This 401(k) Trend is ABSOLUTELY DEVASTATING (And Getting Worse)

Summary

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Podcast Summary

Money Guy Show:

Episode: "This 401(k) Trend is ABSOLUTELY DEVASTATING (And Getting Worse)"

Hosts: Brian Preston & Bo Hanson
Date: April 8, 2026

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Episode Overview

In this episode, Brian and Bo spotlight a disturbing trend in 401(k) plans: a growing number of Americans are withdrawing funds early, threatening their long-term wealth-building prospects. The hosts break down why the 401(k) is essential for financial independence, the devastating impact premature withdrawals have on future nest eggs, and how listeners can avoid these mistakes (and help others do the same). As always, the episode is filled with actionable advice, relatable anecdotes, and a healthy dose of dad jokes.

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Key Discussion Points

1. The Power and Peril of the 401(k)

• 401(k)s are central to wealth-building:
  • Free money via employer match
  • Automated savings and strong tax benefits
  • "More than 80% of employer plans now offer Roth contributions" ([01:49], Brian)
• Statistics on Millionaire Status:
  • 665,000 401(k) millionaires as of early 2026 (up from 537,000 in 2024 and 422,000 in 2023; source: Fidelity)
  • For most people, the 401(k) is “the first account that gets them into the two comma club.” ([02:33], Bo)

2. The Devastating Trend: Premature Withdrawals

• Alarming Withdrawal Rates:
  • "For every single dollar that flows into a 401(k), $0.40 comes out as a premature withdrawal on average." ([03:36], Bo)
  • 6% of workers took a hardship withdrawal last year, up from just 2% pre-pandemic—an upward trend for six consecutive years ([05:59], Brian)
• Why It Matters:
  • Hardship withdrawals "rob your future self." ([05:59], Brian)
  • Legislation has made withdrawals too easy, intended to help but may ultimately hurt long-term security ([05:59], Brian)

3. The Math Behind Early Withdrawals

• Premature withdrawals destroy future wealth due to both the loss of compounded growth and associated taxes/penalties.
• Examples:
  • "The average hardship withdrawal is around $1,900. For a 30-year-old, that's effectively $44,000 lost at retirement; for a 20-year-old, close to $84,000." ([07:54], Brian & Bo)
  • “Was that vacation or plane ticket really worth $44,000 for a 25-year-old?” ([08:10], Bo)

4. Proactive Solutions: How to Avoid Financial Sabotage

Build Emergency Reserves

• "If you have an appropriately funded emergency reserve, you don't have to raid your 401(k) in a crisis." ([09:06], Bo)
• 3–6 months of living expenses in liquid cash; closer to 3 months if you’re highly marketable with few dependents, closer to 6 if you have a single income or high fixed costs. ([10:04], Brian)

Control Lifestyle Inflation and Follow the FOO

• It's okay for your lifestyle to improve—but grow it within reason (“inside the parameters”; e.g., car-buying rules [23/8], house rules [3/5/25]) ([11:08], Bo).
• “Don’t get the financial order of operations out of order.” ([12:04], Brian)
• Download the "Financial Order of Operations" resource for guidance ([12:08], Brian).

5. The Role of Financial Education and Tools

• New Resource: The Money Guy Parenting Guide—helping spread financial literacy and wealth-building concepts to the next generation ([13:18], Brian & Bo)
  • “If we change the kids, we can change the world.” ([16:43], Bo)
• Compound Growth Demonstration: Example showing how small amounts saved in youth can snowball into huge sums, reinforcing the power of starting early ([14:26], Bo).

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Notable Quotes & Memorable Moments

• “For every single dollar that flows into a 401(k), $0.40 comes out as a premature withdrawal. That’s just devastating.” ([03:36], Bo)
• “When you distribute that [old 401(k) after a job change], you pay ordinary income tax and a penalty. And that happens over and over again.” ([04:55], Bo)
• “Is that thing you pulled $1,900 out for worth $44,000 in your future?” ([08:10], Bo)
• “You can turn emergencies into inconveniences if you do the hard work of building your reserves ahead of time.” ([10:04], Brian)
• “Don't get the financial order of operations out of order... It's like food—it just doesn't taste the same!” ([12:08], Brian, launching a dad joke)
• Dad Jokes & Rapid Fire “It Does Not Depend” segment (approx. [39:24]–[48:31]): Brian and Bo attempt to answer questions in 30 seconds or less, without saying “it depends,” while working in dad jokes.

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Timestamps for Key Segments

• Devastating 401(k) Trend Introduced: [01:04]–[02:33]
• Why 401(k)s Are Critical: [01:49]
• The Premature Withdrawal Crisis: [03:36]–[05:59]
• Trend Data & Context: [05:59]–[06:56]
• Math of Withdrawals: [07:54]-[08:27]
• Emergency Reserves & Proactive Planning: [09:06]–[10:04]
• Lifestyle Inflation & Rules: [11:08]–[12:08]
• Financial Order of Operations & Resources: [12:08]–[12:36]
• Parenting Guide Launched: [13:18]–[16:43]
• Rapid Fire Q&A and Dad Jokes: [39:24]–[48:31]
• In-depth Q&A on Planning, Net Worth Statements, Asset Transfers, Home Purchases: [30:37]–[63:08]

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Actionable Takeaways

• Never treat your 401(k) as a piggy bank—the long-term cost is huge, even for “small” withdrawals.
• Build a robust emergency fund to stave off desperation moves during emergencies.
• Don’t let lifestyle creep compromise your security; stick to car/home/insurance rules.
• Educate yourself and your circle: Use free resources like the Financial Order of Operations and the new Parenting Guide at moneyguy.com/resources.
• Be a financial ambassador—spread these lessons to friends and family, since many are making these mistakes unknowingly.

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Practical Tips and Listener Q&A Highlights

• Net Worth Statements: Keep a detailed, regularly updated net worth statement and share access basics (like password managers and key contacts) with your spouse ([30:37]–[34:26]).
• Transferring Old 401(k)s: Temporary time out of the market (a week or so) is mostly noise; focus on minimizing the gap and consider in-kind transfers ([57:31]–[60:51]).
• Housing & Cash Flow Rules: Use 3/5/25 for housing; shop insurance to keep overall costs within guidelines ([36:01]–[39:02]).
• Home Improvements: Financing energy-related improvements like windows can be reasonable, especially with strong financial footing; don’t treat them with the same rules as car purchases—use common sense ([61:30]–[62:59]).
• Teaching & Influencing Others: Use stories and easy-to-understand numbers to make compound growth real for younger audiences ([24:08]–[26:09]).

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Final Thoughts

Brian and Bo’s message is clear: Use your 401(k) responsibly, play the long game, and leverage free tools and community to stay on track—for yourself and for the next generation of financial mutants.

Memorable sign-off:
"You can pull up your personal finances and live your best life with the financial order of operations." ([64:27], Brian)

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Further Resources

• Download the Financial Order of Operations
• Parenting Guide: Raising Financial Mutants

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This summary captures only the main educational portion of the episode and omits advertisements and extended tangents.

Transcript

[A]

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[B]

K Pop Demon Hunters, Saja Boy's Breakfast Meal and Hunt Tricks Meal have just dropped at McDonald's. They're calling this a battle for the fans. What do you say to that, Rumi?

[C]

It's not a battle. So glad the Saja Boys could take breakfast and give our meal the rest of the day.

[B]

It is an honor to share.

[C]

No, it's our honor.

[B]

It is our larger honor.

[C]

No, really stop.

[B]

You can really feel the respect in this battle.

[A]

Pick a meal to pick a side

[B]

and participate in McDonald's while supplies last.

[C]

There's a trend with 401ks that is going to be devastating for many, many not mutants, but the folks 401ks if they're not careful.

[B]

Brian, I am so excited. Thomas.

[C]

It's called a run on in.

[B]

That was. It was gone. I was. I was on the edge of my seat. I was waiting for the end of it. I am so exc. Excited to talk about this though, because I think this is something that we can improve and something that we can change and something that we can make you guys aware of because it is no Secret we love 401ks for many financial mutants out there, it is one of the most powerful wealth building tools that you have in your financial tool belt. And yet there are some people in our opinion that are screwing it up and may not even realize.

[C]

Well, I think, look, let's not keep it a secret. Why do we love 401ks is that these things, first of all, free money from your employer. Anytime somebody's going to just prime the pump and give you free money, you got to get in there and get that. They're also automatic for the people. Meaning if you're trying to actually make the good habits as easy as possible, there's not many things that are more automated than setting them. Getting a 401k. Also love all the tax benefits. You know, now that you can do roth with your 401k, I think it was greater than 80 plus percent of employer plans now offer Roth contributions. There's just so many things to get excited about and then to find out that People are just cutting the knees out right from this wealth building opportunity. Just makes me sad.

[B]

Well, most people, most millionaires that reach millionaire status actually do so inside of the 401k account. It's the first account that gets them into the 2 comma club. And according to Fidelity, right now there are 665,000Americans that are 401k millionaires. That's up from 537,000 at the end of 2024 and up from 422,000 at the end of 2023. So things are moving in the right direction. 401ks are getting bigger. And one of the reasons they're getting bigger is because they are such amazing tools and vehicles. And yet there is this like alarming and frightening statistic that exists. And it's so funny because Vinyl just said this inside the chat. He goes, hey, this doesn't apply to any of the people in here. This doesn't apply to us. Why are you guys talking about this if this doesn't apply to financial mutants? And I, I'm actually of the opinion, I think this probably does apply to financial mutants because this statistic would not be true if a lot of people. Maybe it's not in the big gravitas way, but we know that right now, Brian, for every single dollar that flows into a 401k, $0.40 of that comes out as a premature withdrawal on average.

[C]

Well, and to help Vinyl out, I mean, look, I'm of the age. I don't think they do this anymore after school specials. I mean, if there was ever anything going on in society, you know, they would put on these after school specials like it was a psa, you know, on all the. So you could avoid the eating disorders or make sure you're not playing with matches and other things like that. So it is important for financial mutants to understand because I think even financial mutants fall into this trap is that if you get into moments to where you're trying to cut the corner off because we just reacted to a bunch of content this morning. People were using home equity lines to pay for cars. People were using 401k loans to buy boats for the Virgin Islands. Just silly, silly stuff. I think it's important to. Yes, to cover these things. Not only also so you guys can be the ambassadors because I guarantee you every one of you guys has friends and family that are falling into this trap and it's on you. We can only tell reach so many people.

[B]

That's right.

[C]

I'm counting on my financial mutants to also use some of these stats and the data points to make sure that people are avoiding these traps.

[B]

And we're going to talk about one specifically. But I just think in general, we've seen this with our client, and by the way, our clients are like cream of the crop type folks who've had some financial success, made good decisions and, and even they have fallen into the trap early in their career where they change jobs and all of a sudden that $20,000 they had in their 401k, oh, well, I changed jobs. Well, now I can just, oh, instead of rolling it over, I'll just distribute that. Well, when you distribute that, you pay ordinary income tax and you pay a penalty on that. And I think that happens over and over and over again. But there is an alarming statistic taking place that is happening that I think is it's become too easy of a release valve to activate right now. 6% of workers in 401k plans, this is according to Vanguard, took a hardship withdrawal last year. So 6% of folks have this special provision where even though you're not supposed to be able to pull out money from a 401k while you're participating in it, there's a little carve out that says in case of emergency, you can do this. And I think too many people are

[C]

doing it, but in context matters because you're like, well, okay, 6%. Tell me, historically, what, what does this mean? Is that because this is back to why are we doing a PSA on this? Why are we doing the after school special? Is because this is an alarming trend that every year for the last six years has gone up. I mean, just to give you guys some context, guys, pre pandemic, this was like 2%. Now here we are at 6%. It's gone up every year for the last 6%. I think there is too many people out there in the public world who are looking at this piggy bank of a 401 and they're basically robbing their future self of the opportunity. So we got to make sure we let people know, be careful. And even some of the tax legislation, I think about some of the tax bills that have come out have made it way too easy. And I understand they're very noble in the way they're. They're doing the narrative on this. But still, at the end of the day, this will create the ripple effect that you'll have less money in the future if you're not careful.

[B]

And look, you've heard us harp on this before. You know that we really dislike 401k loans. These hardship withdrawals are, are even more devastating because what ends up happening with these is you actually are taking the money. You know the, you can think of about a 401k loan. You're kind of like putting your soldiers on the sidelines, your players on the sidelines. With a hardship withdrawal, you're actually taking them out of the game altogether. And it is a costlier option over the long term. Because Brown, we talk all the time about the wealth multiplier and we use it as sort of this educational tool. We say that for every $1 a 20 year old invest, it can turn into $88 by the time that they retire. It's such a valuable idea of thinking about that money growing. But when you flip it around and you think about the alternative that for someone who pulls a dollar out of their 401k, think about how that magnifies on the negative side.

[C]

Well, you don't even have to. We, we've, we've done the math for you. We went and looked this up. Is that the average or median hardship withdrawal in around $1,900. To put that in perspective for a 30 year old, they're basically taking $44,000 from their retirement for that $1900.

[B]

Think about that. Was this 1900. I'm trying to think about something that costs $1900. Maybe it's a vacation, like go, maybe it's a plane tickets. Were, was that thing, was that singular cost worth $44,000 for a 25 year old?

[C]

It's close to $84,000 for the 20 year old. So this is for the cast of Stranger Things. You know, started out as little kids but they stretch us out so long they're all 20 years old. When it comes out, $168,000. You can see how the impact of this is, is you want to keep your army of dollar bills working. So we were like okay, that's enough. We've lamented, we've shared the trouble. How do people protect themselves? So you financial mutants, if you're not following this trap, how can you share with, with your friends and family so they don't fall in the trap? Let's avoid the desperate decisions. And the first thing you do is be proactive, not reactive. We love emergency reserves.

[B]

Yeah. And I want to be clear. You know, I think you mentioned this, but if we didn't, you know, one of the, some of the top reasons cited for why people pull out these hardship withdrawals is not for the plane tickets or the travel they say, hey, it's for avoiding foreclosure and eviction or perhaps medical expenses or something along those lines. Even when the unknown unknowns come your way, if you're doing the right things, you can do exactly what Brian said. You can stave off that desperation by being proactive and thinking about things like, man, you know what if I do have an appropriately funded emergency reserve, if I have three to six months of my needed living expenses in liquid cash, when that, not when that foreclosure notice comes, that's a little too aggressive. But when that medical thing comes or when the job loss happens, or when the fill in the blank thing takes place, I don't have to go to my 401, can't have to go to my retirement accounts. I have cash right there able to protect me when I need it the most.

[C]

Yeah, I mean, I know financial mutants fall in the trap thinking that cash is trash. But I'm telling you guys, you can turn emergency situations into just inconveniences if you do emergency reserve. So a lot of you, we always say three to six months. You know, it's. By the way, step one of the financial order of operations is going to be highest deductible covered. Step four of the financial order of operations is fully fund that three to six months. If you're trying to figure out my three months, my six months, we actually try to make that easy for you. It all depends upon how easy is it for you to replace a job. How many people are counting on this money. You can understand, obviously if you have highly marketable, it's only you and your household that you have to worry about. You have access to other, you know, break glass like Roth IRAs. I think maybe three months works for you. But if you, you know, the single family income, if you're, you know, you have a difficult replace job, if you have a mortgage or really high fixed costs, probably closer to six months. So make sure you're paying attention to those things so you can really avoid exactly what we started this thing to close the loop. Those desperate decisions that make huge mistakes.

[B]

And another thing we want you thinking of, while things are good, while things feel comfortable, while you're in an okay spot, be aware of lifestyle inflation. Now not all lifestyle inflation is bad. You know, lifestyle creep gets this real negative thing. We want your lifestyle to increase over time. We want your 30s to look better than your 20s and your 40s to look better than your 30s. That is an okay thing. So long when you do it inside the parameters is why? We have rules like 23. 8 for buying a car. If you buy a car inside of 23. 8 or if you buy a house inside of 3, 5, 25. You're going to prevent yourself from having such a big lifestyle that when something comes your way, when an unknown unknown happens, now you have to start reaching for the crazy stuff. And I've start going into your 401k to get that. You did not lifestyle your way out of financial security and don't get the

[C]

financial order of operations out of order.

[B]

That's right.

[C]

You know what happens? This is for all the dads out there. I'm going to turn this into the greatest dad joke ever. If you do the financial order of operations out of order. Oof. It just doesn't sound the same as food. So let's make sure we get the financial order of operations done in the right order. You too can go download your own copy. Go to moneyguy.com resources. We've done the heavy lift for you. This thing is all terrain, all weather. It will tell you exactly what to do with your next dollar.

[B]

I love it. Sometimes we just need a reminder. You guys are. Oh, this is. This isn't us. You're not talking to us. We're financial means and we totally get that. But we love that we get to sit here and be that voice of reason constantly reminding you that's the better way to do money. If you want to be someone who is constantly reminded and you're not subscribed to the channel, make sure you subscribe right now so you can know when we have fresh new content coming out. Because on this channel there is only fresh new content coming out. Every time you get a notification, you can know it's something you have not seen before, which we are so, so, so excited about.

[C]

So there's even new stuff to pop off about it. So is. Are we going to introduce that today?

[B]

Are we gonna. We're gonna pop off first?

[C]

Oh, I'm sorry.

[A]

Yes.

[C]

I was the worst secret in the world.

[A]

You gotta see me around Christmas about the same thing. Are you talking about a new free thing that you talk about? Absolutely. Absolutely no. So this one, calling all members of the messy middle. This one is for you right now on moneyguy.com resources. There is a brand new to the public resource called the Parents Guide to Raising Financial Mutants. So this is going to help you really find a lot of the things that we talk about here and there, right? All in one place, all about parenting. What? It's all what you need to know about things like being financially prepared to have a child, wealth building strategies and account types for kids, tax credits, how to teach your kids about money and more. So go check that out. It's free moneyguy.com resources and I'm going to just be completely honest with you. It's a very robust free resource. It's like 15 pages of content. It's all beautifully designed, really easy to navigate. We really just wanted this to be a great place to point parents and members of the messy middle or anyone who thinks they're about to enter that type of stage of life. This is for you. So that's brand new, free on the website moneyguy.com can I tell you sort

[B]

of of a real world thing that happened to me last week that I think is awesome. I was, I was in a van with seven other entrepreneurs down by the river. No, it's not down by the river with seven other entrepreneurs. And I was, I was in the back and I'm checking my emails and an email comes in and it's our, our parenting guide. I was like, it just released. And so I just kind of mentioned, hey guys, I just released this and somebody was like, hey, I've been meaning to ask you. And they asked me some question about kids and getting them excited and custodial Ross. And they were like, but hey, I just, I'm trying to figure out how to connect it, how to make it. I'm like, well, one, let me give you a copy of this parent guide and two, let me show you this. And literally on the van, there was the, there was the guy driving, the guy in shotgun. Then everyone else just kind of crowded around me. I pulled out my phone and I went to moneyguy.com resources and pulled out our wealth multiplier. And I started saying, okay, how old's your kid? All right, 13. You said your kid's got some birthday. How much money does your kid, Let me show you what that $4,000 your 13 year old could turn into. I was like, you know what's even cooler? I'm going to go to our compound interest calculator. You said your kid, he's cutting grass right now. How much he makes for 20 bucks. Let me show you what happens if he saves. And I, and you, their eyes were just like this big. If you have people in your life that you want to get excited about personal finance that you want to show them and see the light bulb go off, that is exactly what our tools on the website were for. And it's not. They're not just lipstick. I actually did this in real time with real human beings, and it was awesome.

[A]

So shout out to you for living the perfect, like, example money guy scenario.

[C]

Visual though, of BO. I love that adult church camp. Like, they're all in this minivan. They're all in this van riding down to. Every time a semi rides by, they're like, trying to get the semi to blow the horn. Oh, that's, you know, I just. It cracks me up. I had all kind of visuals going off.

[A]

That's fantastic.

[C]

What type of vehicle was it?

[B]

It was a big. It was like a big, like, touring van. You know what I mean? Where, like, you got. It's like, I guess probably 12 seats, but in the back you can put all the storage stuff.

[C]

So is this like a hospitality type van where, you know.

[B]

Oh, yeah.

[C]

TV up front.

[A]

It was nicer than the van that we.

[B]

It was nicer than the van we took on retreat. But it wasn't like, you know, it just. It just gets you like a box truck.

[C]

We basically just told everybody, bring your own folding chair and jump in.

[A]

You did, and you were like, don't pack too much. There's only so much room.

[B]

The parenting guide is awesome. I. I am so excited because do you recognize how much we can change the world if we begin by changing the kids? The next generation? What's so funny is as I was explaining this to all the people, there was this, hey, why isn't this. Why don't they teach you this in elementary school? Why don't they teach you this in high school? Why don't you graduate college Knowing if I would have known all this back then, man, we have an awesome opportunity to be able to do that. I hope that we change the future financial mutants of the world. Gets me super stoked.

[A]

Agreed. Agreed. And with that, we are going to dive into answering your questions. So drop them in the chat. If you have a personal finance question. We're going to kick it off with Michael. He says, I bought a car with 268 before becoming a financial mutant. I am two years into the loan term. Should I count it as a learning experience and keep the car or adjust and sell according to the rules? Tricky question, but great one.

[C]

Financial triage is what I mean.

[A]

What if you're finding money guy and you've already made some mistakes? You're kind of trying to back into where you start in the foo and in the car buying rules.

[B]

Now I want to. I want to figure this out. So I'm going to Kind of reverse engineer some math here. So you said you bought a car with 26, 8. So 20 you put down greater than 20%. Okay. I love that. The 8 based on the six year amortization you did, the 8 was fancy car. Right? Like the now, now here's what, I don't know how close to the 8 was it? Because he didn't, you know, it could, this could have only represented 2 or 3% of his gross pay. He just knows that it's not more than eight, which I like. The very first thing that I would do is I would recalculate how much I'm paying on the car if I were going to get it inside that 36 month time frame. So we said what you're two years into the loan term, what would I have to do? How would I have to change my situation to have this car paid off in the next year? So that way I did it inside of 36 months. And am I able to do that without going above and beyond the 8% of monthly gross income? Now if the answer that's no, then I want to start thinking through, okay, well how much to owe on this? What's the interest rate? Should I potentially pay more on it so that I can have it paid off in one month? Maybe have emergency reserves or cash somewhere else? I don't know that you have to like sell the car. Now you may, and that may be something, but I don't want you to default that the only two options are keep this bad decision going and rock and roll with it or sell it. I think there's probably somewhere in the middle that could potentially make sense.

[C]

I mean, yeah, if you don't course correct now you're basically dragging this bad decision on for another four years. And it's the time lost that drives me crazy on this is because if you go look at our wealth multiplier, especially did he share Michael share his age with us? I don't think I don't have his age. But I'm assuming this sounds like an early decision, that wealth multiplier is definitely impacted and four years is too long. So self correct asap. And if you know that's one of those things, I'll give you a little grace that if you look at this and go, man, I don't think I can correct this in 12 months, but maybe I can in 14. But if you look at it and go, no, it's going to take every bit that I would. I just, there's no extra money in my budget to get this thing back under 23 8, then you might have bought too much car. And I know Bo said we don't want you to sell. That's not your first default. But if you go default to it, you go through the actual exercise and do the math and triage your situation. This is what's keeping you from funding a Roth IRA and actually building your army of dollar bills. Then, yeah, sometimes you have to do some tough love. And remember part of the hedonic treadmill, when you have good decisions, you're supposed to spread those out as much as possible so you get all. You know, you squeeze every ounce of goodness and enjoyment and dopamine hits when you're. When you're buying, like, new cars, new houses, and those type of things. But when you're dealing, facing bad things in life, like you made a lot of consumption decisions, then I would tell you, cut, cut, just cut it off, you know, just because you'll get back to your base level happiness that much sooner if you make the hard decisions earlier and often so that you don't just string along the bad hardships that you'll have. Getting your financial life in order.

[A]

Michael, thank you for the question.

[C]

I'll show you something, Bo. This could be kind of a fun little game to play.

[B]

Oh, wow.

[C]

That we'll see.

[B]

That was not thought through. That was not thought through at all.

[C]

I feel like we have a countdown.

[B]

You know what? I got you.

[C]

I got you. I got some.

[B]

I got you, bro.

[C]

We might be. It's a final countdown to see battery power.

[B]

He might be going digital to analog.

[C]

You know, like, I have a. I have a college daughter. I can't say that much longer because she's graduating in May.

[B]

You want to have an, like, an adult.

[C]

Like, a fully adult. You know, we still. I get notifications, like, when her. Her. Her battery on her phone is, like, at 5%. Really, you know, and then. And then I will. You know, we. Anybody who's got teenage kids, you know, you. You'll. You'll know what I'm talking about, what apps we're talking about. But. And. And whenever we're in content meetings with Ribi, she is guilty of all.

[A]

Not whenever. It just happens to me from time to time.

[C]

I am the opposite. I am, like, fully charged. You know, it's. It's like, I'm not worried about battery life. You know, we'll just go buy a new product before we worry about the whole battery life. But today, you know, we're running. We're in the final countdown.

[B]

So you drive 3%, you drive battery powered automobile, right? How low will you let that? Like, like when I, when I, when I was growing up, my grandparents, my grandpa never let, let it get below half a tank. If it was half a tank, he was about to run out of gas. So we'd always fill up at half a tank. You do that with the, with the test?

[C]

No, what I do is, you know, I'll charge it up to 80% and then that will last like three or four days. When it gets down to like 35%, 40%, I'll plug it in at night and then it's back to 80%. Good for the three or four days.

[B]

What's the lowest you've ever let it get?

[C]

Actually, you were in the car with me when we went to Kentucky. We went to Kentucky and there was supposed to have been a destination charger at the hotel. And we pulled up to the destination charger, there were destination chargers there. But when we plugged them in the car, they had zero power to them. You know, they had, they had cut the power to these things, so they were not working. So we did our speech in Kentucky at Murray State and then we, and I think it got down to. It was 1 or 2%. It was scary.

[B]

We have another, a fellow friend, content creator here in town. They actually broke down the side of the road in his. Remember that, Remember that story?

[A]

I don't know if that's called breaking down, but yes, he ran out of

[B]

juice on the side of the road. That's as broke down as you can get in an electric car.

[A]

You guys are funny.

[C]

We made it though. And there was. What was the name of that restaurant? We ate at the restaurant. It was a ripoff of Waffle House, but it was.

[B]

Oh, the American Diner. Isn't that what it was?

[C]

It was pretty awesome.

[B]

The American Diner that was out of this world.

[C]

Instead of you having to choose between grits and hash browns, they just give

[B]

it all to you.

[C]

It was an and it wasn't or it was and you get both. I think you also got sausage and bacon. I mean it was like everything.

[B]

It was so good.

[A]

All right, we're gonna go on to the next question. It's from OG Laminated Foo. I think we've got a charger for Brian, so nobody panic. We will make sure he stays fully charged and able to answer your questions. But the question from OG Laminated Foo

[C]

says, I love that name.

[A]

I am a 24 year old college student preparing a speech for my classmates on financial literacy and the Power of compound growth. What message would you focus on to actually help change their futures? Speaking of changing the lives of the next generation, Beau, what would you say?

[B]

Okay, the number one thing that I would try to get across because whenever I give a speech or a talk, I always want to think about when the audience leaves. What are these small nuggets I want them to take? I'll generally have like a big nugget that I want them to take and then a few little like small nuggets I want them to to take. In this particular case, OG the big nugget I would want them to take away at 24 years old is just do something. You don't do everything right. You don't have to do all the things right. You ain't got to get every decision perfect. But if you can just start doing something, the 24 year old that starts doing something, even if it's not perfect is going to be way better off than the person who waits until 30 and does everything perfect just because time matters that much. So I would just get the idea across. Hey, if it's 20 bucks a month, 40 bucks a month, 50, whatever the number is, just start doing something. To begin saving for the future, I

[C]

would remind them of the three ingredients to wealth. There's your presentation is because you have to. Nobody builds wealth. If you can't get component and ingredient number one. Discipline. You have to live on less than you make. If you can live on less than you make, that creates margin, which leads to having money. Which is ingredient number two. If you put that money to work with enough time. The most valuable of your wealth building ingredients is that magical component of time, especially for somebody in their 20s, is because you realize that compounding interest and compounding growth really is the eighth wonder of the world. And it's magical because your money can truly work hard. Harder than you can with your back, your brains brain or in hands backs,

[B]

your brains and your hands.

[C]

But only Bo has multiple brains that work as fast as his brain does mine. I'm like, we're working at like 40, 30% and we're hoping that it's enough to pull us through.

[A]

You guys are funny. Thank you, Og Laminated foo for the question and the username crisis.

[C]

Averted, by the way. Remarkable. Remarkable, by the way. I thought it would show a charge sign, but now I'm just seeing the number going up. It's like, you know, coming to life.

[A]

That's good, that's good. I'm glad to hear it. Well, hey, before we dive into Our next question. Submit your rapid fire questions, drop them in the live chat RF at the beginning of the question so we know that you want them to answer it in 30 seconds or less. I do have a little twist for it today, so we're gonna try that. So stay tuned. We'll do a question or two more.

[C]

That's probably why she was in the office rapid fire instead of sitting in that early content meeting. She wasn't there.

[B]

Twist.

[A]

You'll find out when we start the rapid fire segment.

[C]

Probably hammering in spikes.

[A]

Just a little twist, but I think you'll like it.

[B]

What would you do if she actually brought the shot collar? She's like, hey, we ordered this.

[A]

I would do it gust.

[C]

I mean I'm the one that put on the sunglasses last week in the, in the, the mullet.

[A]

I feel like Brian is down for, you know, what an adventure.

[B]

After, after that show we both donned the mullet and the, and, and, and the other accoutrement. Did we put that on socials? Matt, Was that out on social media? Yeah. So you gotta. If you're not on socials and you're not subscribed, you miss out on all those little extra.

[A]

I will tell you, our Saturday newsletter has some great behind the scenes stuff and all of our awesome financial content.

[C]

So I love that social media. They put out the sexiest man alive with me and a mullet. It is now the picture of one of my group threads. I go on a golf trip once a year with all my neighbors from Georgia and I love that trip. It's coming up in like a week and a half, two weeks. But now that's what they're. They're totally picking up.

[A]

The memes are strong with our marketing team.

[B]

Brian. I love being a business owner, but I think people underestimate how fast things move from I've got an idea to. All right, now we actually have to build this thing.

[C]

That's right. The idea is the fun part. But then you've got logistics, operations, marketing, all the stuff that actually makes the business run and work.

[B]

And that part can really slow you down. And it might even keep you from starting at all.

[C]

Exactly. Which is why having the right tools and the right partner can make all the difference. That's where Shopify comes in.

[B]

Shopify is the commerce platform behind millions of businesses around the world and 10% of all e commerce in the US from startups to popular brands like Chubby's and Allbirds.

[C]

And they really make it simple. You can create a clean, professional online store with ready to use templates and their AI tools help handle things like product descriptions and even improving your images.

[B]

They make it easy to build your brand, but they can also help you grow their email. Email and social media tools can help you get your brand in front of the right customers.

[C]

And everything works together so you're not bouncing between a bunch of tools on different platforms. You got inventory, payments, analytics. Everything's all in one place, making your life easier and your business runs smoother.

[B]

That's huge because it means you can spend more time focusing on the big picture and less time getting stuck in the weeds. That's how you actually build something that lasts.

[C]

Start your business today with the industry's best business partner, your business Shopify and start hearing. Sign up for your $1 per month trial at shopify.com moneyguy go to shopify.com

[B]

moneyguy that's shopify.com moneyguy so good, so good, so good.

[A]

New markdowns up to 70% off are at Nordstrom Rack stores now. And that means so many new reasons

[C]

to rack because I always find something amazing.

[A]

Just so many good brands. Cause there's always something new. Join the NordicLub to unlock exclusive discounts. Shop new arrivals first and more. Plus buy online and pick up at your favorite Rack store for free. Great brands, great prices. That's why you rack. All right, let's go to Seth McFoo's question. Lots of good usernames today. He says. I'm starting a document for my wife with a everything she will need to know if I pass, like life insurance accounts, etc. Any suggestions for how to structure this? What should I include? We're 30 years old in the messy middle with all caps. I think you guys have a lot to say about this, but it's funny.

[C]

Bo, you and I just had a conversation about some of this yesterday. I'll tell you Seth, one of the things that has been great for of course, let me start off with level set, foundational. Do a network statement. Net worth statement is going to be magical as a communication tool because it also leaves behind the breadcrumbs of what you have. Now let's get into the nuts and bolts of how you get access beyond your life if you just so needed to. We use a password manager my wife and I do. And I wanted to make sure she could get into all of our primary accounts if something should happen to me. And the thing is everybody's now using two factories or multi factor and she was like, well, how am I going to get into like think about your custodian or think about your bank. What I have found both my bank and my primary custodian allowed me to add my wife's phone number in addition to my phone number as, you know, those, you know, for security purposes. So now if she was trying to use the password manager to get into the account, we've actually added that to where she is not going to be kicked out because she couldn't pass the multi factor.

[B]

Yeah, I don't have a ton to add to that because I do the exact same thing. I do a net worth statement. I want to list out all the stuff that we own, all the assets, all the liabilities. I also put on there where they are. So I don't just have like Roth ira, I've got like Fidelity Roth ira and I'll even put like the last four of the account numbers. So if she's trying to shuffle through account statements or whatever, I want her to have some sort of identifying information to be able to find. Okay, this is where the checking, you know, and that's all about the institutions we use. Where do we bank? Where's our checking account? Where, where are our investment accounts, life insurance, where's the actual life insurance policy? Where's the digital record of that? And then I also go through her, with her, hey, I get hit by a bus. Who are the first phone calls you're going to make? Right. Like that's just something I want her to know. Hey, something happens to me, number one very first phone call, Brian. All right, Once you call Brian, then I kind of work through the, you know, down that list. And I think it's just more because I am the one who, who, who navigates the majority of our financial life and when we make decisions together. But I'm kind of like the, the implementer, if you will. I want her to know how she can get to and get access to everything that she's going to need. And so I just put it on and it's actually all on the net worth statement and then all in the footnotes page. So she has all that information in one place. And then I go over like any, you know, we also use a password manager, but also stuff like, you know, safes and that kind of stuff. Like I make sure she understands how do I get in there? What do I need to know? Where the document's housed, all those parts and pieces.

[C]

Yeah, that's why, if you want, by the way, if you're like, oh my gosh, I don't even know where to start with a net worth statement, we have a free one. If you go to moneyguy.com resources, we do have a free one. And if you want the same one Bo and I use, if you go to learn.moneyguy.com, we actually have a net worth tool. And don't skip out on the footnote page because that's where you lay out all the life insurance, the kids accounts, and all the other things that Beau was covering. And I even. We have a section where I have the, you know, people we work with, you know, and that can be your life insurance agent, it can be your property and casualty insurance agent. You can be your cpa, it can be your, you know, attorney that did all the estate documents for you. That stuff is very helpful so that you're leaving behind, you know, breadcrumbs. And then I always tell people if you. This is more. So if you got stuck with a situation where you just don't know what somebody had and they passed away. Tax returns are a great forensic tool to go figure out where all the financial resources and assets are as well. But that's. That's kind of when you're left holding the bag on something. This is. I'd rather you be proactive so, you know, you can get into the accounts, you know what's going on, and everybody has peace of mind.

[B]

Another silly one. And I just. This happened this past year, not only because, you know, I'm helping out a client who unfortunately, you know, lost her spouse. And one of the things that she's. It's like we pay off all of our credit cards. And I kind of knew, like, the ones that I used, but I didn't know all the credit card, like, all the different companies I need to reach out to and stuff that was in his name and in the business name. And so I just started kind of keeping an inventory. Hey, just so you know, sweetheart, this is all the stuff that we're attached to, right? Like, so, again, if something happens, these are all the places you need to go to know to look for stuff.

[C]

Did you do that under the liability? Like, even if you're paying your credit cards off, or did you put that under foot?

[B]

I did it in footnotes because I didn't want to, like, I didn't want to clutter up my network.

[C]

Plus, you're paying it off monthly.

[B]

That's right.

[C]

Because I actually, that's something I probably need to add to mine. I don't have that on there. And that's smart.

[A]

That is smart. And yeah, I agree it's not really a liability if you're not carrying the debt password.

[C]

Manager would hopefully help on that a little bit just because I've, I've labeled stuff in the share file, but. But it's more.

[B]

Just wanted to know, like, hey, okay, there's five credit cards.

[A]

Yeah, no, those were great thoughts. Great question, Seth McFu. Love that you're thinking through that and setting your household up for success. We'll do one more question and then dive into rapid fire. This question is from Tumblr enthusiast. Everyone is really going for the usernames today. My wife and I, both 27, are in step four. 5.

[B]

Let's go.

[A]

An escrow shortage made our new payment 33% of our gross income. Should we move on to step six? Or prepay principal to eliminate PMI and drop from 6.5% to 5.75%.

[B]

All right, you gotta let me think about this one a little bit.

[C]

Well, let me. While you're. While you're thinking about, there's another variable that's also going in because we've, we've even talked. There's several reasons. Housing's hard. We even have a show coming up that we're gonna be releasing to help people kind of know how to navigate this in this unique time. But also because you're 27 and it's not uncommon that people stretch things when they're at the beginning of the career because especially like a house, I'd ask you, what's the opportunity that if you took three years of your upcoming income, if you levelized out your income, are you closer to 25% then? Meaning that. Because, like, I come from a, you know, public accounting background, so my pay went from, like, apprenticeship where I was not making a lot of money. And then I started getting big jumps when I got my certifications and other things. I'd be curious if you have something in your career that's going to help minimize this because of upcoming income. And then I'd ask for other things that might in the current situation, mitigate. The situation is like if you live in a high cost of living area, but you have great public transportation and so you don't have the 8% that most people have on 23 8. Going to a car loan that can help get you through. Give you a little grace on this as well. But I will tell you that if you go through that exercise and you don't have it, we got a bigger problem then.

[B]

Yeah, one at 6.5% or 5.75% either one of those. I don't consider high interest debt. That's not really part of the question. I just want to throw that on there. For a home, I don't consider that to be high interest debt. I am a little curious. Assuming that your mortgage payment was inside a 25%, the escrow adjustment, jumping it up 8% seems significant. So I'd want to really dive into what was it that changed? And perhaps your insurance got a whole lot more expensive and more expensive insurance caused the escrow underfunding. So I may want to go shop my homeowner's insurance and say, okay, man, what? What happened? Why was that the case? I did this for myself recently. The last two years, I went and shopped all my property and casualty insurance, and I was able to save thousands of dollars a year by shopping my insurance. And as a result of that, because my homeowners was part of it, when I got my escrow notice, I got a refund check for over escrow and my payment went down. So it's kind of a nice thing. If it went up because your property taxes went up a ton, I'd ask, okay, is that right? Is that accurate? Is that reasonable? Is that something that I should appeal? A lot of people don't realize this. If you feel like you have received an inaccurate, I don't want to say unfair, that's the wrong word to use. But an appraisal that does not match market, you can actually appeal. The property tax record say, hey, this. You said my house went up in value this much. I don't believe it did. This is what the tax rate should be. And I would try to dive into why it was such a significant increase year over year. And then exactly what Brian said. If it's unlikely, I'm gonna get any reprieve there and my income will not grow to the situation where it's affordable. Now I gotta begin to make some decisions.

[A]

Yeah, those were great thoughts, Tumblr enthusiast. Thank you for the question. All right, we are going to dive into our Rapid Fire segment. Remember, the rules are Beau and Brian have a combined 30 seconds to answer your question and they cannot use the phrase it depends or any similar phrases or their time is canceled.

[B]

Both of our times are one of our times. Ruby, Just asking for the audience.

[A]

We will make the statement that it is both of your times. If one of you says it depends, you lose the opportunity to answer.

[C]

Ruby, I just want you to know I appreciate being your favorite. I bet.

[B]

I bet you do.

[A]

Thanks, Brian. Thanks. An added twist if you can work in a dad joke into your answer.

[C]

Goodness.

[A]

Since Brian started us off strong, if you can do a pun, a dad joke, any kind of joke, you get 10 points. And whoever has the most points at the end of the round wins.

[B]

It's going to be hard enough to do it in 30 seconds, but now we got to add humor into it. I'm up for the challenge.

[A]

Let's just see what happens. All right? And remember, at the end, we will let you have our maybe it does depend segment where you can, you know, belly a.

[C]

What I want to do.

[A]

Explain whatever you need to say that you didn't get to say. I will give you that. All right, ready to dive in? I'll read the first question and then 30 seconds will be on the clock. First question. Have you guys ever second guessed the order of the foo? If so, which step was it and why? And if not, why?

[C]

I mean, mortgage debt has been the hardest thing recently. Just because when we saw interest rates go up to 7%, that, that was one of those things. Like, that hurts a little bit. But then Bo and I had a conversation and I felt very comfortable that, no, we don't. We don't consider mortgage debt even as a higher debt because you can have the option to refinance.

[B]

We struggled a little bit early on. How do you prioritize Roth versus hsa? Are those different parts of the foo and we just said, no, no, I'll just put them all in the same bucket.

[A]

Nicely done. Next question. Why is espp?

[C]

Where was that dad joke?

[B]

I didn't have one so far.

[A]

Now you're both at zero points. Here's the next question. Why is ESPP in step two? Wouldn't it be bad if the stock went down below 15%? Stop the 15% stock discount. I can put 15% of my pay into this, but it would block a lot of my other. A lot of other of my savings. What do you think? Why is ESPP in step two?

[C]

Remember, it's usually on a lot of these ESPPs, it's the. It's the lower of the beginning of the quarter, the end of the quarter. So if it went down 15%, you'd probably be the beneficiary of the lower purchase price. And then remember, don't, don't miss, don't do. Oof. That's not a very good dad joke to foo. And the fact that we want you to have a process to where you're actually turning that money into other investments. Oh, did I take it all? I am so Sorry.

[A]

I'm so sorry, team. Does he get credit for that dad joke? Did we get enough? Did we get the full dad joke? Yes. Okay, we're getting nuts.

[B]

Brian gets 10 points.

[A]

Can we get him 15 points?

[C]

See? Oh, y' all are mean.

[A]

I was like, wait, what do you mean, mean? You're mean, frog. At the time,

[B]

I was like, all right, we're at 20.

[C]

You're answering the next one first. You take as much time as you want.

[A]

All right, next. Next question. I am 25 years old and recently got married. I have two times my income in life insurance through work. But should I be looking for looking at a term policy as well?

[B]

Oftentimes, yes. A good rule of thumb is that you should have 10 times your annual income in term life insurance coverage. That's again, that's a rule of thumb. It's not like a hard, fast rule, but that's a good place to start.

[C]

So let me go ahead and give you a secret to marriage. Yes, ma'.

[A]

Am.

[C]

That was my dad joke. It's bad when you have to label your comedy.

[A]

I thought he was gonna bring it back to life insurance, but that did not happen. Zero points for that one. But I really respect the effort. Thank you for playing along. Next question. What is your favorite step of the foo and why?

[C]

I like step five. I like the tax free growth and I like when I wrote Millionaire Mission, the Armageddon reference at the beginning of the chapter

[B]

Step seven. Do you know why step nine is afraid of step seven?

[A]

Why?

[C]

Because.

[B]

Seven, eight, nine.

[A]

Nicely done.

[C]

Your brain is amazing. Points for both. That is beautiful.

[A]

10 points for both.

[C]

That is brilliant.

[A]

All right, next question.

[C]

This is why you're a CFA.

[A]

Hi, team. I have access to both a 403B and a 457B after capturing my employer match. How should I prioritize contributions? How does the 457B that has a Roth option change the three bucket strategy?

[C]

I would, without saying the bad D word, I would go 457 because you can get access to it before you know it doesn't have an early withdrawal age to it.

[B]

And oftentimes 403Bs also have Roth options. So I'd want to see did my 457 and 403B both have Roth options, but holding them side by side, I would err towards the 457 as well because you get access earlier.

[C]

We didn't get to put a dad joke. And the only thing I would. Yeah, that one I might need to put and say a little Bit more.

[A]

All right, we'll make a note. Next question. Do you see yourself ever signing up for a prediction market for entertainment purposes only, of course.

[C]

The only way. I had an associate show me the arbitrage that you can run on these things. But then I found out how quick the providers jump in and limit your bets when they realize that you're running systems.

[B]

No, prediction markets. I just. It's more like gambling. It's. I don't see it a whole lot different than, like, going to the casino and doing that sort of thing. So that's something that you get utility out of and it's not causing you to go in a bad direction. That's fine, but it's not for me.

[A]

Nice to see answers.

[C]

We don't have the time. Put a dad joke in Brian.

[A]

I feel like at the very end, he's like, two seconds. What joke can I add? All right, next question. What are your thoughts on investing $500,000 from a 401k fund in a private real estate fund? I still have 1.5 million left in a 401k.

[B]

Investing the 401k assets in a private real estate fund.

[A]

Yes.

[B]

There's a lot of nuance there because when you're using qualified assets and you try to invest in private equity, there are some unique things that take place.

[A]

The nuance you were. I really should flag you for that.

[C]

No, personal finance is personal. I mean, we'll leave the porch light on for you.

[A]

Nice. He was basically like, I don't know. Go to aboundwell.com they'll tell you. I love that. All right, next question. If I want to buy a house in the next five years, what's the best place to put the down payment and why?

[C]

Well, you know, it's better to attract bees with honey. Never mind.

[B]

You just don't want to say.

[C]

Thing is not working out for me.

[B]

Cash is king for expenses that are going to happen inside the next five years. If you're 60 months in, I think building up in liquid cash for known expenses is likely the best decision.

[C]

Why did chicken cross the road get the other side? The dad jokes is killing me. This is not what I wanted. Like when we brainstormed all the ways we could make this more fun. Dad jokes, at least I could study up on beforehand.

[A]

10 points for Brian.

[C]

That's horrible. I should not get those 10 points.

[A]

You know what? Maybe next time we'll tighten up the rules. All right, last one. If you have the full cost for a house, should you put 20% down and invest the rest or pay in full and invest the would be mortgage payment.

[B]

Mathematically, you will come out better investing the larger balance earlier because it has longer time to grow. If you're just going to pay it in full and then invest the monthly payment, you're going to have a lot. It's going to be hard for that monthly payment. Ever catch the lump sum that you invested?

[C]

If. Since I can't use the D word. If you're under 45, you know, finance it. If you're over 45, pay cash.

[A]

All right. All right. That concludes our It Does Not Depend rapid fire segment. We are honestly, you guys came very close. I probably should have flagged your dancing around it depends. But I'm going to give you some grace today. I don't know why. Just feeling.

[B]

Speaking of dancing, you know how to make a Kleenex dance?

[A]

I do.

[C]

Put a little boog.

[B]

You put a little boogie in it.

[A]

Unfortunately, that does not count towards your points because it was not in an answer.

[C]

I love it because we didn't. I felt like that was. We did not have a lot of. I don't have a lot of dad jokes in me.

[A]

I really liked seeing you try, though.

[B]

It was honestly, seeing you try was probably my favorite part.

[A]

I will say Brian did win with 20 points.

[C]

I watch when I was on my last spring training old man trip with my buddies, we watched some fighting at the end of the night, you know, on one of the channels and I watched this boxer. The other guy was a better boxer, but this guy understood the rules and he was just, every time they lock up, he was over there just, you know, barely tapping him on the face. He ended up winning because he had so many his, his punch rate and his accurate, you know, an accuracy or percentage was higher. I feel like that's all I did. I was the guy who was, every time we lock up, I was, I wasn't really getting any shots in. Nobody thought I was funny, but I was playing the game.

[A]

You did play the game and I appreciate that. All right. There were a couple that you said you wanted to come back to in our maybe It does depend segment. Question 2. Bo, you didn't get to answer so I will give you a chance. It was about why are esp.

[C]

I wonder why you didn't. You must have passed out.

[B]

So ESPPs don't all operate the same. You said, oh well, what if the. What if the Stock goes down 15% in value? A lot of folks will choose to invest in their ESPP. They will take advantage of the 15% discount, buy the stock, they will immediately then go sell. Now that's going to be a short term capital gain. You have to pay ordinary income tax on the discount element plus on any gain that you that exists. But even doing that, you're coming out ahead because remember, it was free money. It was 15%. You pay ordinary income tax on the 50%, you're still net positive. I do see if you have a plan where you have to hold the SBP for a year, you have to hold it for 18 months, there could be some risk there and you have to kind of assess that on your own. But if you have the ability to just liquidate automatically, I'm not as concerned about the stock price because I know right off the jump I'm going to be in the black.

[C]

The other one that was was a question number four.

[A]

Yep, I have that one about 403B and 457.

[C]

Sometimes your employer will structure it to where the match will be associated with the 403B and then the 457 is kind of an additional add on plan. So that's why if you have match free money from your employer, get in there and get that free money and then you might want to consider switching over to the 457. But that wasn't put into the way the question was asked. That's the. It depends is because I don't want you to miss out on the dollar for dollar match from the employer just so you get into the better structure for early access of the 457.

[A]

Yeah, good thoughts. We did have a couple at the end. While we don't give specific investment advice, there was a lot there that really did depend. Right. The 20% down or invest with investing or put the full. Anything you want to say about that one?

[B]

Yeah, that one was hard. Okay, so mathematically if I had a million dollar, not a million, a hundred thousand dollars to invest a day or you know, $500 to invest every month, it's going to be really hard for that $500 a month to catch that $100,000 invested. So mathematically that likely makes the most sense. However, if you're at this stage and season in life, we do want to factor in risk and overall financial goals. If you are near retirement, towards the end of your accumulation journey, you have this big portfolio already built up. There's nothing wrong with paying cash for houses. We have clients do this all the time. They'll retire or think about relocating. They'll sell a house and then they'll go to buy a house another place. We don't say, hey, put 20% down and finance 80% invest that. We said no, pay cash for the house. But it's very much situationally dependent on where you are and what your ultimate financial goals are.

[C]

If you'll visualize the journey to wealth building is that say from age 20 to 45 is the make wealth phase. And then from 45 all the way to when you land the plan for retirement is the maintain wealth phase. Is the thing that people miss out on. If somebody came into a windfall of a half, half a million dollars like this example laid out, and you put it all into the house and then your behavior never started creating your army of dollar bills, you didn't really make the wealth, you kind of went and bought a house. And then how are you going to live off that money when you actually reach the retirement? When you reach retirement is that you have to sell the house. And a lot of people, you know, we're trying to take away as many variabilities and things that you have to make hard decisions when you get close to retirement because hopefully you're getting rewarded for the good decisions you made at a much younger age. That's why I like for a young person, let's build your army of dollars so you actually make the wealth. It's not assured. So many Americans never actually build the wealth. Now if you're getting this and you came into this 500,000 and you're 50 years of age, then yeah, let's de risk this thing. You're probably at a good place. Pay cash for it at that point. Because also the wealth multiplier is much lower. The opportunity cost is so much lower from a risk standpoint. That's the thing that drives me crazy is when I find out 30 year olds aren't funding their Roth IRAs, aren't maxing out their 401ks, but they pay cash for a house, okay, that's great. But man, oh man, what that could have become in the long term and you think that you've de risked but the risk, there's still a risk. The risk is you never built wealth.

[B]

That's right.

[C]

That's the thing that I think is never taken into account. I understand what risk is and, but there's a balancing act on also making sure you build wealth in the background so your army of dollars and you can actually own your time that much sooner. This is why I don't do good on rapid fire. That was probably two and a half

[A]

minutes that's all right.

[C]

On a 30 second question.

[A]

Hey, you answered the question. People want to know.

[C]

The last one that I had was the person with $2 million in their 401k. We definitely would. That would depend. I would want to custom look at your financial plan, Monte Carlo simulation, look at all your goals, and then tell you if. And then I don't want to do the due diligence.

[B]

How private placements are created.

[C]

I mean, some of them are good. Some of them, but a lot of them aren't. You know, a lot of people are sold off. The sexy sizzle of this is what rich people do. I'd need to do some due diligence. How much of the managing partners or the general partners of their money is in the deal? How much of their mom's money is in the deal? There's all kind of questions I go into. And what's the. The percentage cost that they're charging on annual operating? There's all kind of things. And then how does that fit into your own personal goals?

[A]

That's good stuff. That's why you guys are so good at what you do. I like it. All right. We do have time for at least one, maybe two more questions. So are you ready to dive in?

[B]

Can I share one thing?

[A]

You can.

[B]

You know what's really hard about dad jokes? My. My kids and I, or my family, we wanna see.

[C]

This is why Beau had a head start on me. He has books.

[B]

Well, that's what. That's what I was going. This. We. My family went on this vacation, right? Just like us. Little State Park. It was awesome. It was wonderful. And we ate at Cracker Barrel because we're awesome. And at Cracker Barrel, there was a joke of dad books right there. And my kids were like, dad, dad, dad, we want to get all these candy. I'm like, no candy. But they're like, dad, we get this. And I'm like, all right, we'll get the joke book. And so we got it. And I love a good joke. I love dad jokes. And they're fantastic. My kids also love rating them and they don't listen to the show, so this won't hurt their feelings. They are horrible at delivery. So do you know how bad it is, like, when they'll, like, read the joke and they'll say the punchline, but they kind of say it wrong, and then I connect the dot with the punchline was supposed to be, and then I'm just sad because they missed a huge opportunity to deliver the joke. We did this all the Way from Kentucky to Tennessee. That part was just. That part was for free.

[A]

That's what you're supposed to practicing.

[B]

I know.

[C]

I did sound inflection voice. This is the mentorship.

[B]

I know. That was what we're.

[C]

We're seven, eight, nine. That was dying. I thought that was actually really good. That was impressed. I was like, oh, not worthy. I was really impressed with that because it fit within the financial order of operations, too.

[A]

Right? It was good. I mean, Bo only took one swing, but it was. It was a good one.

[C]

Hey, I've done no tangents today. Can I. Can I give one tangent? I wore this shirt on purpose because it is Masters week. Oh, it is very excited about Masters Week week. So I don't know. That was my tangent.

[B]

That's the shortest tangent you've ever gone on. I'm excited for Masters Week.

[A]

You're allowed to say that.

[B]

Love that.

[A]

Great. All right, let's go to another question, guys. We got another good username. It says, what's up, Fu? That's. Who's asking this question? It says.

[B]

I'm sorry, what was the username? I missed that. Ruby.

[A]

What's up, Foo?

[B]

Oh, I just like the way she delivered it. I was kind of. She was, what's up, doc?

[A]

Are you gonna coach me on my.

[B]

No, no. You was awesome. I was actually a fan.

[A]

Okay, let's get to the question. It says, I'm 35. I have about 40% of my investable assets in an old employer, 401k. If I move it to my new 401k, the money will be uninvested for about a week. About a week. Don't like that. How do you think about this?

[B]

Yeah, this happens sometimes. Sometimes when we move assets, companies will require you to liquidate, cut a check, mail a check. Check is deposited. Check gets reinvested. And I have clients ask me, hey, I'm so nervous about time out of the market. I'm so nervous. I'm so nervous. At the end of the day, it's a little bit of a coin toss, because think about this. What if you sell today and the market's up and over the next four days, the market goes down, and then you buy back in, you basically get some free return. You basically, like, accidentally time the market in the right way. Now, it could also go the other way. You could sell today and the market's low, and then when you buy back in, the market's high. Hopefully what you're hoping is that this does not happen in, like, a week of extreme Volatility. But by and large, even if that did happen, if you fast forward a year, three years, five years, 10 years, 20 years out into the future, it probably will not have mattered. Those four days probably will not have made a significant difference.

[C]

So what's up? Fu is I agree with BO Exactly. This is noise. This is not something. But. But now with that said, here's what you can do to set your mind at ease. I want you to completely, you know, research what, what the actual process is so then you can actually create contact points. Like if you know, okay, I'm going to have to place the trades to sell and then, okay, how many days before the now the money, the check will be sent. You can then follow up. You can call back and say, okay, was the check cut on the day that you guys told okay, was it sent? And then you can expect, then when it's supposed to arrive, you can call to make sure that they were receiving, custodian actually received it. You can shepherd the process so that less stuff is likely to fall apart. That's what we do. That's one of the reasons people are like, aren't you worried AI is going to take your job? I'm like, no. Have you seen how our admin team has to go shepherd transactions through? I think that element and plus all the government regulations and other stuff that goes with it, that part is going to be hard to just automate away.

[A]

That's great.

[C]

Doesn't mean they won't add tracking. There's definitely things that they could do. But having somebody call and go, hey, put my stuff to the front of the line is, is not going to go away.

[B]

And when in doubt, always, if you can try to transfer assets in kind, a lot of times you can. Hey, what I want to do is I want you to move. If I've got a 401k at Fidelity, I'm moving it to an IRA rollover at Fidelity. Oftentimes if the investment options in there are publicly traded, it's not like pulled vehicles. They can do an in kind transfer. While I owned S&P 500 over here, I can move it over here. It's just a much more efficient way to transfer. Whenever we bring on a new client and they have assets somewhere else, we transfer everything in kind that we can so that we can do the tax analysis to determine, okay, what's the appropriate way to diversify, to reallocate whatever, understanding the tax consequences, but also minimizing that friction of actually being out of the market for any period of time. So ask your provider if transferring assets in kind is an option.

[A]

That's great. Good stuff. I think we have time for one more. Let's do it. This one is from home, Reno 2038. And you will see why that is his username 23.8forWindows. If Windows will be 30 to 40K more than we would spend on a car and would last longer, can we use the 238 rule? I'm in step six and over. $1.2 million saved under 40. Wow. He really like. I mean, he is making his case here. The 238 rule is normally for buying a car that you really just need for your family and you can't pay cash for. So what do you think about doing that?

[C]

I mean, I mean, but this is. This is like you find out that, you know, apple and oranges are both fruit. So you're like, okay, well, since they're both fruit, I'll use the same. They're not. They're not the same. I mean, it's.

[A]

You can't make.

[B]

I'm trying to follow the analogy.

[A]

I'll try to follow the analogy. You can make an apple pie.

[C]

What I'm saying is, is that just because the 30 to $40,000 is similar to the purchase price of a car.

[B]

Right.

[C]

It's a different transaction. Even though it looks like it, you know, it's. They're both, you know, transactions about the same size. But I love the. You're essentially a financial mutant creating games or, or systems to pay this off in a reasonable time. You've built a $1.2 million and you're under 40 years of age. You do whatever you want on, on paying for those, those windows. I mean, that's perfectly fine, especially if that's a communication tool with your significant other.

[B]

Yeah, I think that there's nothing wrong with financing home improvements, especially if these like, energy improvements like Windows and that sort of thing. It's not like you're putting in a pool or something like that. So I don't think it's crazy. You can determine based on your own financial situation what's the appropriate way to financ finance it over three years. Should I put 50% down? How should I think about it? Nothing wrong with that, but I love the idea of you doing the improvement and paying it off quickly as opposed to dragging it out over the course of the rest of your mortgage.

[C]

But don't expect to see a new slide on the money guy show with the 238 for Windows.

[A]

You heard it here first. There will not Be an official rule for buying Windows with leverage. Okay.

[C]

Did I at least salvage the fruit analysis?

[B]

No, no, no. I got it. I got it.

[A]

I got what you were saying.

[B]

You know, Ruby helped me. I don't heard it because I was kind of listening out. I was listening with you this year. And her with that ear. She's like, you wouldn't. You wouldn't say just because apples and oranges are fruit. You can make an apple pie using oranges and like that. I kind of got that.

[C]

Yeah. It's funny you say, because marmalade is like my least favorite jelly. And that's a Southern thing that people always show up with marmalade. I'm like, why would you put this in ruined toast with marmalade?

[B]

Wow. Nah, we eat biscuits around here, brother.

[A]

Southerner. Are you.

[C]

What are you doing? No biscuits. You sop up stuff. I'm not putting. I don't put. I don't put jelly my biscuits either, because I'm using them to sop it up.

[A]

Oh, man. Well, this has been fun. This has been a great live stream. Just because we turned the cameras off today does not mean the fun or the personal finance talk stop. Just go to moneyguy.com to see our full archive of content, plus tons of free resources to help you continue the conversations. A special shout out to our brand new parenting resource, a guide to parenting for financial mutants. Moneyguy.com resources where you can find that and more for free. So be sure to check that out. And we'll be back next Tuesday live at 10am Central here on YouTube.

[C]

And I want to thank the production team for helping me avoid crisis. I mean, we got down to about 2% on the battery. I'm happy to report we're sitting at 14%.

[B]

Wow.

[C]

Well done, team.

[A]

What a redemption, guys.

[C]

Just like we pulled this thing up, we were flying it straight towards the ground. You can pull up your personal finances and live your best life with the financial order of operations. I'm your host, Brian, joined by Mr. Bo, Money Guy team out.

[A]

The Money Guy show is hosted by Brian Preston and Bo Hansen. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance and compliance with the securities laws and regulations, Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial tax, investment or legal advice. All investments involve a degree of risk, including the risk.