Is it Impossible to Build Wealth in Your State? (Ranked)

Summary

Podcast Summary: Money Guy Show

Episode: Is it Impossible to Build Wealth in Your State? (Ranked)

Hosts: Brian Preston & Bo Hanson
Date: February 11, 2026

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Episode Overview

This episode dives into whether it's inherently harder (or easier) to build wealth depending on which state you live in, considering cost of living, income opportunities, and strategies to succeed regardless of geography. Brian and Bo challenge the conventional wisdom that living in a high cost of living state is an insurmountable obstacle and provide both data and practical advice to help listeners build wealth wherever they call home.

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Key Discussion Points & Insights

1. Does Location Make Wealth Building Impossible?

• Timestamps: 00:34–03:45

Brian opens by asking, "Is it impossible to build wealth in your state?" (00:34)
Bo sets the table: No two states are alike. Cost of living, job opportunities, and lifestyle vary widely and can impact one's financial life. (00:38–01:20)

Cost of Living: Highest vs. Lowest States

• National average cost of living (single adult): ~$56,000/year
• Highest:
  • California (+12.6%)
  • New Jersey (+8.9%)
  • Hawaii (+8.6%)
• Lowest:
  • Arkansas (-13.5%)
  • Mississippi (-12.7%)
  • South Dakota (-11.9%)

Noted: Nearly half of Americans cited cost of living as the biggest obstacle to saving money (03:13)

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2. Case Study: California Carly vs. Arkansas Adam

• Timestamps: 03:45–06:55

Contrarian Approach: Expensive states offer more than just sticker shock; they can bring greater income potential.

Example:

• Carly in California: Cost of living ~$64,000/yr.
  • Income: $100,000 → After-tax: ~$72,000
• Adam in Arkansas: Cost of living ~$49,000/yr.
  • Income: $55,000 → After-tax: just under $45,000

Key Insight:

• Income opportunities in high-cost states often outpace the expense difference, leaving potentially more margin for wealth-building.
• "Even though Carly lives in a more expensive cost of living area... she likely even has more margin available to her to build wealth than Arkansas Adam does." – Bo (05:10)

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3. Essential Wealth-Building Strategies No Matter Where You Live

• Timestamps: 05:50–09:51

Brian: The wealth creation formula is universal:

1. Live on less than you make (discipline)
2. Create and grow margin
3. Let time do the rest (compounding)

What Can You Control?

• Leverage the situation: In high-cost areas, ensure your vocation offers compensating income opportunity; if not, reconsider your locale (06:26).
• Assess your location: Even within a low-cost state, geography matters; "driving out of a 'bubble' drops costs significantly" (06:55).
• Own your choices: Increase income or decrease expenses—these are your two main levers (08:07).
• Consumption choices: Avoid lifestyle inflation; a “too expensive car” hurts wealth anywhere (08:53).

Memorable quote:
"No matter what geography you live in... building wealth and making wise and sound financial decisions is available to all of us." – Bo (09:51)

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4. Rapid Fire Q&A – Key Personal Finance Takeaways

• Timestamps: 30:59–42:34

Unique Segment: "It Does Not Depend" Rapid Fire Round—Brian & Bo answer questions quickly, can't use "it depends."

Sample Topics and Insights:

• Teaching kids about money: Search “15-year-old savings” on Money Guy site for practical shows and resources (31:40).

• Should you keep contributing to a 401k if the employer match is suspended?

  • Prioritize next steps in the Financial Order of Operations (Roth IRA, after-tax brokerage, etc.) if investment options in plan are lacking (32:23).

• House down payment in brokerage account:

  • If goal is 3–4 years out, keep the majority in cash (for flexibility), consider small portion in short-term, low-risk investments (35:40).

• Encouraging a less frugal spouse:

  • Goal-based conversations and annual planning sessions recommended—“reverse engineer into mutant tendencies that will lead toward your goals” (37:16).

• Are annuities bad?

  • Most are poorly suited as first investment; don't liquidate without careful analysis (38:28). Fixed annuities acting as pensions are acceptable in certain situations; variable/equity index annuities are usually less favorable (43:49).

• When does a 401k loan make sense?

  • Almost never, unless in a dire last-resort scenario – “Never.” (39:16)

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5. Listener Questions: Rules, Emergency Funds, & Behavioral Insights

• Timestamps: 20:36–29:48; 47:53–62:49

Why 25% of Gross Income for Housing?

• Upper limit/guardrail, not a spending target (21:11). Gross is a fixed number (less manipulable than net); offers grace for high-cost areas provided other financial order factors are strong (22:55).

Building Emergency Funds vs. Roth IRA Contributions

• At low fixed expenses, it's OK to “play the game” (contribute to both if the timeline to fully fund EF is short, or keep Roth contributions in cash until protected) (25:37–29:48).

When to Diversify Out of 100% Equities?

• If you’re young and at sub-critical-mass asset levels, total equity is acceptable—but know your trigger for reducing risk (age, dollar amount, etc.). “If now’s not the time... when is?” (59:37)

Renting vs. Owning in Retirement

• No imperative to own; just plan (with a buffer for future rent hikes) and budget rent as a core expense (53:58).

"Taking your foot off the gas" in wealth-building

• Balance between discipline and enjoying life is key. Don’t let “mutant” frugality rob you of experiences, but don’t abandon compounding unnecessarily early (48:11–53:02).

Notable quote:
"Money is nothing more than a tool. …I want you to balance out what’s the analytical needs plus the mindset, plus the memories I need to be building..." – Brian (50:00)

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6. Announcements and Memorable Banter

• Money Guy Clips Channel: New YouTube channel dedicated to episode highlights and best segments (11:47).
• Job postings: Video editor and content developer roles open (62:49).
• Fun banter: Miser moments (wearing small diapers, splitting IHOP bills, three men sharing a hotel room on a cot) emphasize real-life financial frugality stories (33:32–35:21), and the camaraderie throughout keeps the advice accessible.

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Notable Quotes & Moments

• "What is the simple ingredient to wealth creation? Live on less than you make, discipline. And that discipline creates the margin..." – Brian, 05:50
• "Those are really the only two options you have. But the more deliberate you are, the higher likelihood you’ll have of not letting cost of living be a determining factor." – Bo, 08:07
• "A too expensive car in California is going to drive just like a too expensive car will in Arkansas." – Brian, 08:53
• "No matter what stage of your financial life you’re in... building wealth... is available to all of us." – Bo, 09:51
• On balancing discipline and enjoyment:
  "There's a fine line between mutant and miser. Money is nothing more than a tool... Are you doing those things [to make memories]?” – Brian, 50:00

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Key Timestamps

• 00:34: Main theme — Does location hinder wealth building?
• 01:20: Highest & lowest cost of living states breakdown
• 03:45: Cost of living as an obstacle for savings
• 04:19: California Carly vs. Arkansas Adam case study
• 08:07: Main wealth-building levers: income vs. expense
• 20:36: Why 25% of gross for housing?
• 25:37: Emergency Funds vs. Roth IRA dilemma
• 30:59–42:34: Rapid Fire Q&A ("It Does Not Depend" segment)
• 47:53: When to ease up on saving intensity
• 53:58: Renting in retirement vs. owning
• 59:36: Is 100% equities too risky up to $388k invested?
• 62:49: Free resources & job postings

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Language & Tone

True to Money Guy tradition, the tone is conversational, practical, encouraging, and sprinkled with friendly ribbing and self-deprecating humor. The hosts stick to empowering listeners to control what they can, reminding them to be practical mutants but not misers, and to always be intentional with their finances regardless of circumstance.

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Final Takeaway

Cost of living matters—but it's just one piece of a much bigger puzzle. Margin, discipline, intentionality, and using the unique career/income opportunities available in your area can help you succeed financially, wherever you call home. Personal finance is personal; control what you can, and tailor your strategy to fit your unique situation and goals.

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Further Resources

• MoneyGuy.com Resources – for calculators, tools, and rule guides.
• New 'Money Guy Clips' YouTube Channel – for bite-sized highlights.

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Next Live Show:
Every Tuesday at 10am Central – tune in, submit your questions, and join the community!

Transcript

[Ruby]

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[Brian Preston]

Here's a question. Is it impossible to build wealth in your state?

[Bo Hanson]

Brian, I am so excited to talk about this because we know that different geographies and different states are different. No two states are the same thing. No two states have the same benefits and the same attractions. And realistically, no two states have the exact same cost of living. And depending on where you live in this country, can have a big impact on what your financial life looks like.

[Brian Preston]

Yeah, I mean, this is. Look, we've done shows on taxes. We've done shows. This one will focus specifically on cost of living. And we want to talk to you. You don't always get to control where you live, so you can at least pay attention to how do you make the most of the situation. But in the meantime, let's talk about what the high cost of living states are. Are.

[Bo Hanson]

Yeah. And this isn't going to be a huge surprise because we know that some states are much more expensive than others. According to the U.S. bureau of Economic Analysis, they determined that the national average for cost of living for a single adult is about $56,000 a year. So that's the baseline on which we're going to operate. Well, if we think about the highest cost of living states California came in at the highest, it is 12.6% above the national average.

[Brian Preston]

Yeah. By the way, if we had to do a list of the three, I mean, I would tell you none of these three, because the next one was New Jersey at 8.9% higher than the average. Yep. And then Hawaii, I mean, they at least have the excuse that they're on pretty awesome. 8.6% from the national average. So those aren't shocks to me. When I saw the list, I was like, okay, here's another list of California, New Jersey, Hawaii, you know, or the top of cost of living. What might surprise people is what's on the actual low side of cost of living.

[Bo Hanson]

Yeah. So again, if we're going to consider the national average is $56,500 a year for a single adult. The lowest cost of living was actually Arkansas. It came in 13 and a half percent below the national average cost of living. The second lowest was Mississippi, coming in at 12.7% below the national average. And then the third lowest cost of living was South Dakota, coming in at 11.9% below the national average cost of living for a single adult.

[Brian Preston]

I mean, from a popularity standpoint, you know, this is one of those where South Dakota, because isn't that the only state we don't have a client in?

[Bo Hanson]

I think it might be the only state that we don't have a client.

[Brian Preston]

So obvious it's not enough mutants taking advantage of the 12% discount they're getting. I think there's just not a lot of people in South Dakota. Also, in our defense, even if you.

[Bo Hanson]

Don'T live in one of these states, that doesn't necessarily mean that cost of living is not a factor for you. We know that 47% of Americans, almost 1 in 2, said that cost of living is their single biggest obstacle to saving money because things have gotten more expensive, whether it's gas, travel, housing, whatever that thing may be. Just the cost of keeping the lights on and living the life you want to be is a major obstacle to being able to build wealth. And that's pretty common across the entire population.

[Brian Preston]

Well, that's why we wanted to do a contrarian take with doing a case study because, look, it's easy. We pick on California all the time because of their taxes and so forth. But here's the reality. Historically, there's actually some pretty good career opportunities because these high cost of living areas have opportunities sometimes you don't have in other areas because of industry and other things that are going on in that community. So we said let's do a contrarian take. Let's compare California Carly to Arkansas Adam, you might be surprised at what we're going to show in the in this case study.

[Bo Hanson]

Yeah, we want to argue that cost of living certainly can play a factor in your ability, ability to build wealth, but it's not necessarily the determining factor. So if we're going to think about California Carly, I bet you can't guess what state that she's going to be living and working in. And then we have Arkansas Adam. So Carly, we know again, just assuming these national averages and where these states fall, her average cost of living is going to be about $64,000 a year. But Arkansas, Adam, is only going to be about 49,000. Now, you just alluded to something, Brian, that the career opportunities and what is likely going to be available from a trajectory standpoint is probably going to be different in California versus Arkansas. So okay, what if Carly moves out to California, decides to live there, but because she's living in that type of area, she can go out and earn a salary of $100,000 and Arkansas Adam instead, he's going to go out and earn a salary of $55,000. Well, we know that both of those two states are taxed differently. So when we compare their after tax income, Carly would have an after tax income of about $72,000 and Arkansas Adam would have an after tax income of just under $45,000. Where when you compare their after tax income to the cost of living in their states, what you can see is that even though Carly lives in a more expensive cost of living area, because of the other opportunities there, she likely even has more margin available to her to build wealth than Arkansas Adam does.

[Brian Preston]

Isn't it amazing how we can get through? Now look, we're building a lot of assumptions into this, but what is the simple ingredients to wealth creation? First, you have to live on less than you make discipline. And that discipline creates the margin that we're seeing here for Carli. And that margin is what if you give it enough time that it actually creates the fruit of wealth. And I think that this is, and that's why you have to pay attention, we're going to get into, deeper into. You have to pay attention to what can you control in your personal situation to go on this wealth building journey?

[Bo Hanson]

Well, the very first thing that you can control or can think through is how do I leverage this situation if I'm going to live in a high cost of living area, does that mean that the vocation I pursue, the trade that I pursue is going to have higher income opportunities? If that's not the case, then it may be worth reevaluating. Okay, is it justifiable? Does it make sense for me to live in the geography I'm choosing to live in if there aren't more attractive opportunities available to help me keep up with the cost of living?

[Brian Preston]

Well, it's because I want to bring these next two together, like leverage the situation. We all know because I mean it's a household brand. Walmart is in Arkansas. Yeah, probably now. But here's the thing. Even in low cost of living states, I bet there's because we live in Tennessee. But if you go look at the Nashville proper area, compared to other parts of the state, the cost of living is completely different. So you have to pay attention to. And that's what I loved about the leverage of the situation, is what Job opportunities, what things they are. And then here's the second one. Assess your location. Because of, like in our situation, because Nashville and in Williamson county and the areas that are surrounding Nashville is so cost of living. There are a number of people that do commute because you just have to go right outside of this bubble and all of a sudden the cost of living drops down significantly. So you need to kind of look at your scenario and say, am I one of those people? I hate commuting. I think it's one. You know, when you look at happiness surveys, it's not one of the greatest things you ought to be spending your time doing, but there are moments in time, I've done it in my life, where you assess your situation and you figure out how do you make the most to. To be able to control what variables you do have.

[Bo Hanson]

And then you have to take ownership of your circumstances. Remember, no matter where we are, what stage of life we are, if we want to impact our financial life, there are really two levers that we can pull. We can either increase our income, seek out opportunities that are going to allow us to have a bigger, bigger shovel, look for areas where there are more opportunities, build a different skill set, or we decrease our expenses. We find areas that are lower cost of living to match the vocation, to match the shovel that we have. Those are really the only two options you have. But the more deliberate you are in terms of how you pull each of those levers, the higher likelihood you're going to have of not letting cost of living be a determining factor in your ability to build well.

[Brian Preston]

And that's what we, we find out these, this is your environment, this is what you're surrounded with. It definitely has a huge impact on opportunities, but a lot of times it's your choices of consumption, you know, and that's why a too expensive car in California is going to drive just like a too expensive car will in Arkansas. And you need to plan accordingly. And that's why I would encourage everybody, I want you to go to moneyguy.com resources and we have all kind of free stuff. Here's one that we just pulled off the shelf, put in front of you 23 8. Because that car that you drive, that's not going to impress anybody that you think it will, will work against your wealth, even more so than some of the things we've covered on today's show. So Pay attention to 23 8. Pay attention to 25, you know, 5. And as we're working through all the rules, there's all kind. I screwed that one up. But that's okay. That's okay. It's. It's that we have so many rules as you. Even if you screw up the rules that we have, you can go to moneyguy.com resources to clarify and make sure you're on the right path.

[Bo Hanson]

I love the three ingredients of wealth creation. Stay the same. It is discipline. It is money. It is time. No matter what stage of your financial life you're in and no matter what geography you live in, I love that building wealth and making wise and sound financial decisions is available to all of us. It's one of the reasons why we love that every Single Tuesday at 10am Central, we get to sit right here and answer questions that you guys care about. We get to speak to the things that are on your mind. So if you have a question that you want to get our take on, that you want us to weigh in on, make sure you get it in the chat. Right now, we have the team out in the wings collecting your questions because we really do believe that there is a better way to do money. So with that, creative director Ribe, I'm gonna throw it over to you.

[Ruby]

Yes, drop those questions in the chat because today is Tumblr day, and now is your moment. But before we get to the first question I do have.

[Brian Preston]

You know why I didn't get any quarks today?

[Bo Hanson]

Why do you get any quacks?

[Brian Preston]

Because there's some exciting stuff that Rebi's.

[Ruby]

I'm sitting up here.

[Brian Preston]

I'm just so excited for her to say what she's about to say, that I kind of blew past me that we just offered up.

[Ruby]

Oh, there will be more opportunity, Brian. Don't worry for your sound effects. But we do have an exciting.

[Brian Preston]

You know, I can perform on command. But I am excited for Ruby to announce.

[Ruby]

We've done something.

[Bo Hanson]

The first question.

[Brian Preston]

Oh, we're not talking about. We're not doing announcements yet.

[Ruby]

I have a big announcement because this is something that I. I feel like our channel has finally kind of grown into. It's something that you have asked for. It's something that we have considered and are finally able to make happen.

[Bo Hanson]

And you're gonna talk about it after we answer some questions, right?

[Brian Preston]

What are you doing?

[Bo Hanson]

Oh, you want to.

[Brian Preston]

You're just being mean.

[Ruby]

All right. I have a list of all the things I'm gonna hit and what I'm gonna do, but they're not gonna let me. But I now I do wanna announce it. I'm announcing it. I'm. I've decided.

[Brian Preston]

You do it. You do it, Rabi.

[Ruby]

We now have a Money Guy clips channel.

[Bo Hanson]

Let's go.

[Ruby]

So what this means for you watching is that the Money Guy show channel that you know and love, that you are watching or listening to right now will continue to have all new content. Monday, Tuesday, Wednesday, and Friday. Everything on this channel will be new, original content. You've noticed that we've picked up clips, like some of the most popular and interesting parts of our full episodes, and we've been posting those on the weekends or at different points throughout the history of this channel. Now those clips are going to live on Money Guy Clips, the channel on its own. So you can kind of tailor to what you want to watch. And here's the call to action here. We're doing this for you. We want this to be a great experience for everybody who finds Money Guy content. We want to reach even more people, people with this amazing advice. So be sure to go subscribe and watch some of our Money Guy clips channel content to just give it a little oomph and make sure that we can keep doing this and keep serving you with better content and keep making better changes like this to hopefully make your life a little better and make the content easier to find and easier to watch.

[Brian Preston]

So here, here's what's happened in my life already. In my friend group, we have a big text thread. Well, that's what, that's what I was like this banner that's up right now. My buddies have. One of my enterprising buddies has clipped just my picture and said, this guy looks like he could sell some used cars. So already some shots. Because I don't choose any of this stuff. I let the content team just run raw with it. But I do. If you want to go check it out, you have to go check out, go to YouTube and we have money guy clips. It was @moneyguyclips.

[Bo Hanson]

That's right.

[Brian Preston]

In case the search function isn't because it's brand new. And then, you know, staying on that same theme, I mean, we have pulled the top off the carburetor, we've poured a little gas, but we need you to be that additional fuel to prime the pump so we can get this engine fired up and take the Money Guy to the next level.

[Bo Hanson]

I love it.

[Ruby]

I love it. So we're excited about that. Go check out the channel. Go look at Brian's fun picture. I like the pictures we chose for.

[Brian Preston]

The record with it. I mean, look, if I have to sell Some used cars to make this thing go down a spoonful of sugar.

[Bo Hanson]

We've been talking about this for a while. It is not until this moment in the chat that I recognized how much it does sound like a barbershop. Like I never did.

[Ruby]

There was a memeification based on everybody's.

[Bo Hanson]

Like, man, I can't wait to get my hair cut at Money Guy clips.

[Brian Preston]

Like, I never put that together until this moment.

[Bo Hanson]

It's unbelievable. I literally never even saw it.

[Brian Preston]

Oh, man.

[Ruby]

Oh, I love it.

[Bo Hanson]

Oh, man. Somebody just said, brian got you rolling. That's hilarious.

[Ruby]

That's Ryan got you rolling.

[Brian Preston]

If you have not seen Steve O.

[Ruby]

Got me rolling, you should watch some of our financial advisors react video.

[Brian Preston]

Thank you. I thought you were going to come really close. Go check out some Steve O clips. Do not go check out some Steve O clip.

[Ruby]

Honestly, you probably should not do that. No offense. You should go watch Money Guy react.

[Brian Preston]

He is working. Wouldn't that be funny if Steve O came and did a studio tour?

[Bo Hanson]

It'd be amazing.

[Brian Preston]

Be like, I'm a big fan of y'. All show y' all helped so much. Like that's not what we're trying to do here.

[Ruby]

Let's teach you about 23 8. Let's have a sit down. All right, let's go ahead and get to our first question from Kevin B8679. It says, hey, MoneyGuy team, my spouse is self employed making 120k annually. What retirement account is best if we expect to be in a higher tax bracket later in life?

[Bo Hanson]

Well, Brian, this is interesting because you know, one of the things that you, you said when you used to do taxes a million years ago, you were like, hey, one of the best things, things that I could do is whenever I sit with a sit down with a small business owner, someone who is self employed owns their business, I know I can always start kind of blowing their mind in terms of tax savings. And this exact question is one of the things you'd always start to talk about.

[Brian Preston]

Well, yeah, because in the past it was easy. You just threw a SEP IRA at them. Because a SEP IRA is one of the unique tax planning tools that could go back in time. Meaning that if right now we're in the year 2026, but we're not past the tax filing deadlines or extended tax filing deadlines if you follow a tax extension that goes all the way to October for 2025. So you can imagine if you're a self employed person and you have really, you know, income Popped because that's the thing about being self employed. Sometimes you just don't know your income is going to pop until all of a sudden you're like, oh my gosh. Because you have so much money plowing back into the business that you're, you're shocked when those early years when it starts piling up and because you realize, oh my gosh, this thing is starting to show some success. So you could fire up a SEP IRA and put up to 25% of the earnings. Usually with self employment adjustments around 20%, you know, that you could put as a profit sharing contribution and that was all funded by the employer side, meaning you, the owner. Then along came, and that kind of really changed things a lot. Because what blew up SEP iras was then once people had employees, you do a simple and then you go into a traditional 401k. Well, if you don't have employees, there's still an option that's probably better. It is better than SEP IRAS. And that's. The Solo 401K has really changed the game because in addition to doing that profit sharing contribution that I just laid out for SEP IRAs, it also allows you to, it allows you to do the salary deferrals just like a 401k would. And there's even options you can get into Roth side of things. There's some really cool planning opportunities that you can do with a Solo 401K. And by the way, employees can be you and your spouse only, you know, but once you, even if you start putting the kids on the payroll or other crazy things like that, it will blow up these things and then you have to go more traditional. And that's a whole nother conversation. But if you're, if you're self employed, you don't have employees. Solo 401ks have a lot of benefits.

[Bo Hanson]

Yeah. So just thinking through, you know, your wife having $120,000 of comp, and let's assume that that's what she's actually showing as her net operating income with a SEP IRA, she could do a $30,000 contribution. You figure out, okay, if you guys are in a higher tax bracket, 30% tax bracket, you just take, you know, $30,000 contribution times your marginal tax bracket, that'd be your tax savings. If she does the solo 401k contribution, in addition to doing the $30,000 employer profit sharing, she can now add on $24,500 a salary deferral. So the total deferral of her income could be $54,500. Take that number, multiply it by your marginal tax rate, and you can see that there are some, like, serious and substantial tax savings available to you by opening a solo. And they're so easy to open, you can go to any of the major custodians, you know, Fidelity, Vanguard, Schwab, you know, fill in the blank, open it. There's no tax refiling, no reporting, no issues until it crosses over $250,000 of assets. Once it does that, you do have to make sure that you file an annual 5,500. There are no taxes due. It's an informational filing. But if you miss that filing, the IRS will send you a nasty and gnarly letter that will scare you to death.

[Brian Preston]

Penalties are severe. So don't make sure you file the time every year.

[Bo Hanson]

Make sure you track to see how big is my solo. Or if you're someone who's like rolling IRA assets into a solo to open up back doors, make sure that you file your 5,500 every year because you do not want to get that letter.

[Ruby]

That's great. Well, Kevin B8679, you get a MoneyGuy Tumblr if you'd like one. Since we answered your question, just email winneroneyguy.com all right, before I go into the second question, I do have another small announcement. We will be doing another it does not depend rapid fire segment between the 30 and 40 minute mark of today's episode. So if you are watching live right now, please submit your questions. Just put RF for rapid fire at the front of your question and our team is going to queue up a bunch of really fun rapid fire questions for Brian and Beau. Feel free to have fun with it. Feel free to stump them. Feel free to just ask a genuine personal finance question as we do on this show all the time and as we love to do so. Go ahead and get those questions in the chat and we will come back to that after a couple more long form questions.

[Brian Preston]

I heard last week that I said it depends and you didn't pop me around for doing that. So you have my permission to go over the top if I because I'm the one.

[Ruby]

Honestly, by the end we were having so much fun trying to get you to answer it in 20 seconds. I may have forgot. I just missed it.

[Brian Preston]

I would ask it. Really. I don't think my brain can go less than 30.

[Bo Hanson]

I bet both can work at a speed.

[Brian Preston]

It's just like when you listen to me, there's, there's, there's limits on how fast. You can probably listen to me at three times, four times speed because of how slow I talk. But it's. But there are definitely limits on how fast I can process a question.

[Ruby]

Yeah, well, we're going to try to find a happy medium and have some more fun today.

[Brian Preston]

So the bow we ought to give him 10 seconds.

[Ruby]

Just label them RF so we know it's for that segment. In the meantime, I've got a couple more long form questions. I guess that's what I'm calling them queued up. This one is from Power Bait. It says, hello, why do you suggest 25% of your gross income for a house payment instead of 25% of net? 25% of my gross ends up being about 32% of my net, which feels like 2 too much. So this is regarding our house buying rule. So maybe you can kind of recap that and speak to his question.

[Bo Hanson]

I want to be clear because the way that this question is worded is a little bit different than what we say you said. Why do you suggest that our housing should represent 25% of our gross? We do not, we do not say, hey, your housing should be 25% of your gross income. What we say is that is the upper limit guardrail that you should use to determine if the housing that you're getting into is more expensive than it should be. Now, if you're someone who is a little more risk averse, a little more conservative, you want to have a little bit more margin in your life, there's nothing wrong with you using a net number. I'm going to do 25% of my net or I'm going to do 20% of my gross or 15% of my gross. There's nothing that suggests you have to go all the way up to that threshold in order to get into housing. It just so happens housing is really, really expensive right now. And it's a very, very difficult thing for a lot of folks to get onto the home ownership side of the equation. And so that's why the 25% exists there. We never tell people when, like when someone says, hey, I'm thinking about buying a house. We never start with, okay, what's your gross income? Let me tell you what your mortgage payment should be. We start with, okay, why do you want to buy a home? How long do you see yourself being there? What's the home going to do for you? What problems does it solve? And then we begin getting into the mathematics around, okay, in the area that you live that you're looking at with the type of home you're looking for. What are those prices? Okay, now can we make sure that fits comfortably inside your realm of affordability? 25% is not prescriptive. It is a restriction. Hey, really be careful. Don't go over that well.

[Brian Preston]

Look for a lot of people that live in these high cost of living areas, they're going to need every ounce of the housing that we can give them. So that's why giving them boundaries or how much can you do without being fallen in the category of potentially being house rich, life poor. But the reason I use gross is this simple. You can't manipulate it if anybody, because everybody's net is going to be slightly different because where the taxes fall, where does your savings rate with your employer plan at work, you know, what are your health, health insurance electives that you've chosen? How about other things if you're doing, you know, you know, life insurance or dependent care and all kind of other deductions that you've chosen out of your cafeteria plan. If we use net now when I give you a specific recommendation, that's going to be completely different than everybody else. But if I go it off of gross, you, you can't manipulate that number. It is what it is. We all know our top line number. So it gives you a little extra grace and takes it all the way up to 32% if you live in a high cost of living area, I'm okay with that. Especially in this unique time in history where we are, where housing already is so much harder. As long as you are doing all the other it depends stuff and you're saving for the future, you're making sure that you're keeping your other debt limits within thresholds. And the boundaries we share, it all works together. And that's why I always say when we do personal finance stuff, it's exactly what Bo's talking about. He basically just gave you the triage list that we have to go through to assess where somebody is in their financial life. We give rules to give boundaries and guidance. But it still has to come back to the personal side of personal finance, which is going to be so unique that that's why I can load you up with so much free advice, is because everybody, when you get to the critical mass point of that, hey, these are big decisions I'm making. My simple life has gotten super complicated. We kind of help bring it all together as financial planners. And that's why I don't worry about my job with even all the crazy technology that's going on is because that's going to continue to be very personalized and unique and the implementation is a whole nother level that I haven't even talked about. One thing to know strategy, it's another thing to actually make it happen.

[Ruby]

Power bait. Thank you for the question. If you would like a money guy Tumblr, just email winner moneyguy.com Next question's from Bennett B. It says, if I'm 24 years old with very low fixed expenses, can I commit the foo sin of contributing 625amonth to my Roth IRA while simultaneously building up my emergency fund, already getting the full employer match?

[Brian Preston]

What I think is interesting, I mean, because I don't know, Ben, at 24, it's definitely young and I'm super excited, especially if you can. I mean, you're at the point where we can already be thinking about Roth ira. I absolutely love that. But you just answered your own question in a way because you have very low fixed expenses. So if you know that to get out of step four four, you just have to basically know you have three to six months of living expenses covered and you back to quote, very low fixed expenses. And you know, let's just say if you were. Because look, there's no shame in the game that when I graduated college, I lived at home for three months. Three or four months, because my apartment that my buddies and I were moving into, it didn't open up until September, October. I graduated in June. I bought the sweetest purple leather recliner with some of those savings and, you know, saved up some additional money that went into emergency reserves and other things. It was on sale.

[Bo Hanson]

Oh, just price.

[Brian Preston]

I mean, you know, back then it's a burgundy purple type color. You don't. It's a bunch of guys like Rob, my other buddy, he bought the leather couch, it was brown mine, you know, and so we. And then another guy bought the like subwoofer and speakers. I mean, this is. These are priorities that roommates, you know, we all assign. We did a zone zone coverage on what we were going to fill this place up with, but it's back to the point of I think you're going to be able to cross out of step four and right into the 625 within a month. I mean, so we're really talking about are you getting cute for a month to get. Because I want you in the Roth as fast as possible, but I just want to make sure that you're being smart on the risk side of asset of your exposure as well.

[Bo Hanson]

Yeah, I wish I knew more numbers. Ben, I'd love to ask. Okay, when you say, like, very, very low fixed expenses, is that like $2,000 a month? I'm just kind of making up a number. So three months of those fixed expense will be a $6,000 emergency fund. But when it comes to emergency fund, we don't just want necessarily fixed expenses. I want you to actually have the true cost of living that you're experiencing. So whatever that may be, if it's three grand a month, it's 369 for three months. I want you to have an emergency fund so that you can keep your life out of the ditch. But you're trying to, like, play a little bit of a game here by doing step four and step five. So this is the first question I would ask you.

[Brian Preston]

All right?

[Bo Hanson]

How much emergency fund do you have? Like, are you like a month and a half? Two months in is only going to take you one more month to fill that bucket up. If so, go ahead and do that and then get back to the Roth. But I will say as an honorable thing to just, just like a little Asterix honorable mention. One of the unique things about Roths, let's say that it's you're getting close to the end of the year, or you're getting close to the end of the tax filing deadline. You've almost maxed out your Roth for last year, but you're not quite there. And you have, man, you just need to squeak in a few more contributions to fully hit the max. One of the unique things that's true of Roth IRAs is that if you absolutely had to, you could get to your basis penalty free, tax free. Now you.

[Brian Preston]

That's a true statement.

[Bo Hanson]

Never, ever, ever, ever, ever do that. But if you had to, you could. So if it comes down to man, all right, I just want to make sure I get that last little bit in. Am I going to be okay if you take the 625 and you put in your Roth and you just let it hang out in cash? I know that sounds crazy, but you let it hang out in cash until you get your emergency fund fully funded and then you invest that. I'm not going to fight you on that because I know that once we pass that tax filing deadline, you don't have the ability to go back and max out the Roth for that year. So those dollars are precious. They are special, they are coveted. But I don't want you to run afoul of the food. So, yes, there are circumstances where you can do both, but you got to be unique in how you do it and you got to make sure you're doing it the right way. Agree, disagree.

[Brian Preston]

No, I like that. I like that because I mean there are moments in time where. Especially where, because you're right. Like we're in this unique time between January and April where you can still fund for last year's taxes, you know, last year's Roth contributions. As you get older and more successful, you're going to be sad if you didn't fund some of that. So I get it. And look, you do have a break glass opportunity to get to the basis of the Roth. I always just get nervous because I don't want people to look at their Roth account as a p. Well, and.

[Bo Hanson]

That'S, that's why I told him. And this is the part that's going to be so painful for a 24 year old. You make that 625 Roth, I want you to have it sit in cash. And what I hope happens is you see that $600 in your Roth and it just drives you absolutely nuts and you start losing your mind. So that you get your emergency fund fully funded and then you can go invest those dollars. Let the it sitting in cash be the thing that motivates you to fully fund the emergency fund. Because cash and Roth sucks. That's not a good thing.

[Brian Preston]

No, I agree with that.

[Ruby]

That's great. I'm just getting ready for a rapid fire segment. But Bennett B, thank you so much for the question. If you would like a money guy Tumblr. Hang on, let me give Bennett his Tumblr winner. Moneyguy.com Bennett email there. If you don't have a Tumblr, we'll get you one. All right, we are almost to the 30 minute mark, so let's go ahead and gear up for this rapid fire section. Again. This is called the it does not depend rapid fire segment. Brian and Bo have to answer your questions in 30 seconds today and they cannot use the phrase it depends. I will give you 30 seconds each to start. Okay. You can go first to start and you cannot say it's future.

[Brian Preston]

We got to flip a coin to see who goes first.

[Bo Hanson]

Cause we'll just alternate back and forth.

[Ruby]

Let's alternate back and forth. I like the idea. Someone suggested I give each of you 10 seconds for each 10 years of life. But we're not doing that.

[Brian Preston]

I like that.

[Ruby]

Wow, that made me laugh. All right, are you guys ready for the rapid fire segment?

[Bo Hanson]

Ready.

[Ruby]

All right, so I will ask the Question and then the timer will start. First question says best way to teach kids about money. Want them to be responsible but not misers.

[Bo Hanson]

Depends on how old they are.

[Ruby]

Nope, nope, nope.

[Brian Preston]

Right out the gate.

[Ruby]

Disqualified. Brian, you're up.

[Brian Preston]

Go to moneyguard.com there's some. There's actually some shows if you. Because our search feature is so good now if you type in I'm trying to think of 15 year old savings or because I had to did a show specifically with my daughter when she was 15 that shows gold. You're see how much weight I lost. Um, and it's. But it's good. We laid out some basics and we've done. We sprinkled in some other things and we want to do even more content.

[Ruby]

We do want to do even more content to serve you as parents. Sorry.

[Bo Hanson]

You used to win over time and you still smash me on that one.

[Ruby]

Next question says, should I continue contributing to 401k if employer suspends employer match or should I work on the next step?

[Brian Preston]

Where are you at in the financial order of operations? Because you got to go add now look at your high interest debts and you got to look at your emergency reserves. You got to jump right into the Roth ira And then if there's room, yes, definitely go back to the employer savings plan assuming that it has decent investment options that makes it worthwhile. Otherwise you might want to drop down right to doing an after tax account if it's so horrible because your. Your employer works with his golf buddy.

[Ruby]

I need a sound effect. Wow. Okay, Bo, you're up.

[Brian Preston]

We do need some.

[Bo Hanson]

Yes. Go to next step. Go to next step with the food. Do three, do four. Get to tax free. If you're doing Roth 401k tax free, do that and then get to step six.

[Ruby]

Love it.

[Bo Hanson]

I'm. I'm so ashamed of myself for blowing the first one so bad.

[Brian Preston]

I love it.

[Bo Hanson]

I'm ashamed.

[Brian Preston]

It worked out beautifully. Took that talking about all nerves. Just went away because Bo sacrificed himself.

[Bo Hanson]

It was the first words. I said. It was the very first words.

[Ruby]

Here's a fun one. But 30 seconds remains. Biggest miser moments.

[Bo Hanson]

Biggest miser moments. I ate cereal. I ate cereal for every single meal when I was freshly graduated out of college. Breakfast, lunch, dinner. Two for one Public steel.

[Brian Preston]

I still have my friends bring up that IHOP when we were in our early 20s. I was so frustrated that I said I'll split the bill for everybody. So I had them give me the receipt. I screwed up the math. I don't know if it's because we had had adult beverages or what. But anyway, I got an argument with the. With the waitress. I was wrong. And I felt like the biggest miser. And if now if we just split the tickets like I normally do, it'd be fine. But I was so worried about how I was a miser back then. I was so bothered with what everybody.

[Ruby]

I don't think I've ever heard that.

[Bo Hanson]

Story with my first daughter. She had outgrown her diapers, but I didn't want to waste the diaper, so I kept using two small diapers and she blew out for weeks on end every single day.

[Brian Preston]

That is a little kids in packing.

[Ruby]

You guys are so far beyond.

[Brian Preston]

I know, but there's all kind of miser. But you will. Oh, my success.

[Ruby]

The very first time at the end where you get to say all of the things.

[Bo Hanson]

No, I get to say no. But I got one more. The very first time that me and Brian ever went on.

[Brian Preston]

Oh, yeah. That is a miser moment. Oh my gosh. I know what you're gonna say.

[Bo Hanson]

The first time we ever went on a business trip together with my other.

[Brian Preston]

Business partners before Beau with another business partner.

[Bo Hanson]

They were so tight.

[Brian Preston]

Oh, gosh.

[Bo Hanson]

They got one hotel room with two full beds or two queen, right? Two beds.

[Brian Preston]

We rolled a cot in and they.

[Bo Hanson]

Rolled a cot in for 21, 22 old Bo so that all three of us slept in this same hotel room. And I slept on.

[Brian Preston]

That is solid. That one should be breaking the rules. A lot to go over 30.

[Bo Hanson]

A big miser moment.

[Brian Preston]

Yeah. Now. Now when we do book tours, it's everybody gets their own room except for Brian and Bo.

[Ruby]

I can explain. Anyway. All right, next question says should I keep a down payment on a house for three to four years from now in a taxable brokerage account? Time starts now.

[Brian Preston]

You or me? You. A portion of it should go in the taxable brokerage account in cash equivalent. All of it can go in the taxable brokerage. But majority of it. A good portion of it's going to be cash. Because you're so close to five years, you could have some short term assets that have a little more risk than cash but get you a little better yield.

[Bo Hanson]

Yeah, I think majority I would keep in cash so that it's available if the house. If the right house shows up. But I do think that's a long enough timeline that you could have a portion of that invested in the taxable brokerage.

[Brian Preston]

But maximize the cash.

[Bo Hanson]

Maximize the cash.

[Brian Preston]

Don't let it be in like F cash.

[Bo Hanson]

Because what happens is the economy goes down and all of a sudden there's an opportunity to. Real estate slows down. You want to be able to move on a house really, really fast. You want to make sure you have your capital there and the market hasn't gone down. You want to make sure that you're available to capitalize. When the opportunity presents itself, you turn.

[Brian Preston]

Into the micro machines guy. I just want to. You really do. It's amazing how you can speed up your voice. My voice? Well, here I can't do that.

[Ruby]

If I give you an inch, you guys really take a mile. You tag teamed and took mile of that time.

[Bo Hanson]

We're still unreal.

[Brian Preston]

No, we blew past 30 seconds. We're horrible.

[Bo Hanson]

They need to get she said 30 seconds.

[Brian Preston]

Shot collars. I'm proposing we get shot collars for me and Bo and then we let Ruby push pull the thing.

[Bo Hanson]

If we did a shot collar segment, that would be insane.

[Brian Preston]

Hold on.

[Ruby]

You said I'm usually not for these crazy things, but I like that.

[Bo Hanson]

You see 30 seconds each a minute total, right?

[Ruby]

Yes. But you guys were really being very liberal on how you shared that time. Let me say.

[Bo Hanson]

Well, you know, it's heavy team.

[Ruby]

Next question for the rapid fire segment says, how does one encourage a spouse to be more mutant?

[Bo Hanson]

Like begin with the end in mind, talk about the goals that you have and reverse engineer into mutant tendencies that will lead you towards those goals.

[Brian Preston]

Also, use the net worth as a tool to. To. To communicate. And y' all do that annual planning session like we do with our spouses where you come up with what the goals are that way. It seems like you're doing this in a collaborative method versus you getting up high and saying, hey, you need to do this, you need to do this. Nobody likes to feel yelled at or preached to. They want to feel more like we're doing this together.

[Ruby]

Next question.

[Brian Preston]

Welcome the money God show. Watch the money guy show every Saturday as a couple.

[Ruby]

Wait, what? Every Saturday?

[Brian Preston]

My family and I have certain YouTube channels we watch every Saturday as a family together. And I was saying make us part of your family.

[Ruby]

Because I was like, we don't have a new video on a Saturday. We have one on Friday. Great.

[Brian Preston]

This is why the rapid fire is hard for us.

[Ruby]

Next question says, are annuities bad investment vehicles? If an older family member already has several, where do they go on their net worth statement? Go, Brian. First.

[Brian Preston]

For most people, annuities are not the first investment you should do. But I want to put the word of caution. If They've already made the mistake and gone into annuities. Don't just assume that liquidating is the best option. You might have to figure out how you get yourself out from where you are currently versus just, you know, turning it all into cash.

[Bo Hanson]

Not all annuities are created equal.

[Brian Preston]

That's true.

[Bo Hanson]

Some are better than others and some are more appropriate in certain situations than they are in others. So you have to assess them on an individualized basis for that specific individual.

[Brian Preston]

There are a lot of bad annuities, though.

[Bo Hanson]

Agreed.

[Ruby]

Great. Next question. When does a 401k loan make sense?

[Brian Preston]

Oh, gosh, I'm glad Bo's going first.

[Bo Hanson]

Never.

[Ruby]

Top that. Top that time.

[Brian Preston]

I mean, I always have a. No, hypocrite. I've never used a 401k loan, but I could see a moment where it would have to be a last resort.

[Bo Hanson]

Not if you have step four done. Right. Like if you're following the financial order proposition.

[Brian Preston]

I would really. I'd have to be in one heck of a pickle to use a 401k loan.

[Bo Hanson]

The reason that the financial order is built the way it is is to protect you from getting in those desperate circumstances. Right. Like that's why we have an emergency fund so we don't have to resort to, you know, cannibalizing our retirement assets.

[Ruby]

Good stuff. All right, this next one is fun. Disney. Disneyland versus Disney World. Which one?

[Brian Preston]

I mean, I spent a lot more time at Disney World because of proximity and, and Preston south is down there. But I love Disneyland. When I actually went to it the first time because everybody was like, you have to tell us. I absolutely loved it because it felt like a greatest hits album because everything is so compact and if you stay in the. The Grand Californian, you can actually be over Downtown Disney and listen to all the music and see all the shopping and it's really awesome.

[Ruby]

I've never, I was. In 30 seconds.

[Bo Hanson]

I've never been to Disneyland.

[Ruby]

I was gonna say. So I guess Disney World for you.

[Bo Hanson]

Disney World for me.

[Brian Preston]

I could add more, but I mean, because the weather.

[Ruby]

At the end. We'll do our catch up segment. Until then, we do have a couple more. Next question says windfall, invest or pay down low interest debt.

[Brian Preston]

You're. You're asking questions at this point. There's no way to answer that without I'm going to blow up depends. There's no way to answer that question without disqualified.

[Ruby]

Disqualified. Brian, you had that over Bo and you just threw it away.

[Bo Hanson]

Invest or pay down low interest debt. Assuming that you have done what you're supposed to do and you've built up a healthy asset base.

[Brian Preston]

He's gonna give you all the depends.

[Bo Hanson]

Appropriate level of your financial life. And you're in step nine of the food. Then you can certainly pay down that low interest debt. Absent being in step nine and having a firm foundation and on your well on your way to financial independence. And you're the appropriate age, you're not above 45. Then you should invest.

[Brian Preston]

Is that timer right? Because we blew past 30 seconds.

[Bo Hanson]

No, it was.

[Ruby]

Well, it was combined. It was still going from your.

[Bo Hanson]

Whoever starts, you get till 30.

[Brian Preston]

That's right. We waited until the last question before.

[Ruby]

I figured out how to find that in the future. But for today, we're on brand minutes.

[Bo Hanson]

He just realized how the timer's been going.

[Brian Preston]

I already looked at the timer this whole time.

[Ruby]

That's why I hear the sound effects. Ding, ding, ding, ding. All right, last one. You can answer this in 10 seconds. Can Bo bench Brian?

[Brian Preston]

Yeah.

[Bo Hanson]

That's great.

[Brian Preston]

I weigh less than like 350 pounds.

[Bo Hanson]

So yes, I can bench Brian a lot of times.

[Ruby]

Have we tried it?

[Brian Preston]

No, we're not doing that. Brian was like, you know what's funny is I threw out shock collars, but all of a sudden that's a bridge too far. Oh, man, that's awesome.

[Ruby]

All right, that was good stuff. Thank you for submitting your rapid fire questions. Now let's just make sure. Was there anything else that you would like to say for it does actually depend segment any miser behaviors, any clarification on the 401k loan, anything left to say?

[Bo Hanson]

I do, I do Some mention on the annuities. Annuities are not inherently a bad thing. They solve a problem, a very specific problem in very specific circumstances. But what's happened is that industry is kind of morphed to where it got broadly applied to way more people than they actually made sense for. So I don't want to say just throw out all annuities completely, especially if you have an older family member, an older relative that you're doing this analysis for, you want to go through. Because some annuities, it may not make sense to get rid of it, but there are things you can do. Like, hey, this annuity has this really interesting feature where I can activate the income rider and those dollars can sit there, but now it can start generating real income for me on a month over month, year over year basis. And it makes sense to do that because I've been in the annuity for so long. So you don't want to just like throw them completely out of the bathwater. You want to do the analysis to determine, okay, which ones are worth keeping, worth having, and which ones are worth not having.

[Brian Preston]

If we were doing a quick summary like a fixed annuity that acts like a pension, that's probably the one with the least amount of crazy stuff going on. If you were just trying to. Because we see people set up their own pensions like that, variable annuities, equity index annuities, those are the ones that usually have a salesforce attached to them and they're very profitable for the people who sell those, those products. And you just need to be careful if it sounds too good because they always say, hey, we can give you the returns to the market without the risk just off that statement alone. Your spidey senses ought to go, that sounds a little too good to be true. And historically, when you go look at the data, you can see, yeah, there's a lot, there's a lot going on with that sales line that doesn't hold up when you go back test and look at what they do historically. Because I think a lot of people also don't understand when you look at these products, when they say, hey, we're going to give you all the great returns of the market with no risk or limited risk. And then when you go find out that they cap you at very low returns, meaning that those years that the market makes 20%, you don't get 20%, you're capped at whatever low number that is. And that oversized performance is what really drives a lot of your other years. And then the, and they also in the fact that if you got an emergency and you needed access to this money, a lot of annuities cap you at, what is it, 5 or 10%, depending on how they're structured. And you know, you blow yourself up if you need that money and have no way to get access to it because you're, you're, you're stuck within the timeline.

[Bo Hanson]

Another I think the second part of this question, and thanks for reminding me in the chat, was, you know, where do these find themselves on the net worth statement? Well, that does depend a little bit because annuities can be qualified annuities, meaning that they're bought inside of an IRA, inside of a tax deferred structure. They can be non qualified, meaning that they were bought with after tax assets. And while they may have grown tax deferred, when you begin receiving those payments, you're likely gonna have to pay some sort of pro rate, Pro rata. Allocation of taxes. So it depend. Determining what kind of annuity where on your investments inside the net worth statement it would go.

[Brian Preston]

You. You want to really get in my crawl is. Is have a qualified annuity. Because I'm like why would you put an annuity in an ira?

[Bo Hanson]

It's. It's.

[Brian Preston]

Unless you're just trying to sell a product.

[Bo Hanson]

It's like putting a rain jacket on and jumping in a swimming pool. Don't make no sense.

[Brian Preston]

I don't. I don't know if I love that analogy but especially with swimming with Bo. But it's. But. But I see what you're trying to do.

[Ruby]

Really. There you go. Look at all that extra color you got to add to your answers. Well done.

[Bo Hanson]

I'm trying to go back through all the questions. See were there any other ones?

[Brian Preston]

The only other thing I was gonna say is Disneyland's. The reason that Anaheim is so great is because the climate is incredible. All those rides are outdoors because they just don't have the humidity that we have in Orlando. And it's spectacular from a climate and weather standpoint.

[Ruby]

Our friend Humphrey Yang did submit a rapid fire question right at the end.

[Bo Hanson]

Oh.

[Ruby]

For fun. So I think you can answer it. It says when your salary can be covered by your investment returns.

[Bo Hanson]

What would you name that Financial independence.

[Brian Preston]

Was that milestone four on our list or something? We have a milestone for that one because that means you are really. You're not necessarily financially independent, but you are getting Richter scale close to really cool things happening.

[Bo Hanson]

This is literally the point where your dollars can work harder than you can with your. Your brains, your back and your hands. They can literally do the job that you're doing. And often they can do it even better. They can make more while you're sleeping. That's a pretty exciting spot to be.

[Brian Preston]

Thank you, Humphrey, for jumping in and asking.

[Ruby]

Talk to him in the chat.

[Brian Preston]

Let us know when you're coming back to this neck of the woods.

[Ruby]

Absolutely.

[Bo Hanson]

Did it will be cool if he came back? We did something else. That'd be awesome.

[Ruby]

We're here for it. All right. We're gonna dive into some more personal finance questions. This next one is.

[Brian Preston]

Can I get it? Can I ask something in real time? You may, because I don't. You know, y'. All. Y' all keep computers and distractions away from me. How many subscribers are we up to on the Clips channel? Is it rude for me to ask that in real time?

[Bo Hanson]

Why don't you look that up while we're answering this other question? We'll have an answer after this question.

[Ruby]

This question is from physiotherapist. Very nice, very nice username. It says, good morning, money guys. At what stage of your wealth building journey did you take your foot off the gas? I'm 33 with about $1 million in invested assets, so doing very well, goodness gracious. Trying to balance my wealth multiplier with enjoying my 30s. Thanks.

[Bo Hanson]

Here's a question I would ask Fuzio because I think this is really unique. And by the way, you are such an, like, unique, rarefied heir. It's an interesting place to be at, to be that young with that, with that much wealth. The question I would have is, were you able to get to a million dollars?

[Brian Preston]

Does that come through on the audience?

[Bo Hanson]

No.

[Brian Preston]

No.

[Bo Hanson]

Were you able to get to a million dollars because you have like an insane savings rate, meaning you're saving 50, 60, 70% of your income and that's how you've done it, or are you one of those young people, has a very, very high income and because your income is so high at a very reasonable savings rate, you've still been able to accumulate that level of wealth? If it's the former, if you're someone who's had that crazy high savings rate and it's caused you to miss out on stuff you want to do in your 20s, miss out on living for the day, miss out on getting to enjoy the present, then I think there's a really good conversation around taking your foot off the gas and getting to enjoy the fruits of some of that labor. But if you're someone who's 33 years old and you're just a 25% saver and you've been stacking, stacking, stacking, stacking, I don't know that you have to take your foot off the gas. Unless there is stuff that you're missing out on that you would like to be doing and your savings is causing you not to do that.

[Brian Preston]

The reality of the situation was, and I put this in the book, I didn't feel like I was financially comfortable until I was in my early 40s. And that worked out nicely because that's the age I told my wife that we could take our foot off the accelerator if we'd make the sacrifices in our 20s and 30s. But also I had the mindset in my 20s and 30s to still bedazzle my basic life. I mean, we were still traveling, still doing things. Now, what you might find yourself, now you're much better. Situation 33 is, I would challenge you. You have to ask Yourself because I. When I got into my 40s, I didn't. My income got to a point where I didn't necessarily have to dial it down to zero and do coast fire or anything. I was able to still save because I just looked around, I was like, well, what makes me happy? What's. This is only a tool. What is. How is money use for me? I didn't want a bigger house, I didn't want fancier cars or anything like that. So I asked myself, well, am I traveling enough? Am I doing enough making enough memories with the family? And then I just let the money continue to build up. And what's been great is now I'm in my 50s and it's kind of. If you could see some of the charitable giving that I get to bless upon people and institutions and organizations and truly start moving the needle. The why eventually shows up for you on how this money, because I just didn't feel the need to go spend it if I didn't need to. It felt better to let this money grow in the background and be a bigger resource. And that's shown up in our content and how we can buy stuff or invest in stuff that's irrational that nobody would do because it doesn't have to be tied to the grounding of this is a good decision or not a good decision. And that's what the flexibility of good financial management do. So I just. You have to kind of be honest with yourself and know thyself on Are you living your best life now? I worry for misers that they're going to ask that question and not be able to see I should be living life more because I will say we had a dear friend, a client of the firm who passed away this weekend and way too young, younger than me. And it kind of caught me off guard and it was just a really tough thing to see. And I'm glad that some of the sacri. Some of the. I wouldn't say he went against us, but he definitely did some things that I thought were financially a little more aggressive. And I'm kind of glad he pushed on those things because not that we make our clients misers, but I do want to make sure everybody's honest with themselves that you look at your life and your happiness. Are you doing those things? Because money is nothing more than a tool. And I don't want you to. I don't want you to be in your 20s or 30s or even 50s and 60s and have regrets. I want you to balance out what's the analytical needs plus the mindset, plus the memories that I need to be building in each stage. And that's why I tried to cover all that mindset stuff in Millionaire Mission. I really did. Some of the favorite chapters everybody always puts in the comments is in those latter chapters where I really load up what I've done in my own life to try to balance that, because there is a fine line between mutant and miser. It's great.

[Ruby]

Love that. Go to moneyguy.com millionaire mission if you want to get Brian's book. It's still out there, rocking and rolling. And special thank you to physiotherapist. I had all my usernames up here and I wanted to make sure I got it right. If you would like a money guy Tumblr Email winner, moneyguy.com we'd love to send you one.

[Bo Hanson]

33 with a million.

[Brian Preston]

That's. That's huge.

[Ruby]

Yeah.

[Bo Hanson]

Moneyguy.com A client also.

[Ruby]

Well, yeah, go to moneyguy.com, click on the Become a client button if you're interested. You know, just check it out. It can't hurt to talk to somebody. We'd love to meet you. All right, Brit M. Is up next. It says, how do you factor not owning a home into plans for retirement? My mom retired and sold her house to live near me. She plans to stay a renter as it's a high cost of living area. Just curious how to plan for that potential.

[Bo Hanson]

Well, I think that there's a common misnomer that you have to be a homeowner in order to be financially independent, and that's just not true. Now, a lot of people are homeowners, and a lot of people choose that who are financially independent. But we have a lot of clients who they might live and work in one area of the country for their entire lives, and they decide, hey, in this next season, this next phase, I don't want to be tethered to any one place. I want to have flexibility that if I want to go somewhere else or if I want to travel for part of the year, if I want to spend time in different parts of the country, close to different family, being a renter affords you the opportunity to do that. So I think you would factor that into the retirement plan the same way you would factor in any other cost. The one difference, the one caveat being when you have a mortgage, when you have a fixed expense, it's very, very easy to project out. Okay, this is what my house is going to cost or that my housing is going to cost me over the next 30 years. I know what the mortgage payment is. I have a reasonable idea of what insurance and taxes are going to be. Rent is a little bit different. If it's in a high cost of living area and a lot of people are moving to the area and it's causing rents to increase, there can be some escalation on that expense. And so what I would do is I would put a buffer into my expense category for what I think housing not necessarily is just going to cost me today, but what I reasonably think is going to cost me five years from now, ten years from now. And so long as you budget and account for that, I think you'll be okay.

[Brian Preston]

I think a lot of people always try to help them understand the why. Why do things work the way they are? And if you're especially in a high cost of living area right now, there's a kind of an arbitrage situation where you can definitely rent cheaper than you can buy. And the why on that is you think about we had such a fast run up in housing costs, meaning that in addition to the cost of housing going way up, the cost of interest rates, meaning interest rates went way up. And that's a double whammy because it not only means you're paying more for the houses, but it also means the cost to carry if you leverage and not paying cash for the which most people don't pay cash for. Real estate has gone up significantly too. So those two things together mean that it's hard for you to buy. But there's a lot of people out there that owned that have the rental property that locked in with sub 4% mortgage rates, sub 2020 pricing on these houses so they can offer very reasonable rents because they don't have the carry cost of high mortgage payments and they don't have the carry cost of high interest and all the other things. So you can go and be the beneficiary of that and rent probably in that area cheaper than you can buy. Pay attention to that. That's always all I tell people you need to know how money works or understand it so you can kind of analyze is this a buy situation or is this a rent situation? That's why I want and the why so you can quickly look at it and go, wow, with these interest rates, with these housing prices in this area, probably ought to take advantage of this moment in time and just rent. But then keep my eyes out because at some point, maybe the pendulum swings the other way or maybe in that community because different communities have different personalities on even what the cost of housing is. You can, if you know where you are in the system or know where you are in the location, location, location of the real estate, you can quickly analyze and figure out what's best for you.

[Ruby]

BRITT M. Thank you for the question. If you'd like a moneyguy tumblr, email winneroneyguy.com and we'd love to send you one just as a thank you for asking.

[Brian Preston]

Well, and the reason I was thinking about this is because like Beau and I do commercial real estate and there's some properties that are intriguing at first when you find out they're coming on the market, super cool properties and you get excited. But then when you back test and you do the math on you're like, well you could never buy that because the tenants won't be able to afford to pay the rent for what the premium is on what the cost of the real estate is now. And that's why, so I think about those things, I'm always thinking about that and what is, you know, because that's what, that's what if you wonder why things get more expensive too is because every time a property sells it has to be reset. You know, this goes for commercial, this goes for residential. And, and that's why you're trying to find the arbitrage of finding somebody who bought that real estate with a low interest rate pre2020 because those people are sitting pretty in a pretty good situation and can pass those savings potentially on to you now. Because there are a lot of, there's a lot of inefficiency in residential real estate is because like we had, we had a house here in this, I hate it that this firm let it go. Yeah. Because there was, there was a single family house that was two miles from our office and the, the owners were artificial. They knew their rent was low, but they was more about the quality of the tenant that was then that they don't try because they were going to keep this house. This was going to be their house that they, they, it was like their first house that they started their family. They moved away because of work. They wanted to keep this house because they thought someday they might come back to community. So they were on purpose keeping rents reasonable so they could attract really high caliber people. And you, you need to be on the lookout. I know that that's a needle in the haystack, but I'm just trying to tell you how you make the most out of, you know, hard moments because you Might get lucky. Luck sometimes is better than being good. So pay attention to these things. Yep.

[Ruby]

All right, we're going to do another question from Chris H. It says, hey, MoneyGuy team, my wife and I, 31 and 35, have 388k in retirement, all in equities, low cost index. Do we need to be more diversified or is it okay to be this far out on risk at our age? Our income is 185k.

[Brian Preston]

They're doing really well.

[Bo Hanson]

You're doing awesome. Here's a question I'd ask Chris, and this is not incredibly uncommon because I would argue at 388,000, you are crushing it. You likely are not quite at the boiling point, critical mass. At that point, you're close. So a lot of times we tell people, hey, in this stage, in this phase of your wealth building, you can look for a really, really simple solution like low cost index funds or oftentimes like target retirement index funds, because it does some of that natural allocating for you. My question for you is, if now is not the right time, and I want you go and think about this, to diversify, to spread out, to take some risk off table. When is, is it 35? Is it 40? Is it 45? Because so often, and this happens all the time, we'll have people reach out to us and they'll have big portfolios and they'll be in their late 40s, mid-50s. Hey, guys, I've got 2 million, 3 million, $4 million invested and I've been a great saver. And we look at it and it's all equities and we're like, well, why did you never take any of the risk off the table? And they say, oh, well, because this strategy I had worked so well and works so well. It works so well. And that's true until it doesn't. That's why whenever you look at your portfolio, you have to measure not only your risk tolerance, but also your risk capacity. It's not just about how much risk can you handle, it's how much risk should you handle. So I don't necessarily have an issue with your portfolio being all equity at that size. But I would be thinking, what are your trigger points? Is it 35? Is it 40? Is it half a million invested? Is it a million invested? And so long as you can be honest and truthful with yourself about when that's going to happen, I think it's okay. But you probably ought to start having those thoughts.

[Brian Preston]

Well, and it also, it comes back to the financial order of operations. You know, one of the things that I always remind people, by the way, I didn't give that a proper shake. There we go. This thing, I want to make sure it's still working is that don't sleep on the fact that steps one and four. Is your deductibles covered in emergency reserves. Is that because it's somebody who's making your level of income? Now, we've already taken off what the assumptions were, but I remember they were making how much per year?

[Bo Hanson]

185,000.

[Brian Preston]

$185,000 a year. So if we take half of. Basically you just say if your cash Reserves was like 100 grand and you said your portfolio was 388.

[Bo Hanson]

388, yep.

[Brian Preston]

Yeah, so I got that part right. I mean your true risk. If you had a fully funded emergency reserves, Even though you're 100% equity, the risk of your financial situation might be not as risky as you because you followed the financial order of operations and you had enough cash. So if you had emergencies or bad things happen. Now look, you're getting into the weeds of how do we maximize the investment portfolio to max. But I always say these things are all working together. It's not only just what's going on with the investment portfolio, but what is going on from a risk standpoint with your entire financial order of operations. So you can make sure that you're not skipping steps. That would be more of my concern is skipping steps and being that aggressive than just making sure. Hey, is this the time I need to go buy 15% or 20% of bonds? I think there's a bigger question to ask that ties into the financial order of operations. Love it.

[Ruby]

That's great. Hey, if you want to dig deeper into these financial topics or if you want to work for us, go to moneyguy.com and yes, I said that right. We have a whole resource page for full of free resources diving deeper into everything we talked about today. We also have some new job postings up on our join the team page. We've got a video editor and a content developer role in particular that we're looking for right now. So if that's you, we would love to talk to you, would love to see your application. So be sure to go to moneyguy.com for all things moneyguy and keep letting us know what you want. Keep tuning in on Tuesday at 10am Central. We love talking personal finance with you, answering your questions and hearing about the things that you're thinking about. So hopefully we can speak to it and help you build just a little more confidence each time.

[Brian Preston]

And there's a clips channel.

[Ruby]

And there's a clips channel.

[Brian Preston]

Where's that at? Look at those pictures.

[Ruby]

Oh, you're right. I forgot to announce you're the one with beta dream.

[Brian Preston]

Still time to let me know where we're at.

[Ruby]

We are at 1,458 subscribers on our brand new Money Guy clips channel.

[Bo Hanson]

Almost 1500. That's great.

[Ruby]

We like it.

[Brian Preston]

So I like that. I also love the Rapid Fire segment. I feel like we packed a lot into into this, this show today. Thank y' all for supporting us. It means the world to us as we keep doing scary endeavors like even launching a brand new channel so that we can clean up the feed for you so you can actually know what's long form content, what's short form. We listen to you guys now. We sent and by the way, if you could seen our content meeting this morning, we even poke our head into that Reddit thread every now and then just to keep an eye on what those discussions are. And you guys, you're witty, you're funny, you're smart. Make sure you're not sleeping on those job postings that we have because I know that our next, you know, team member who's going to join the family is probably lurking around on those Reddit threads and we'd love to have you apply. So I'm your host, Brian, joined by Mr. Bo Reby and the rest of the content crew. Money Guy Out.

[Bo Hanson]

The Money Guy show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance and compliance with the Security's 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 involved.