back and I was like, man, this stinks. I don't want, I'm trying to build, open my wings, leave the nest. And then here they are telling me I have to go ask my parents to help me out. So I went back to the and I talked to the branch manager and I said, look, here's the thing. I said, and this is why it is negotiable. I said, I'm brand new to my career and I'm gonna be a cpa. I've got all these things going on here. You guys are making me bring my parents in. They don't have a lot of money and you're gonna make them now be sign off on my name. I don't like that. If you take it, you need to take a chance on me. Because look, if you make me happy, you might. I'm gonna eventually buy a house, I'm gonna need to buy more cars and I'm gonna need a place to deposit my savings accounts. Why don't you see if you can make this work because you're betting on me and the future, future relationship we're gonna have. And he says, man, I appreciate that. And he actually called me back. He goes, you know what, we're gonna do it. We're gonna give you the loan, we're not gonna do the co signing. And what's funny, I did give them close to 20 years banking relationships and you know, before all this gobbling up and horrible service kicked in and all the scandals that happened with this big consolidated bank afterwards. But at the time I stayed true to that. I ended up opening up many accounts, business accounts and other things with this same bank. So yeah, if somebody, if you don't like, if it leaves a bad taste in your mouth, don't feel like you can't advocate for yourself because I do think that a lot of these things are negotiable and, and they would have been crazy not to give me that loan. I mean it was just, it was insane. I mean, but so I'm Glad I stood up and and didn't just take the first thing that they threw at me.

[Bo Hanson]

Love it.

[Rebi]

Yeah, that was a great experience. Share and I hope that all of that helped you ask the boss 12:16 thank you for the question and thank.

[Brian Preston]

You for being here, I think, don't you? Because like we had that, that making a millionaire couple that was on. I can't wait. But Bo put it in my head that they're, you know, it's just like they came from nothing or it came from modest beginnings and then they've built this big portfolio and I remember telling them at the end of the interview, I was like, I wish I could have met the 22 year old version of yourself. And I kind of wish I could go back and meet the 22 year old version of myself to see that idealistic kid that basically was like, hey, you sure you don't want to give me this loan? I mean, I just, I wish I could have been a fly on the wall to experience that. If you're having your Ebenezer Scrooge type, you know, go back in time, back to the future, that would have been a cool thing to witness.

[Bo Hanson]

As someone who's been hanging out for 20 years, I feel like you haven't aged a whole lot over the last 20. I imagine 22 year old Brian's pretty much just like the guy sitting right here today, Right? Not a whole lot.

[Brian Preston]

I think I was probably funnier back then.

[Bo Hanson]

You think so?

[Brian Preston]

Man, if you could have seen me before CPA turned the CPA lifestyle, turned me into this. That was a good time back in those days.

[Bo Hanson]

That hilarious.

[Rebi]

That makes me happy.

[Bo Hanson]

Imagining he didn't choose a CPA life, the CPA life chose him.

[Brian Preston]

I'm telling you, it's. Look, it's made me smarter and better with money, but I'm probably a little less fun than I was back in college. Brian was a good time.

[Rebi]

Well, you're still really fun, so props to you. It all worked out.

[Brian Preston]

Maybe I needed to moderate it then.

[Rebi]

All right, here's another question from Febreze. Me up. Oh, I have good usernames today. It says I just received an inheritance from 10k of 10k from bonds. I want to take that and reinvest. What are some good options? Love the show. And I mean, I think this is an interesting question. Whenever you have a lump sum of money.

[Bo Hanson]

Yeah.

[Rebi]

You know, what do you do with it? What's next?

[Bo Hanson]

So here's a, here's the very first thing I would do. The very first thing I would do Febreze is I'd go to moneyguy.com resources and I would download my free copy of the Financial Order of Operations. Brian, will you hold that up to me for me? Because one of the things you need to answer is where am I in my financial journey? You know, what's, am I still trying to get my highest deductible cover? Do I have high interest debt that I need to be paying off? Am I putting money in my 401k? Where am I in this journey? And then I would say, okay, I've got this windfall, I've got this $10,000 that's now come my way. What is going to be the best use of that? If I have some debt that is high interest, maybe I don't need to invest this $10,000. Maybe I need to go satisfy some of that debt and wipe that off of my balance sheet. But let's assume for a moment that you've gone through the Financial Order of Operations. You know exactly where to put that 10,000. You know, I'm either going to put it in my Roth IRA or I'm going to use it to put more money in my 401k. Or maybe I'm in step seven, I'm going to put in an after tax brokerage account. Well, once you've made that assessment, what you invest in and how you choose to invest will also depend on where you are in your financial journey.

[Brian Preston]

Yeah, I think where you are in your journey. But then also I want to talk about the logistics of how you actually do it. Here's something you might not realize now. First you have to go see if you wanted to, because you talked about reinvesting. I'm basically thinking you're thinking about liquidating and then putting those assets elsewhere. What are the transaction costs on that you need to go figure out? Because bonds, sometimes you need to just figure out what is it worth, what's the spread, is there any inefficiencies with that? But after that there is a nice little thing about inherited assets. They get what's called a step up in basis, meaning that I don't know if there's any built in gains to this bond from whoever you inherited it from. But the good news is that whatever the value was on the date of death, there will be a step up to that value. So you could potentially be able to convert this to cash. Tax free doesn't mean cost free because there might be some transaction costs. You need to know what those friction costs are. But then you can kind of get a start at square zero and figure out where in the nine steps of the financial order of operations that this is going to really help you out because that is. And then I think that also honors. I always like to tell people when you inherit assets, also take a moment to just think about what would whoever bless you with this would kind of put a smile on their face too. Because I do think that there's some weight to when you get a blessing like this, what the intent and how can you make this actually have some legs that you can remember this and it actually has some long term value to you and gives you a leg up. Because I hate it when you people come into money and they go buy a new car or they go put it in lifestyle and then you think about this blessing just got squandered in a lot of ways. So I always tell people when you get any type of blessing or somebody gives you an inheritance, try to honor it and make sure it actually sticks around and gives you some legacy.

[Bo Hanson]

So when they think about like what to invest in, they've gone through all that. Should they go buy some individual stocks, maybe some Bitcoin? Maybe they should go.

[Brian Preston]

Well, it's back to your point. I mean if this is, I mean, because I can.

[Bo Hanson]

When it comes to investors investing, what are the actual things that they should be buying?

[Brian Preston]

Yeah, I mean we like index funds, you know, index, you know, that's what Roth IRAs, you know, those type of things. And that's why I even think about y'. All. Y' all know I've lost my. I lost my father in my mid-20s. My mom gave me and my brother $10,000 from a life insurance policy. And I can never forget I paid off a little bit of, you know, it helped me catch up on a. You know, I didn't have credit card debt, but it definitely. There were some periods, some expenses that I need to get caught up on, I might have paid off. I think that maybe that car loan that I might have paid that off. But then I definitely funded a Roth IRA with that money and that's. That makes me still happy that I think about, you know, came into this money for the something I'm not, you know, I would love to give the money back and have my father. But still I feel like it has legacy now because that's part of this Roth IRA that I have. Yeah.

[Bo Hanson]

So if you're, if you're early on in your journey, a great solution might be target retirement index funds. It's a type of investment where there's only really two answers. You have to come up with, how much can I save? In this case, $10,000. And when do I think I might need this money? If I think I might need it 30, 40 years in the future, I can look at a target date, index fund, some point in the future. Or maybe you're further along in your journey, you've reached the boiling point and you're at 500, $600,000 of assets. Well, then I would look at my overall allocation and say, okay, where am I underweight? What are the undervalued asset classes that I might want to get exposure to? And then I think about really good low cost index funds inside of those asset classes to make sure that I have a very robust and well diversified portfolio.

[Rebi]

Great. Febreze me up. I hope that helps. Thanks for being here and asking the question.

[Brian Preston]

Look at the content team. We realize Febreze is a cleaning product first released in 1998.

[Bo Hanson]

What they think we know what Febreze is. That's so messed up. We know what Febreze is.

[Brian Preston]

Isn't Febreze one of those. Those things that. That's part of the Mandela effect model effect where the logo changed or something?

[Bo Hanson]

I don't think that was Febreze. Was it?

[Rebi]

I don't remember that being.

[Brian Preston]

I thought it might have been one of those.

[Rebi]

BO is looking up.

[Bo Hanson]

Yeah, Tell them a joke while I'm looking this up.

[Rebi]

Real. Because I know you have a question.

[Brian Preston]

I might be wrong. I know Fruit of the Loom is one of those things. The monopoly is one of those things. Oh.

[Bo Hanson]

Oh, I'm sorry. Yes. So it is part. Look at you. Steel trap. One of the people remember Febreze being F, E, B, R, E, E, Z, E with two e's instead of the correct spelling. With just one correct spelling. I don't know.

[Brian Preston]

That's not a real word.

[Bo Hanson]

Well, but the correct spelling of the brand. Some people say that they change.

[Rebi]

Which one is it? We don't know.

[Bo Hanson]

Mandela. That one still kind of messes me up.

[Brian Preston]

Don't us getting started about Simbad.

[Rebi]

Yeah, we're. We're not gonna. We're not getting started on this. No, don't do it.

[Brian Preston]

He just is embarrassed.

[Bo Hanson]

It was in the movie. That was real.

[Rebi]

Okay, we have a question from.

[Brian Preston]

But can I say one more thing? Berenstein bears are.

[Bo Hanson]

No, this one you debunked.

[Brian Preston]

I will say unless the collider really did create and change things. I went home. We have all of my childhood books or my wife's childhood books from like the 60s and 70s. From, like, because we got them all. It was spelled, you know, it was.

[Bo Hanson]

Spelled the way that we didn't think it was spelled.

[Rebi]

If you don't know what they're talking about, go Google the Mandela Effect, the Berenstein Bear, Sinbad, and you too can have the hilarious day that we did when Will and Brian discovered the Mandela effect.

[Bo Hanson]

So Fruit of the Loom change too. I'm gonna stick by Fruit of the Loom Change Breeze. Apparently Sinbad was in that movie. It was, it was just. It's true.

[Rebi]

All right, are you ready for TWC's question?

[Bo Hanson]

Absolutely.

[Rebi]

Because I've got it queued up here. He asks, Investment options in 529 plans are too conservative for funds that won't have to be liquidated for 18 to 22 years. Could a Roth be used as an alternative approach for paying for grandkid college expenses?

[Bo Hanson]

Okay, let me, let me, let me double back before. I don't even want to really talk about the Roth part because you said, hey, 529 plans are too conservative for. Funds are going to be 18 years in the future. Most 529 plans now. And you can go look because every single state now sponsors their own 529. Most 529 plans will give you a number of different options you can choose from on how to invest those. So one of the options might be an age based allocation, which I agree with you, tends to be pretty conservative inside of 529s. But then oftentimes there's also an aggressive age base which is a little bit more equity heavy than the regular age base and it's less conservative and maybe a little more fitting. But then even most plans now will allow you to do your own customized portfolio across the low crawl, low cost indices that they have. So if you are someone who wants a specific level of risk exposure inside the 529, it's not uncommon for 529 plans to have a small cap index, a large cap index, a total market index, an international index where you can build an allocation to match the level of aggressiveness that you want to have inside of that plan. So I'm not going to concede that all 529s are too concerned.

[Brian Preston]

That's too strong of a statement. Because you think about, you even get to choose. You don't have to work your own state unless there's a huge tax benefit in your state. Because you can go look at. And I'm just Doing this off memory, but Utah is Vanguard. You get to go choose whatever index fund that you want to maximize the 529. Here's the crux of what I think he's getting at is he's looking for, instead of doing the 529, he wants to use the Roth IRA. And I would tell you it's back to this isn't an either or, it's really an and. Because I don't. When you get money into a Roth IRA because you're limited on how much you can put In a Roth IRA, they cap you out at around $7,000 a year. You're going to not want to use those assets. Whereas college is going to happen, you're going to want to use it. And I will tell you, having a child that's a senior in college right now, and I'm happy to report we just paid, basically we've paid for three and a half years because we just paid her last semester of her, her first semester of her senior year. So we're three and a half out of four years paid for. And the 529 covered three years. And I'm very pleased because you don't, I didn't want to be left holding the bag on. Now here's the good news. 529s have gotten a lot of escape hatches built into them. Now you can fund Roth IRAs with them, you can pay off student loans with them, you know, up to 10 that you can do K through 12, you can pass them down to relatives. Lots of escape hatches if you overfund it. But I like that it's built into the system that you're going to use this. And if you use them for qualified expenses, it's completely tax free growth. Whereas the Roth ira, I just, that money is so valuable that I want you as soon as your kids. And this is a conversation I had with a client over the weekend. Their kids are starting to work, they're teenagers, they're lifeguarding, they're, they're doing other things. And I'm like, go start doing dollar for dollar match on Those custodial Roth IRAs so you can prime the pump. Get that money in those Roth IRAs so that you can turn them into savers and investors at an early age. So that way it's not an either or, it's an and and so that you not only have the 529s but you also can prime the pump once they start working and open up those custodial Roth IRAs. Man, oh man, are you creating a legacy for the next generation if you can combine those things.

[Bo Hanson]

Love it.

[Rebi]

Great twc. Thanks for being here and thanks for the question. Matt C. Has a question next. He says, is medical debt good debt, quote unquote. My youngest needs braces quoted 6k before insurance. If I paid in full or 150 per month with 2k down at 0% interest, should I use my emergency fund?

[Brian Preston]

Well, what is it? After insurance or is there not an insurance?

[Bo Hanson]

That's a great question.

[Rebi]

That is a great question. I kind of took those two options, but there may be another option.

[Bo Hanson]

There's literally someone out there who is pinning their kids smile on us like that. You know what I mean?

[Rebi]

They're gonna be like, oh, sorry junior, interesting question. Couldn't get you types of debt because you do talk about good debt and bad debt and emergency funds and choices you have to make.

[Brian Preston]

This is more, this isn't a good debt, bad debt. This is more of what's the need for my child. And that's the thing, is that now look, this is why these industries, oh, they really get you because you're like, oh my gosh, I got to do. But you have to kind of, you know your situation and have to do what's the best for your child. And this isn't really debt, it's really of do you have the money? You don't have the money because they're doing a zero percent.

[Bo Hanson]

Oh, that's what I'm, what I'm doing. What's unclear that, and maybe I missed this, is were you getting a discount for paying the $6,000 up front or could you just pay that 150amonth, 0% interest indefinitely? Because if there's no discount for paying up front, the 0% is certainly something that you could take advantage of here without getting yourself into precarious spot. But I want to do the math on that. Generally speaking, when you pay upfront, you pay upfront because you're going to have some sort of cost savings there. But even if you were to take advantage of 0% on this type of thing, that debt's not supposed to stick around forever. So I don't want to have like a very finite plan about how, okay, I'm going to knock this out over the next 12 months or over the next 18 months so that you get it off the balance sheet and move on.

[Brian Preston]

I would rather be. If you, assuming you have a well funded emergency fund, I'd rather just knock it out because I worry about the unintended consequence of. Because, look, there is a bank being brought in here. And yes, it's zero percent, but they're waiting for you to step out of line and then slap you with interest and penalties. All those. A lot of times when you see zero percent, they're very effective if you use them perfectly. But there's a lot of language in there that if you fall off the straight and narrow, that you get slapped with fees. And, you know, even they, sometimes they even bring in the interest that you, you know, got to defer.

[Bo Hanson]

But there's a, there's a. There's a relativity question here, too. I mean, I just, I'm not disagreeing with you that they could use the emergency fund, but if your emergency fund is $8,000 and you take 6,000 to go, that you have to triage your.

[Brian Preston]

Situation and go, man, because, yeah, if you get where it's taking you down to where you're. You're hitting bone. Yeah. Well, take advantage of this. You've got to, you know, put yourself under the pressure of that. You've got to follow the straight and narrow and then get yourself back as fast as possible. Because, look, your. Your health is. I'm never. You can't write us a question saying, should I buy my kids prescription or fund my Roth ira. Come on, guys. I mean, seriously, we always tell you that money is only a tool. It's not, you know, it's not the only thing in your life. You know, there's. There's a lot of things outside of the money that we get, and that's why we try to give you the flexibility. And it also ties back to. This is why a lot of people think the financial order of operations is a walk up the mountain, hitting each step. And if the content team wants to pull up, it's actually not. It's a. There's a lot of things that are going to happen in your life that pull you forward, pull you backwards. You just need to be prepared. And maybe this medical expense is one of those things that sets you back a little bit.

[Bo Hanson]

Did you find. Have your kids, Ruby, had dental stuff yet? Any dental stuff? Okay, did you find that, like, after? Because we did. We've already done the one bout of braces and I've had to do a bunch of cavities at this point. Stuff after the first time that happens, like the very first cavity or. Or after that. Braces. You got militant about their teeth.

[Rebi]

Oh, yeah.

[Bo Hanson]

No, it's like terrifying every single night. I was like, girl, girl, did you. Did you floss you better floss. You flossing right now? Are you wearing your retainer? Did you. Because I felt like I had to protect that investment. Right? This. Because it's not. It's not inexpensive, right?

[Rebi]

Like, yeah, it does get expensive.

[Bo Hanson]

Do you find that you got that way, or no?

[Brian Preston]

No, I mean, realize I'm a person that's. Y' all don't. I'm giving you way too much information. Oh, my wife has. She's blessed with great teeth, so she doesn't get cavities, all this stuff. I'm one of these people that I think if I just look at a piece of candy, a cavity starts just jumping. Because I've just grown up. My dentist, when they, you know, you have deep wells in your teeth or something like that. So I'm always. I've always been very meticulous with brushing my teeth and stuff, because as a kid, I had cavities and had a lot of feelings. So I'm just over the top with flossing and everything else. So I'm kind of always been on the kids about brushing their teeth because. Just. Because I know the struggles I had as a kid. Now my wife and I think, fortunately, knock on wood, my girls, they got their mom's teeth, so they're great. They could really. There are some of you out there who don't have to be militant about your dental care, and somehow you come out the other side perfectly fine. And then there's others. This is all it goes back to. If I was born in the wrong century, I would have probably died after childhood, because, I mean, I don't see. Well, I have horrible teeth. I mean, this is why it's a blessing to be born in the century that I'm born in, that somehow there's value in what I do versus what would have probably been valuable back in that century.

[Bo Hanson]

Wow.

[Rebi]

So much. So much was there. So much ground cover.

[Bo Hanson]

I'm also blown away by the science and technology of, like, teeth stuff. Like when they do, like, the palatal expander and they put the breath. Like, I don't. I don't really understand how it works, how you can make all your teeth get fixed. But it was wild to watch. Like, they, you know, they weren't straight, and they were. It's mind blowing to me.

[Brian Preston]

No, I mean, look, I've got. I mean, I've got one that's getting wisdom teeth cut out in the next two weeks, and I got another one that had surgery to get chains inserted because the tooth wasn't coming down. I mean, there's crazy things. So you're talking about the technology. I don't even know. I mean, once again, it's good to be in this as old, you know, to be able to live in the time we live, that they can do these things.

[Rebi]

Wild. Well, Matt C. I think we're saying that the investment in your child's braces is worth it.

[Brian Preston]

It's worth it.

[Rebi]

I just feel like I need to bring it back home.

[Brian Preston]

Just mention that, but I will. It goes back to that.

[Rebi]

I do appreciate you asking the question being here.

[Brian Preston]

There's nothing wrong with you asking if. If there are any discounts, right? You know, cost reductions or. Go ahead and ask. You know, I know it sounds crazy, but it's worth. At least I do that on about everything. I probably call people crazy.

[Bo Hanson]

Medical. Yeah, you do. Actively. I've watched it in real time, but yeah, like that kind of stuff. Medical bills. Hey, I've got this bill come in. I'd love to go ahead and pay this in advance. Can we work something out or. If I pay you today, it'll be this amount and the second worst answer you can get is no. So you might as well ask.

[Brian Preston]

Look in the comments section. There might be somebody who works in that industry and tell you, yeah, we're just waiting for you to ask for a discount or. No, this. Your insurance is the only discount worth looking into.

[Rebi]

All right, I've got another question from Anthony F. It says, I'm a disabled veteran and utilize VA health care. I currently do not use health insurance offered by my employer. Should I enroll in a high deductible plan in order to open an hsa? And I think he's bringing up a great question because you love HSAs, but does everybody need an HSA? How do you think about this?

[Brian Preston]

So, Bo, you probably know this. So is he probably on tricare?

[Bo Hanson]

That's what I'm guessing is most likely what's going on.

[Brian Preston]

And that's gonna be completely covered or heavily subsidized by the military and the government. So, I mean, that's. I'll let you give the answer because you don't want you to make a bad financial decision. Just because we love HSAs.

[Bo Hanson]

That's right. As much as we love HSAs and being able to take advantage of them. One thing we all have to do to do, whether you're someone who has, you know, VA Healthcare, tricare or whatever you have to assess, man, is the insurance that I currently have access to. Maybe you. I'll work for an employer who has a very solid Cadillac highly subsidized plan. And I see the high deductible option that would give me the HSA availability. But then I've got this other Cadillac option that's really, really good that has low out of pockets, has co pays and all these things. And it might make sense based on the type of medical consumer I am, I ought to take the better insurance and not be able to do the hsa. That's an okay assessment to make. It's an assessment that you ought to work through at least every year as you're working through open enrollment to make sure you understand, okay, based on the next year that I'm going through, what is the best plan for me? What is the. If I add up, here's what I think my out of pocket is going to be, here's what the premiums are going to be, here's what the prescription is going to be, here's what the tax benefit from the HSA would be. And I compare two columns. I want to select the one that's most optimal. And sometimes it'll be the high deductible HSA plan, but sometimes it'll be the other plan. And in this case it sounds like there's a chance, Anthony, that the current insurance that you're on might be better than going to a high deductible plan. So you need to make that assessment based on your specific medical uses.

[Brian Preston]

Well, I love, and I think what Anthony's done is he's probably gone to moneyguy.com resources, downloaded his own personal copy of Foo, the financial order of operations, and he's thinking, hey, I see step five has Roth and hsa, so it must be so good. That ought to do it. Well, it's no different than it's treated as a checklist. When you're looking at the financial order operations, you get to step two, employer match. If your employer doesn't offer a match in the 401k, you just kind of check it off and say, well, it's a great opportunity for most, but my plan doesn't really allow that. So I'm going to move on to high interest debt. Same thing. You get to step five, you say, yeah, I realize the HSA with that triple tax advantage is an incredible opportunity for many. But I get free or I get subsidized health insurance because of my disability. I would be crazy not to take advantage of what is free or provided or prepaid for my benefit because of my service. So you just go check the box and Go. It just doesn't work for me. And that's really what we're trying to get you to do with the financial order operations is that we just want you to make sure you put the personal, impersonal finance. But we're trying to. Money is a tool, and we've tried to create the better way for money, but it is very personal and you have to kind of go through and then you have to now triage. What's the best things for my situation to maximize this?

[Bo Hanson]

Love it.

[Rebi]

Yeah, that's really great. Anthony F. Thank you so much for the question and thank you for being here. You want to do one more? Sure, let's do it. Milkman, please says good morning. Moneyguy team. My wife and I feel like we're on track for retirement, but are incredibly stressed as we enter family planning. Any advice to help us stay on track during this transition?

[Brian Preston]

Oh, Bo, I'll let you. Because you know me, I get all sentimental as a guy who's, you know, got older children now. I'm always like, just, just go have babies.

[Bo Hanson]

I think a lot of financial.

[Rebi]

There you go.

[Bo Hanson]

Can we make that a T shirt? Just go have babies. Brian Preston. I think a lot of financial mutants are in this place where they say, hey, man, I'm doing all this stuff and I'm saving 25 and I'm on track and I'm tracking my net worth and I'm doing it every year and everything is looking great. But, man, there's this big unknown. Unknown associated with starting a family. There's gonna be another human being that is going to be dependent upon me, and I'm gonna have to. It's going to affect the way that I might be able to work, and it might affect career trajectory, it might affect income, it might affect savings, it might affect spending and all these unknowns. And so they begin to get really, really stressed about that. It's one of the reasons why, when you listen to any of our content, and especially for young folks in their 20s, 30s, and 40s, we say that when it comes to what you ought to be doing financially, your goal should be to save 25% of your gross income. And if you can save 25% of your gross income, you can remove that stress. Because odds are, if you're able to do that, and you do that for your entire career, you're going to be able to write the ticket on the kind of future life that you want. And so the question that I would ask you, Milkman, is, are you at the place where okay, I've been doing this stuff that I'm supposed to be doing. I'm a financial meeting. I'm moving the right trajectory. I'm going to have this family. I'm going to start a family. And even though some unknown unknowns, I feel pretty confident that I'm going to get back to once things normalize, once things settle out, I'm going to start making financial decisions the way that I have traditionally always done that. I'm going to be a saver. I'm going to live on less than I make. I'm going to exercise discipline. So long as those things are true, you're likely going to be fine. It's not like what happens is all of a sudden these two financial mutants decide to start a family and then they have a baby and immediately they get in all kinds of credit card debt and they start buying timeshares. They start making these horrible financial decisions. Who you are pre family, at least from a financial standpoint, is likely going to be similar to who you are after, so long as you make sure you put controls in place to keep yourself in check. So I do not think that starting a family is a financial decision. It's a life decision, but it's a life decision. You can go into confidently understanding that if you start out as a financial mutant, odds are you're going to get back and stay a financial mutant even through the messy middle. Agree, Disagree.

[Brian Preston]

Well, I'm glad we let you go first because I'm going to blow this whole thing up.

[Bo Hanson]

He said, because I have a different take.

[Brian Preston]

Well, no, it's just that this question immediately made me think of a pop culture reference and I'm going to probably screw this up. Content team will correct me. Is it Mike Judge and Idiocracy?

[Bo Hanson]

Is that the guy? Yeah, that sounds.

[Brian Preston]

If you go watch the first 10. I'm not saying you have to go watch the whole movie, but you probably find this on YouTube if you watch the first 10 minutes. The whole plot of this movie is, is that really smart people overthink having children and they keep putting it off, putting it off so they have success and other things. Meanwhile, people who aren't so smart just have babies of babies. Babies. I mean, it makes this whole. And society just shifts because the people, they just quit having babies on this side and then the other side and we end up with Crocs and all these other things. You really just gotta go watch the first 10 minutes and you'll see what I'm talking about. Watch the. And I think that sometimes I think about that pop culture reference to sometimes as financial mutants. You're so determined to build your financial success. And I'm all for. And I think it's great that you're disciplined. But also don't overlook that money's just a tool and your family is. Take it from a guy who's in his 50s, children are getting much older, super sentimental. Life is so cruel because when you are more sentimental, your kids will become more independent. And it creates these all strange dynamics. And you know, because it is special. I know there's a lot of people out there that are even in our comments section telling you marriage is not good, kids aren't good and all this. And I'm telling you it's the opposite. I think that it's pretty awesome. And I even got a unique situation because, you know, I have a child on the spectrum. They'll probably never live on her own. So even with those curveballs, I think there's a lot of good that comes from it. Maybe I shouldn't be so opinionated about it, but I'm just telling you from a 50 something year old sentimental guy, don't overthink it too much. I want you to do your homework. Measure twice, cut once. But it's okay to have kids.

[Bo Hanson]

I love it. And yes, what can I do to prepare? I think one of the things, just like anything else, are you following the financial order of operations? Do you have a fully funded emergency fund? If you don't, maybe as you enter into the season where there's going to be additional medical costs and there's going to be additional stuff here in the house, maybe you need to bolster and beef up your cash position a little bit as you move through this transition so that when the stress comes, because having babies is a stressful thing, you can rest assured. Okay, I've got cash in the bank, I've got my emergency fund there. This is one less thing I got to think about. All I got to think about right now is how warm is that milk supposed to be? Or what was the. How do I change the diaper? What's the. Those are the things that you want to be able to focus on, not the financial stuff.

[Rebi]

Yeah, you still get to follow the foo even when you're in the messy middle. That's the point. Right?

[Bo Hanson]

That's it.

[Brian Preston]

Did I get the movie right, by the way?

[Rebi]

I think you did. I was googling it.

[Bo Hanson]

Yes. Content team was telling us.

[Brian Preston]

Now the content teams be like, don't say that. That's how you know, because it's not exactly the, you know, cleanest movie.

[Rebi]

Good to know. I have not seen it.

[Brian Preston]

So anyway, I'm not saying you have to go watch the whole movie, but it is very interesting to watch the whole setup.

[Bo Hanson]

I've never seen that movie before.

[Rebi]

We all learn something.

[Brian Preston]

Maybe, maybe. I know what we're going to watch in the content, the edited version. We need to find the superstation version of it because Bo and I have, let's say this just because I know we're coming to a close. Bo and I have a very similar background. The fact that we grew up in south Atlanta and anybody who's from Atlanta knows Superstation, tbs, tbs, Ted Turner's thing before, you know, AOL Time Warner brought him out. Notorious for putting movies on there. And they were censored movies though. So we have a lot of common, you know, talking about a great movie. But you go watch these movies now through the streaming platforms you're on. They're a lot dirty. Remember that part that was version of so many movies when we mention them to you.

[Rebi]

Oh, love it. All right, well, milkman, please. Thank you for being here. Thank you for the question. And if anybody watching or listening wants to continue this conversation, make sure you go to moneyguy.com resources because we have tons of free downloads, free calculators for you to use to keep thinking about your personal financial situation. Hopefully help you build confidence in what you're doing so that you can actually just focus on what really matters. That's the whole point. So thanks for joining us. Thanks for being here. We'll be back at 10am Central live streaming next week.

[Brian Preston]

There's a better way to do money. And look, a lot of you guys take advantage of all that free stuff that Ruby was talking about, but also a lot of you are super successful. And if you've gotten to that point that you need somebody to help you copilot the seven, maybe even multi seven figure success story you've created, we'll leave the porch light on for you. Consider fulfilling the abundance cycle. I'm your host Brian Preston, Mr. Bo Hanson, Rebi and the rest of the content team and the wings moneyguy out.

[Bo Hanson]

The Moneyguy 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 in 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.