We Changed The 4% Rule!?

Summary

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Episode Overview

Podcast: Money Guy Show
Episode: We Changed the 4% Rule!?
Hosts: Brian Preston & Bo Hanson (with Bob Ribey)
Date: July 8, 2026

This episode dives deep into the origins, evolution, and practical application of the famed "4% Rule" for retirement withdrawals. The Money Guy team breaks down why the rule isn't a one-size-fits-all solution, offers a new, dynamic guideline based on retirement age, and answers nuanced listener questions about planning, withdrawal rates, and broader financial decisions. Expect a blend of financial expertise, candid banter, and plenty of real-world examples.

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Key Discussion Points & Insights

1. Origins & Evolution of the 4% Rule

• Where did it come from?
  • Bill Bengen, a financial advisor, originated the concept (01:27).
  • Popularized by the Trinity Study, which assumed a 30-year retirement period.
• What does it really mean?
  • Traditionally, it's a "napkin" plan: build up a portfolio, take 4% the first year, adjust for inflation annually (01:00).
  • Meant for a typical 30-year retirement starting in your 60s (02:44).

Quote:
"Wouldn’t it be great if all you had to do was say, you know what? If you can just take what you think you need and multiply it by 25, that’ll get you retirement. That's essentially what the 4% withdrawal rule is."
—Bo Hansen, (00:33)

• Recent thinking:
  • Bill Bengen updated the research: With the right asset allocation, a withdrawal rate up to 4.7% could work (01:43).

2. Limitations of the 4% Rule

• It’s not "one rate fits all"
  • Retirement age and lifestyle have huge impacts.
  • Retiring at 45 vs. 65 changes the math: longevity risk, portfolio needs, market volatility.

Quote:
"There needs to be some type of elasticity or flexibility to what your withdrawal rate is."
—Bo Hansen, (03:18)

3. A New, Age-Based Withdrawal Framework

The team introduces an age-based, flexible withdrawal rate framework (04:04):

| Retirement Age | Suggested Withdrawal Rate | |----------------------------|--------------------------| | After 75 | up to 5.5% | | Early 70s | ~5% | | 66–74 (normal) | 4.5%–4.7% | | Early retirees (56–65) | 4% | | Very early retirees (45–55) | 3.5% | | Extreme early retirees (<45)| 3% |

• Why more conservative for early retirement?
  • Longer time horizon, more uncertainty, compounding impact of mistakes (05:08).
  • Leaving a high-income job is often a one-way street—need a bigger safety buffer.

Quote:
"When you make the decision to leave a good paying job, that's a threshold that sometimes you can't come back from."
—Bo Hansen, (05:08)

4. Key Takeaways and Practical Advice

The 4% Rule is a Starting Point, Not a Dictate

• Useful for rough, long-term direction; not for setting a forever withdrawal rate (05:39).
• Real-life withdrawals are dynamic: higher in early retirement, lower as other income sources (pension, Social Security) kick in.

Earlier Retirement = More Flexibility Needed

• Small errors in projections compound dramatically over longer timeframes (07:08).

Near-Retirees Must "Stress Test" Their Plans

• In the 5–7 years before retirement, personalize your plan using detailed projections, not just napkin math (07:50).
• Use tools: Wealth Multiplier Tool from MoneyGuy.com (08:22).

Quote:
"If you retire at age 75 and get your living expenses off by 3 to 5%, you’re probably going to be OK. But if you retire at 45 and you get your living expenses off by 3 to 5% ... it can have a very, very meaningful difference."
—Bob Ribey, (07:08)

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Notable Listener Q&A Moments (with Timestamps & Quotes)

Isaac S.: "Should I fund my child's 529 before maxing my employer-sponsored plan?" (11:51)

• Core Advice:
  • Hitting the 25% savings rate is critical—maxing out the employer plan is ideal, but if you save 25% of income before reaching the cap (especially with lower incomes), it's okay to move on to college savings.
  • The Money Guy's Financial Order of Operations and Savings Rate Resource help assess readiness.
• Memorable Moment:
  • Isaac gets awarded a Money Guy tumbler for joining the live stream for the first time (15:05).
• Quote:
  • "After you've done that and maybe you have a normal retirement age... you should start living your life and even helping out the kids at that point."
    —Bo Hansen, (13:39)

HopefulDreamer108: "Should I have a separate bank account from my spouse?" (15:33)

• Consensus: Communication is key. No single right answer; be open about motivations.
• Personal Philosophy: Money pooled into joint accounts removes power dynamics and builds transparency. Allowances or fun money accounts can be separate—but not for secrecy.
• Notable Quote:
  • "If you're gonna get naked with somebody ... why can't you be open about all your financial goals?"
    —Bo Hansen, (20:59)

BigDog13: "Should I pay off my 5.7% car loan early or invest?" (22:01)

• Decision framework:
  • If car loan meets "23/8" rule (20% down, 3 years, 8% of gross income): focus on maxing Roth IRA/401k before paying extra on the car.
  • But, if loan bugs you, after meeting tax-advantaged savings goals, it's okay to pay off early for behavioral comfort.
• Quote:
  • "There's a lot of common ground in between... you feel good, get it paid off earlier, but you still maximize that wealth multiplier."
    —Bo Hansen, (25:04)

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Memorable Quotes & Moments

• On The 4% Rule's Simplicity and Limits:

  • "We love the 4% from a planning perspective, but there's way more that goes into this." —Bo Hansen, (05:08)

• On The Fallacy of Career-Hopping:

  • "You have to make personal finance personal, and really make sure you're doing this for the right purpose." —Bo Hansen, (34:22)

• On Dream Homes:

  • "If you got a $2 million portfolio, you should be wary, wary of going to buy a three million dollar house." —Bob Ribey, (51:50)

• On Secrecy Within Marriages:

  • "If there's anything that's going to draw that you need secrecy with how you're using your money, that's a red flag..." —Bo Hansen, (20:31)

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Timestamps for Important Segments

| Topic/Question | Timestamp | |----------------------------------------------------------|-----------| | Where the 4% Rule Comes From | 01:25 | | Bengen's 4.7% & Asset Allocation Impact | 01:43 | | Retirement Age & Withdrawal Rate Elasticity | 03:18 | | Dynamic Withdrawal Framework by Age | 04:04 | | Key Takeaways on 4% as Starting Point | 05:39 | | Early Retirement Requires More Cushion | 07:08 | | Stress Testing Approaching Retirement | 07:50 | | Money Guy Wealth Multiplier Tool | 08:22 | | Q&A: First-Time Listener Isaac’s Savings Question | 11:51 | | Q&A: Separate Bank Accounts for Spouses | 15:33 | | Q&A: Car Loan vs. Investing Decision | 22:01 | | Q&A: Career Switching for Wealth Building | 28:33 | | Rapid Fire Financial Questions Segment | 40:00 | | Guidance on Dream/Luxury Home Upgrades | 51:50 | | Pension Lump Sum vs. Annuity Discussion | 47:02/58:29| | Prepaying Mortgage Before Income Drop | 46:04/61:06|

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Tone & Style

The hosts maintain their trademark mix of accessible expertise and playful camaraderie. They freely admit when "it depends," use real-life metaphors (from napkin math to broccoli/brussels sprouts), and stress that financial planning is both technical and deeply personal.

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Summary Table: Flexible Withdrawal Rates by Retirement Age

| Age at Retirement | Suggested Safe Withdrawal Rate | |-------------------------------|-------------------------------| | After age 75 | Up to 5.5% | | Early 70s | ~5% | | Age 66–74 (Normal Retirement) | 4.5% – 4.7% | | Age 56–65 (Early Retirement) | 4% | | Age 45–55 (Very Early) | 3.5% | | Before 45 (Extreme Early) | 3% |

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Final Thoughts

• The "4% Rule" is a useful starting place—not the finish line.
• Your safe withdrawal rate should reflect your retirement age, risk tolerance, and personal variables.
• For big retirement decisions, stress-test your plan, seek personalized advice, and remember: personal finance truly is personal.
• The Money Guy team invites you to use their wealth multiplier tool for your own back-of-the-napkin napkin math, and tune in for future live Q&A sessions.

Quote to end on:

“We come from humble beginnings, but we try to tell you the way money really is. I don’t think there’s a lot of people that are out there doing that. And that's our promise to you guys.”
—Bo Hansen, (65:42)

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For more calculators, resources, and content, visit: moneyguy.com/resources

Transcript

[Brian Preston]

Foreign.

[Bo Hansen]

You heard it here first. We changed the 4% withdrawal rule.

[Bob Ribey]

Brent, I am so excited about this because I think this is going to be incredibly valuable because a lot of people out there are excited about retirement, and even a lot of people are excited about early retirement. They're trying to figure out, how do I know if I have enough? How do I know if I've reached that point? And I worry that some people arrive at a poor conclusion because they're using the wrong endpoint.

[Bo Hansen]

Well, look, everybody wants a napkin financial plan. And wouldn't it be great if all you had to do was say, you know what? If you can just take what you think you need and multiply it by 25, that'll get you retirement. That's essentially what the 4% withdrawal rule is. Because if you think about doing the math, what's 4 times 25? 100%.

[Bob Ribey]

You.

[Bo Hansen]

You should be covered and set. And, and we want to show you. No, there is way more going on when you're trying to figure out than just doing a napkin financial plan.

[Bob Ribey]

Yeah. Said slightly differently. It's a retirement guideline that suggests withdrawing 4% of your portfolio in the first year of retirement. Then you get to adjust that amount every year for inflation. So you build up this big pot of money. You take that big pot of money, multiply by 4%, and that is, is what you get to live off of in retirement. That's what a lot of people have used, and that's what a lot of people use for their planning.

[Bo Hansen]

But where did the 4% rule come from?

[Bob Ribey]

Yeah, it actually came from financial advisor Bill Bangin came up with the idea, and then it was popularized by the Trinity study. But even Bill has come out and said, maybe 4% isn't exactly right. Maybe we can even adjust the 4% rule a touch.

[Bo Hansen]

Yeah, I mean, now realize this has got asset allocation built into it. So you do try to limit volatility based upon your asset mix. But. But Bill did come out and updated it. It's not 4%. If you put in the right diversified portfolio, it can be increased. According to Bill, the author of this originally, Bill Bangin. 4.7%.

[Bob Ribey]

4.7%. So. And as you can imagine, when you're thinking about preparing for retirement, the higher your withdrawal rate number is, the lower your portfolio value needs to be or the higher the income that you get to experience in retirement. Because, so naturally people would want to think, okay, the. If I can have a really high withdrawal rate, that means that, okay, maybe I can save a little bit Less or maybe I get to live a little bit larger. But we worry about that because if you get too aggressive and you assume that, oh man, what if I had a 6%, 7%, 8% withdrawal rate? You could get yourself into some really hot water really quickly if retirement doesn't go exactly the way that you thought that it would.

[Bo Hansen]

Well, all this is built off of the math. And even when you look back at the Trinity study, they're assuming a 30 year withdrawal period. But the thing is, we've covered the fire movement. We talked about the fine movement where you move from financial independence to the next endeavor. Because maybe especially if you're doing this in your 40s or 50s, you're not ready just to play golf or sit on the beach, there's going to be lots of things going on. But you definitely are thinking, think about somebody who's 45 years old or 50 years old. You add 30 years to that, you're probably going to live longer, still going

[Bob Ribey]

to make it pass.

[Bo Hansen]

So, so that's, that's why it doesn't work to just assume that you can just use the 4.7 and it's the other. Let's go the other way. What if you're somebody who loves your work and you actually work until you're 60 years of age or 65 or 70 years of age, that should not have the same withdrawal rate as somebody who retires in their 50s or 60s. So there needs to be some type of elasticity or flexibility to, to what your withdrawal rate is.

[Bob Ribey]

Yeah. Instead of having one safe withdrawal number. And again, we're going to talk about where it's useful and where it's not useful. Instead of having one, perhaps there should be a range, perhaps it should be a little more elastic. So we tried to take some money guide dust and sprinkle it on the withdrawal rate rule to come with something

[Bo Hansen]

pixie money that could be a little

[Bob Ribey]

more helpful for you. And this is what we came up with. If you're someone and you're going to retire past the age of 75 and we're going to assume a normal life expectancy for most adults, then your withdrawal rate could likely be higher than 4.7%. You can actually likely go up to five and a half percent. If you retire in your early 70s, maybe you subscribe to a 5% withdrawal rate, normal retirement age 66 to 74 and a half percent. So right there at that 4.7% range. But if you're someone who's going to retire early and maybe you're going to retire between the ages of 56 and 65, we would argue you should stick with like a 4% withdrawal rate. Someone who's retiring very early, between ages 45 and 55, maybe think about a 3 1/2% withdrawal. And if you're someone who's going to go like major fire major, retire early and you're going to have a very long retirement, long financial independence window, we would argue you should be super, super conservative and think about maybe something around a 3% safe withdrawal rate in terms of how you use your back of the napkin planning to arrive at your number.

[Bo Hansen]

Yeah, a lot of this, yes, it's conservative and that's on purpose because what we. When you make the decision to leave a good paying job, that's a threshold that sometimes you can't come back from. Meaning it's hard to get the water back up the hill is that your earning potential might not be what it was once you leave. So you do want to be conservative with your assumptions when you're making big plans. So that's why I think it's probably a great time to talk about, give us some key takeaways because I love the 4% from a planning perspective. But there's way more that goes into this.

[Bob Ribey]

Yeah. So the very first thing is that the 4% is a starting point. We call it back of the napkin planning. But in reality, you guys know this. In our day job, we are fee only financial advisors that get to help people make it to and through retirement. And here's what we don't do for our clients. We don't say, okay, how much is your portfolio? What's that number? Times 4%. Okay. On your day of retirement, you are now locked in at that withdrawal rate for the rest of your life. That's just not the way that it works in practice. Withdrawal rates are much more dynamic. You might have a season of retirement where you have a very high withdrawal rate because you're traveling more and Social Security hasn't kicked in. And these other factors are at play. But as you move through your life, your withdrawal weight might drop as you have pensions come into play and Social Security or you downsize or whatever the case may be. So it's a much more dynamic thing in practice than it is just in the academic thought process. But it's a great starting point to let you know if you are directionally moving in the right direction to be able to have financial.

[Bo Hansen]

But I do think it's a powerful tool if you're in the planning stages. And you're decades from retirement. There's nothing wrong with using a planning rule like the 4% rule. Just understand your retirement age will change the math. As we've already covered, if you're going to start early, meaning you think that you want to leave your workforce or your professional earning years much, much sooner than most people, your peers, you want to be conservative and adjust the math accordingly.

[Bob Ribey]

Yeah. And you want to recognize that early retirees require more flexibility. The earlier you retire, the more variables are going to change and the more small deviations in the plan, small changes to your assumption have a big impact. If you're someone who's retiring at age 75 and you get your living expenses off by 3 to 5%, you're probably going to be okay. But if you're someone who retires at 45 years old and you get your living expenses off by 3 to 5% and that compounds over a 50 or 60 year retirement time horizon, it can have a very, very meaningful difference. So the earlier you retire, the more conservative you want to be and the more cushion you want to build into your plan.

[Bo Hansen]

And then that leads to my kind of closing point on the key takeaways is look, there's nothing wrong with using this tool when you're planning decades in advance. But if you are within that five to seven year halo of landing the airplane and making sure that your retirement is going to be as good as you hope and all variables are accounted for, you need to stress test your plan. You need to kind of thinking about taking the relationship to the next levels because that is where you're going to get a lot of answers that are personalized to you instead of just using this planning tool.

[Bob Ribey]

Now it's possible that you're out there and perhaps you're still a long way away from financial independence. Perhaps you're not even really thinking about your withdrawal rate just yet. That doesn't mean that you can't still be future minded. We want you to go, if you haven't done this, go to moneyguide.com resources and play with our wealth multiplier tool. Because at least what this can do is you can take the current savings you've accumulated up to this point, you can drop in our wealth multiplier tool and you can see we what that savings is on track to turn into by the time that you get to retirement. And if you get to a normal age 65 retirement, then take that number, multiply it times 0.04 and it will give you an idea of what a 4% withdrawal rate would be able to produce for that age. And you can begin to ask question, okay, am I on pat? Am I on track? Am I behind the curve? Am I ahead of the curve? We want you to be able to use these tools to be able to. To navigate your financial circumstance, to ultimately be able to leave, lead the life that you want to live. Let's just have a moment. Let's just. Let's just have a moment, right Love.

[Bo Hansen]

Ditto.

[Bob Ribey]

Love that we. We love that we get to show up here at 10am and do this. We love that even as things change, we go from a 4% withdrawal rate to a 4.7% withdrawal rate. So now even a money guy dynamic withdrawal rate, we get to be the source for you because we do believe that there is a better way to do money. So much so that we love answering your questions. We love that we get to sit here and load you guys up. So if you have a question right now that you want to get our take on that you want us to weigh in on, we have the team out in the wings collecting your questions. So make sure you get them in with that creative director Ribey. I'm gonna throw it over to you.

[Brian Preston]

Very excited. Cause I've got some questions queued up. Keep them coming. And while you're putting in your long form questions, be sure to submit a rapid fire question if you have one. Because we will be doing our it does not depend rapid fire segment later in the show. Just put RF at the beginning of your question in the YouTube live stream chat so we know that you want to be part of that segment. What's an acquired taste?

[Bo Hansen]

Rapid fire.

[Brian Preston]

You. I think you've acquired it, though.

[Bo Hansen]

No.

[Bob Ribey]

Okay, Last week we did.

[Bo Hansen]

I've just learned it's kind of like. I actually do like broccolis, but I don't love Brussels sprouts. So I feel like. But I eat brussels sprouts because that's the trendy thing in Nashville. It feels like they. They douse them. And you actually don't like Brussels sprouts? No, I don't like.

[Brian Preston]

Oh, I don't either. If they're really, like, fancy, like, he's not.

[Bo Hansen]

I'll eat them. I mean, I'll eat Brussels sprouts.

[Bob Ribey]

Not fancy. Just like raw, boiled Brussels sprouts. Nobody does rapid fire.

[Brian Preston]

Is Brussels sprouts not that hot of a take? Honestly?

[Bob Ribey]

No, no, no. That's a bad. That's a poor take.

[Brian Preston]

No, it's more fun than Brussels sprouts. Okay, we're going to get into the long form, I like brunch sprouts. Answering some personal finance questions, but I've

[Bob Ribey]

never eaten them just plain.

[Bo Hansen]

Can we be honest? Why Brussels sprouts aren't good too. They make you gassy. I'm just telling you.

[Brian Preston]

All right, you heard it here.

[Bo Hansen]

Probably means it's doing good work for you though.

[Bob Ribey]

Well, there's. First question answered. There we go.

[Brian Preston]

Okay, great. With that.

[Bob Ribey]

What do Brussels sprouts?

[Brian Preston]

On to the finance questions. The first one is from Isaac S. And he says it's the first time being here for a live event.

[Bo Hansen]

Brussels sprouts to you.

[Brian Preston]

Wow. Isaac's question says that means

[Bob Ribey]

Brussels sprouts. Do you.

[Bo Hansen]

It doesn't matter. It's not kiwi happy, that's for sure. Or banana happy.

[Brian Preston]

Isaac says I am currently investing 25% of my income, but I am not yet maxing out my employer sponsored plan. Should I move on to funding my child's 529question in the food? When it. When is it okay? You have permission to go ahead and start investing in things like your child's future and college and things like that.

[Bo Hansen]

I was gonna hold it up.

[Bob Ribey]

Yep. Hold that thing up.

[Brian Preston]

And why would you not want to do it right away? I think that's a good thing to say too.

[Bo Hansen]

Well, I mean, look, there's several things well, we don't know from Isaac. This is where I have to give the. It depends is we don't know what his income is, we don't know what his age is. But he has shared with us he's saving 25%. That gives us a lot of context because remember step six to max it out. Now look, ideally, yeah, we want you to hit all those government limits, but there's. If you're somebody who makes under $100,000 a year, you're going to hit the 25% before you because you've done your Roth IRA.

[Bob Ribey]

Yeah, I think we did this for man the meters like $137,500 before you max out.

[Bo Hansen]

So a lot of people are going to hit 25% before they hit the government thresholds. And that's a. Okay. That's why you can move to step seven. That's when you start thinking about how you're going to use your money if you're going to. Because here's the reality of step seven too. If you think you're going to leave the workforce at 55, your number is not 25%. Probably it might go up to 30, 35, 40%. I don't know. You have to do the math to know what your number is. Step seven is where you're going to do the math to figure out where am I at in my financial journey, how do I do the account structures, what does it go with and integrate with my goals. But after you've done that and maybe you have a normal retirement age. Yeah, you get to step eight for sure. Take care of the kids, you know, expand your lifestyle. It's just you've done the hard work. You should start living your life and even helping out the kids at that point.

[Bob Ribey]

Yeah. You know, we have a great resource. If you go to moneyguy.com resources, it's how much should you save? And it shows what a 25% savings rate can do for you. So go find your age, put your 25% and there's a really good chance if you're someone who's in like your, your mid-30s and maybe you're just starting out with or if you've been saving up to this point, saving 25%, you're going to be well on track to be able to accomplish all of your long term financial goals. So by all means, I would say graduate to step eight. Consider funding the 529 assuming that you're on the trajectory that you want and need to be on. And I think it's awesome. That's why the financial order of operations is there. It can free you up to begin spending money on some of those prepaid future expenses or some of those abundance goals. We once you've made sure that you've taken care of the financial independence saving that you need to be doing.

[Brian Preston]

Love that. Isaac. Welcome to the live stream and thank you for your question. We're glad you're here.

[Bob Ribey]

Does he get a okay, it's his first time, maybe it's his first time,

[Bo Hansen]

but if she makes an exception for him, what type of precedent are we setting?

[Bob Ribey]

I'm just saying it might not be the next person's first time, but it was.

[Bo Hansen]

I.

[Bob Ribey]

That's fine. No, that's okay.

[Brian Preston]

I tried going to declare today Tumblr day. Do you want me to.

[Bob Ribey]

No, I just want to give Isaac one. Not everybody, just Isaac, this is your first time. This is first.

[Brian Preston]

Those are fighting words.

[Bo Hansen]

You know what, you know what?

[Brian Preston]

You would like a Tumblr just email winner moneyguy.com to welcome you to the live stream. Look at Brian, he's like, oh, here we go.

[Bo Hansen]

I'm.

[Brian Preston]

We'll see. Maybe the next person will get a Tumblr Too, we don't know.

[Bo Hansen]

I think I just signed the. The invoice on the reorder of hundreds more tumblers, so why not?

[Bob Ribey]

We got them. Give.

[Brian Preston]

Now we got them. Let's give them away. You know, that's what I heard.

[Bo Hansen]

Burning a hole in our pocket.

[Brian Preston]

All right, next question is from Hopeful Dreamer108. It says, what do you think about a wife having a separate bank account for just her? My fiance and I are getting married soon after three years of being together, and we want to merge everything else. What do you think of this?

[Bob Ribey]

Communication. Communication, Communication. We say this all the time. Personal finance is personal. And so what works for you and your household? I don't want to be so presumptuous, say, you have to do it this way, or this is the absolute best way to do it. So if you and your spouse have the conversation, say, hey, I want to have this separate account that I can spend freely with no real oversight, so long as you guys have a clear understanding of, okay, what money goes into that account, how do we factor that in? What, you know, you answer all the hard, tough questions about that account. I don't think that there's necessarily anything wrong with it, but I also think you could have that exact same conversation and be on the exact same page doing it jointly. So one of the questions I would have, if I was going to, like, sit in between you guys, is, all right, why? What's the reason? What's the purpose? What's the thought? Why does this need to be separate? What's the purpose, the goal, the idea behind it being separate? And could we actually achieve the same type of freedom, flexibility, oneness, understanding, having that in a joint account, or does it have to be separate? There's no, like, absolute right or wrong answer. I care more about the question behind the question than the logistics of it being separate or not.

[Bo Hansen]

So this is. I like to give some context here. I don't know. Hopeful dreamers age, where they are in their journey, what assets that they're bringing into the marriage. These things are unknown currently. But I can give you the philosophy, because the reason I say all that is because if you're both coming into the marriage with substantial assets, whether it's family or previous life, you're coming in this as an older adult versus young adults. Then you do your legal protections on that stuff, because premarital assets are protected. If you have family gifts or inheritances, there are some legal protections that we want to be respectful of. Whoever funded or put those. Those bequests upon You. But if also if you have adult children or children from other marriages, there's, there's unique things. But I say all that to put all the contingencies in there is because when you get married, two become one. And I want you to have all the income flow into a joint account. Now once the money flows into a joint account, why is because you want to take the power out of the money. And if you've got one spouse that's making six figures, one spouse that's, you know, making 50,000, 60,000 and, and maybe down the road you want to do family planning or you know, where one of you is going to stay home and one's not, money is going to be a unique power dynamic that you never want to be able to go have to go to your spouse and ask for more money because it just creates what's mine versus what's theirs. And it's supposed to be to become one, it's ours. And I think when people don't do that, it really screws things up because, and look, we've had people on the show making a millionaire and this is my opinion, but it's weird sometimes when, when I see people keeping their money and you feel some, some like ownership or this is my money versus their money, which that creates some unique things. Now when you have all the money flow into a joint account, if y' all decide later, you know what, we ought to set up allowances for each other because maybe he likes to golf or maybe she likes to do a hobby that you know, where she's traveling on girls trips or doing stuff. It's okay if you set up allowances that then if you want to go fund set up accounts, maybe it's for keeping gifts unique and separate and stuff like that. I could get on board with that. But that's a back to Bo's point. Communication a purpose. And it's not what's actually how you're paying the mortgage, how you're paying the utilities, how you're paying all the childcare costs, that stuff. You want to take the power out of the money as much as possible so it doesn't create strange dynamics in your relationship.

[Bob Ribey]

It's interesting we had a little bit of extra context come in. Hopeful dreamer said, I'm 26, he's 30. So this is I actually this is the wife. I thought this is the husband. This is the wife asking the question I thought the husband asked. Quite very interesting. She said I'm 26, he's 30. First and last marriage. Love the Sound of that. And he makes more for sure. So the question that I would ask you, hopeful dreamer, goes back to the very beginning. You wanting to have this separate account. What's the why behind it? Is there so, like, oh, I'm afraid he's going to be upset about the things that I want to spend money on. Well, that should be a conversation. Even if it is a separate account,

[Bo Hansen]

it's not for secrets.

[Bob Ribey]

He's still going to be upset about that. If you're not on the same page. My wife and I, we had to come to an understanding about shampoo and throw pillows. Like, it was a thing we had to get on the same page about. And once we got on the same page, life got that much better.

[Bo Hansen]

If there's. If there's anything that's going to draw that you need secrecy with how you're using your money, that's a red flag for me that you might need to have better communication.

[Brian Preston]

I'm all for an allotment of, like, fun money for each person, and maybe that's even like, a separate account. But, like, like, we've done that. My husband and I have done that at different seasons of life, but it's still like a joined, like, if I have fun money, he could still technically see it. He just knows, oh, she's going to spend that money. That's her money, you know, but there

[Bo Hansen]

shouldn't be secrets in a marriage.

[Brian Preston]

Throw pillows.

[Bo Hansen]

You know, there shouldn't be secrets in a marriage. If you're gonna get naked with somebody and you can be open about that, why can't you be open about all your financial goals?

[Brian Preston]

No, I agree with you. 100. Even though that was a special way

[Bo Hansen]

of saying, yep, it's marriage.

[Bob Ribey]

No, you. Yeah, that's. Put that on a T shirt.

[Brian Preston]

Oh, man, oh, man, oh, man. Okay.

[Bob Ribey]

No, it was right. It's all.

[Brian Preston]

No, it's. He was.

[Bob Ribey]

You went from Brussels sprouts to get naked. And I just wasn't expecting that connection in the first two questions.

[Bo Hansen]

Maybe I'm turning into an old man. It says inappropriate things.

[Brian Preston]

I'm for it. Let's go. All right, well, hopeful Dreamer108. Great question. Thanks for being here. Hopefully that starts off some really fun

[Bob Ribey]

and congratulations conversations on the pending nuptials.

[Brian Preston]

All right, BigDog13.13 is up next.

[Bo Hansen]

Hey, how do they spell dog?

[Brian Preston]

Just like a regular dog. Not a Georgia dog.

[Bob Ribey]

Not the right way.

[Bo Hansen]

I wrote it the right way.

[Brian Preston]

He says, I, 25, and my wife, 26, have 150k income. Let's go and 95k invested.

[Bo Hansen]

Wow.

[Brian Preston]

Which is great. 25 and 26.

[Bo Hansen]

That's great.

[Brian Preston]

I have a car payment and have 10k left at 5.7%. That's his interest rate. I hate my car payment. But no, I should invest and pay off on schedule. Can I accelerate? We're going to have a 25 and 26 years.

[Bo Hansen]

I'll let you speak first, but I want to give Big Dog a tool. If you go to moneyguy.com we have how much did you save? And it's somebody who's 25 years of age. You gotta see that it's not, you're not gonna have to be at 25% yet to do that. So that's the context I'm laying out. What? What? Because I can already see you shaking

[Bob Ribey]

your head, Big Dog. I also do not like car payments. I just don't. 23,8 exists and it's a thing and I support it, but I don't like car payments. However, if you have this car payment and you are already inside the confines of 23,8, meaning when you bought the car, you put 20% down, you're paying it off in less than three years or 36 months and the payment does not represent more than 8% of your gross income, you've already made the financial mutant decision. I'm going to argue every dollar that prepays that loan, it might not be the best utilization of that dollar. Because I'm going to argue, I think that you can make 5.7% better than 5.7% if you're out there investing and growing. Now, it's a little bit tongue, it's a little bit talking to both sides of our mouth because we say all the time, if you can pay cash, you should pay cash. If you can't pay cash, you should pay cash. But if you're gonna have to like decrease your savings rate and you're gonna have to stop saving and accumulating the pace you are in order to do this, I'm gonna argue, I think that you would be better served, continue to max out the Roth ira, continue to max out the hsa, put money in the employer sponsored account fund, the after tax brokerage account, and that car payment will be gone soon enough. If you're inside a 23 8, I love the idea of seeing those dollars work for you. Agree? Disagree. One of five.

[Bo Hansen]

Look, I do agree with you to a degree. But look, first I want you to run it through some, some decision matrixes and the fact that first of all are, you are you within 23 8. If you're not within 23 8, we got to fix it. We got, we got to fix that. But you got to go ahead and triage the situation. But assuming you are in 238 like beau said, I would love for you to. You got to get the Roth ira. I will say I agree with Beau in the fact that I would be very sad if you didn't fund your Roth IRA because you were trying to pay off this loan sooner. But after you get past the Roth IRA and the health savings accounts that tax free opportunities, I do want you going and looking at that percentage savings and assuming that you maybe you're doing greater than 15%, you're 25 years of age and that thing is just, you know, gnawing on you at night. You're sitting there going like why do I have this debt? I'm not going to be mad if you paid it off earlier. Maybe come up with it doesn't have to be an all or nothing. Maybe it's one of those things where you're splitting it with Uncle Bo and funding an automatic for the people you know, always be buying, you know, setting up a dollar cost averaging where you're funding into either your 401k or additional after tax or some other things and then you're throwing a little bit extra on that car payment each month. It doesn't have to be extremes. There's, there's a lot of common ground in between that. You feel good, get it paid off earlier, but you still maximize that wealth multiplier because that's the big thing. Bo saw you 25 years of age, your spouse is 26. It's like that in the old cartoons where your tongue falls out and your eyes get big. It's just when you see what the multiplier is on somebody your age, you get really excited. And that's why he just wants to help you grow that.

[Bob Ribey]

That's right.

[Brian Preston]

So did you fight too much? You feel like you got to a good answer?

[Bo Hansen]

Look, we both agree, I know where he's coming from.

[Bob Ribey]

Either way. Realistically this is like brass tax. Probably going to be okay if you pay it off. Probably going to be okay if you don't pay it off and you invest. You're probably going to be okay. One, I would argue one is a maximization optimization mathematical. But we know that 80% of personal finance is behavioral. And so if behaviorally getting that gone is something that's really, really important, I'm not going to fight you on that.

[Bo Hansen]

I will Tell you the thing that I've. Because we both come from pretty. From humble beginnings. Are you about to sneeze?

[Bob Ribey]

I just get emotional thinking about car payments.

[Bo Hansen]

We both, and I have thought, you know, when you get to your first million dollars of investable assets, you're going to look back and go, where did it come from? You know, you're trying to figure out which dollars routed. Now, it's easier if they're all in one account. Like, you know, if you, if you have a 401k that hits seven figure before everybody else and you have a huge employer contribution, it's like, oh, hey, if my, if I put in 5 and my employer puts in 10, that, that automatic 15 probably drove it. But for a lot of you, you're not going to be able to see which incremental decision it is going to be. Stacking up a lot of small wins and paying down a 5.7 is not necessarily going to hurt you, but it might. And that's what I think BO is showing you're training with. It slows you down a little bit on maybe reaching that first seven figure.

[Bob Ribey]

That's right.

[Bo Hansen]

Goal.

[Brian Preston]

There you go, Big Dog. 13:13. Great question. Honestly, we got a little agreement, a little nuance.

[Bo Hansen]

It's Dawg.

[Bob Ribey]

That's right, dog.

[Brian Preston]

Just note, just, you know, some feedback on the username. All right, just a reminder, we're going to be doing rapid fire very soon. So this is your last chance to get your RF rapid fire.

[Bo Hansen]

Take a moment.

[Bob Ribey]

YouTube chat that sneeze, it just is like hanging up all around.

[Bo Hansen]

You know, it's okay if you want to let it go.

[Bob Ribey]

I know.

[Bo Hansen]

Just make sure you dab it up when you do it. Dab it up.

[Bob Ribey]

I'm fighting it.

[Brian Preston]

All right, the next question is from pj dad Life.

[Bob Ribey]

This guy again. Did you ever confirm?

[Brian Preston]

Confirm what?

[Bob Ribey]

You don't remember?

[Brian Preston]

I remember several things. Which thing are you talking about?

[Bob Ribey]

So, all right, pj dad Life. We were so curious about what the PJ stuff. Pajamas or private jet? Because those are two very different types of pajamas.

[Brian Preston]

This has been a whole conversation. Pj dad Life.

[Bob Ribey]

Pj, we've talked about you a good bit in our show meetings.

[Brian Preston]

Well, the question. First of all, thanks for listening to our collaborations because he says on the.

[Bob Ribey]

I bet his name is Pete. Pj. That's like, I know. I, I Paul Jeffries, like Patrick Johnson.

[Brian Preston]

Well, maybe we'll find out. Pj, if you're out there, let us know. He says on the Rich Habits podcast two weeks ago, which you Guys guessed it on the show. Bo picked career switching as a key wealth building lever. When is careers a career switch worth the risk versus staying put and building skills? And so, Bo, I kind of know the backstory here. I know that this was a draft style pick of different investment types. And this was to be transparent. Spoiler, the last one.

[Bob Ribey]

That's right.

[Brian Preston]

And you were left with it.

[Bob Ribey]

I did not pick it. It was like, which one of these piles of poo do you want the most?

[Brian Preston]

And so let's talk about. Why do you feel like that?

[Bo Hansen]

When is the worst person to answer this question? Because how many jobs have you since you graduated college?

[Bob Ribey]

One Uno, one job, single job.

[Brian Preston]

You're looking at it.

[Bob Ribey]

Job switching was not the thing that I did. Now there are a lot of people and we have a lot of clients, especially those that work in high tech, that, that is the way that you move up. You got to like bounce around and you got to go. The only way to move vertical is to change employers. But I don't know that that is what's necessary for everyone. I think we, I think a lot of us, I had this conversation with a prospect yesterday. I think a lot of us fall into the place of thinking, man, the grass is going to be greener, the grass be greener, the grass is going to be greener. When oftentimes where we are, things are pretty good. If I'm in a really good career at a really good place that I love, working with people that I love, and I see opportunity and trajectory, there's nothing wrong with working my way up at that place. And I think a lot of young people are told, oh, well, the only way to progress, the only way to move, the only way to improve your lot is to jump around and bounce around. I don't know that that is absolutely true. So I ended up picking that in this draft and it was a super fun little exercise because it can be a thing. If you find yourself in a place where there maybe the culture does not fit what you're only looking for or you don't love the work that you're doing or the people that you're surrounding yourself with are not the kind of people you want to be around. All those things might be reasons to change. That is different from saying the only way that you improve, the only way that you move up is by bouncing around. I refuse to believe that that is, that is a must for people in their career.

[Bo Hansen]

Look, I, I don't mind. I, I jumped. I had my third job was when I started My company. Yeah. You know, I'm not counting all the careers or jobs. Not careers. They were jobs all through the, the bus driving, the plumbing, the bat, working on the ramp for Delta, all that. All those were jobs I did all through college.

[Bob Ribey]

Scars on your back from the J hooks, right?

[Bo Hansen]

That's for. I put that love out there that says you guys have never, obviously you've never worked a real job. I'm like, you might be surprised, but, but I say career jobs. Like I came out in public accounting, the CPA firm I worked at. Love, love, loved the, the culture of that place. Loved my bosses. But I was, I looked around and I was like, man, I don't see the career trajectory that I need to see to do what I want to do. So that's why I wrote down, when you start a job, I want you to ask yourself, what is the opportunity here? You should be able to figure out very quickly, look ahead of you and say, hey, how did the people get what they do is the way they're living their life. The way I want to live my life is because more than likely you're on the track of somebody that you're working with. So ask yourself, what's the opportunity here? And I had found myself at this public accounting firm is that I was kind of in no man's land. Is that they. We just started a financial planning division at this company. When they hired somebody ahead of me because that worked for Merrill Lynch, I was like, man, they do not know what to do with me. They don't know how they go get business. I was like, this doesn't seem like there's a lot of opportunity here. So that's what I knew. I needed to leave. And by the way, I reconnected with my old boss, you know, back in 20, 24 years ago. Yeah. And he, and, and, and Bob was like, look, we didn't know what to do. He was honest. We didn't have it, we figured out. We didn't have it all figured out. And I, and I love that we got to connect, connect on that. So I think my read was right, is they didn't have it all figured out. But then I went to my second job and they had the business figured out. I mean, this place was a well oiled machine, corporate, but, but I looked around, I was like, man, culturally, I just don't know if I love this place. I mean, it just didn't fit into me. And I think I shared with you guys, when my dad passed away, I only got to take like A day off work. I mean, it's just, they, they just their, their connection with family was different than my connection with how I process the world. So you need to also ask yourself, what is the culture of this place? Do I fit in here with this? And if you, if you ask yourself that, that's why I tell you do the homework is because so much content I see out there is you have to career switch to know if you're going to get, if you're going to move up in the system. If Beau would have done that, there's no other opportunity you could have come to that would have done what has happened now. Bo's brilliance is, is because Beau is so good, he's so smart and he's so likable. I was like, this guy needs to own a part of my business with me, you know, so we may became business partners. So I mean, I think that we, we all played off of each other very well. But I hate when people give blanket advices that you have to change two jobs to, to create. But I think you have to look around and make sure you feel like there's opportunity. Because you know, one of my dear friends, he was just doing door to door sales and then he moved out to San Francisco and worked for, in the tech industry for a while and he's like, man, I would have never become who I am unless I took this. But I think it's the same. It ties into everything I just shared is because you need to be honest. Look at your, your job. Because we were talking to somebody, I just assumed everybody got 3 to 5% pay raises. least.

[Brian Preston]

At least.

[Bob Ribey]

Yeah.

[Bo Hansen]

If not even because most job, most pay raises I got as I was coming up through my career were 10 to 20% every year. And I found out there's people who've been working jobs for seven years and just got zero pay raises. And I'm like, no, that doesn't work. So be honest. Go through a mental or financial triage of your life and say, what's the opportunity? Be honest with yourself and if it stinks, go advocate for yourself. Go find another job. But if you're at a place that's great opportunity, there's people ahead of you. You love where you work. Don't just change jobs for the sake because you read an article or saw a blog post or watched a YouTube video. You have to make personal finance personal and really make sure you're doing this for the right purpose.

[Bob Ribey]

Can I give a, just a quick brief PSA for young people out There when you accept a job or when you're looking for a job, I would also encourage you begin with the end in mind, thinking through opportunity. I'm thinking back, Brian, way, way, way back when we were going to hire very first employee, like it was literally me and you and administrator. We're going to hire our very first associate. And the person we were interviewing, she actually turned down the job because she got a different job that was okay.

[Bo Hansen]

She got $5,000. It was 2,000.

[Bob Ribey]

$2,000. The, the starting salary we offered was $2,000 less than the starting salary from this. That would have been like employee number three at this enterprise. And I just felt like it was very short sighted to, to, to not recognize the opportunity that was there for that. So if you find a really great opportunity, what that may mean in your circumstances, yeah, I might not be commanding top dollar, top tier, best salary, but if it creates a trajectory that's going to allow me to move along the course of life that I want to move along, that's okay. And I think a lot of young people are occurred. No, you got to get as much as you can as soon as you can, as much as you can as soon as you can. And you can definitely do that, but it's going to be a fight. Whereas I think if you can find really great opportunities where you can actually build some longevity and put the time in and actually develop some expertise, I think those opportunities are out there too. And I just hate seeing young people miss out on that.

[Bo Hansen]

Well, and sometimes bigger, more established companies can give you better starting salaries almost to trap you in a way. Because. Whereas that's why you do need to think about what is. That's why ask yourself, what does the opportunity look like three years, what does it look like five years? And if you really love the place, what does it look like 10 years? And does it fit into what you're trying to build for your life? And then if it does, you don't have to necessarily go create change to make yourself better.

[Brian Preston]

Yep, there you go. I knew you had something to say and we had a few questions about that. So it's Patrick, dad, life, AKA Patrick. We just heard, not pajamas, not private jet.

[Bo Hansen]

These are the things we talk about

[Bob Ribey]

that's been a two week conversation here at the money guy show.

[Brian Preston]

I was really hoping for PJ or

[Bob Ribey]

private jet because here's the stuff. Like, I don't know if you guys know this, but. Well, you do know this because Brian told you he still reads every single book review that comes in On Millionaire Mission, like, we read the YouTube comments. We're out in the discord. We read the red. Like, we try to stay plugged in. Uh, so I. We.

[Brian Preston]

It's impossible to see everything, but we do see some things.

[Bob Ribey]

We do see some things.

[Bo Hansen]

You also can tell when I'm on vacation because I respond to a lot more comments and then get in a lot of trouble with the. With the content team. Like, what are y' all doing? What are you doing? I'm like, oh, I couldn't help myself. You gotta seen all the ones I didn't respond. I wrote. And I was like, brian, don't write. Don't hit that. Don't hit that publish.

[Bob Ribey]

You ought to see the ones I didn't. That's like the. That's the math my wife does when she goes shopping. You should see all the stuff I didn't put in my cart. You should see all the stuff that I didn't buy. We made a ton of money today.

[Brian Preston]

Oh, man.

[Bo Hansen]

No. Where my wife gets us on that is, like, she'll go return $200 worth of stuff, and then because she only spent 220, she'd be like, I can't believe I got all this stuff for $20.

[Bob Ribey]

That's amazing.

[Bo Hansen]

You did not get all that for $20. You got all that for $220.

[Brian Preston]

I knew what you did, though.

[Bob Ribey]

We're about to go. We're going to the beach next week. And Jenna was like, hey, just so you know, you're gonna see a bunch of charges come through. But I didn't know what size me and the girl needed, so I ordered, like, three or four different sizes. And so just so you know, all that's. And I'm like, if it goes back, so long as it goes back and it doesn't turn into exactly what you said reabsorbed into the spend.

[Brian Preston]

Don't even get me mad about shopping online.

[Bob Ribey]

She watched the show, so I know

[Bo Hansen]

she didn't watch any of these shows. That's why, you know, you're safe.

[Bob Ribey]

She's super involved in the live chat.

[Brian Preston]

I hope one day she is.

[Bo Hansen]

By the way, I do want to give a shout out in a psa. You know, I mentioned a few weeks ago that I had something cut off my face, and. No, seriously, it came back that it was precancerous, you know, because it was one of those things that, look, it's fine. I got it on the early stages, but I want to give a shout out to my page. She really did a great job of making sure. And she said, make sure you put on sunscreen. And I found out she watched the live stream. So I wanted to make sure I corrected after making some of the jokes I'd previously made.

[Brian Preston]

That makes it sound like he was just off the rails with me. You guys are fun. Okay, speaking of fun, it's time to do our it does not depend Rapid fire segment. Brian, are you ready?

[Bo Hansen]

Yeah. I was going through what I just said, making sure. Do I need to apologize now or later? Because in three months I have to go see her again.

[Brian Preston]

Oh, man. The it does not depend Rapid fire segment is where Beau and Brian have a combined 30 seconds to answer your financial question. But remember, they cannot say the phrase it depends. You know, we've had some people calling out, you are getting creative. No, we're not. You are saying basically it depends. So I'm gonna my antenna up today.

[Bob Ribey]

The rule is you can't say it depends and we don't say that.

[Brian Preston]

Okay? Okay.

[Bob Ribey]

Okay.

[Brian Preston]

We'll see. And remember, at the end we will have a segment where they can say all the things that they didn't get to if there's some nuance that needs to be clarified. So with that, let's get 30 seconds on the clock and dive in to question number one.

[Bo Hansen]

Okay.

[Brian Preston]

Is it better to pay for a used car in cash and drain my emergency fund or get low interest financing and make extra payments? I know mathematically lump sum wins, but I am wary of no emergency funds.

[Bob Ribey]

I don't like people riding with no emergency funds. So if you must borrow, then that's okay. Try to get as favorable as a rate as you can, either through the dealer you're buying from or maybe through a local credit union. We don't love debt. We'd rather you pay for it. But that's why 23eight exists. So you don't get yourself in a predicament.

[Bo Hansen]

You can't blow through all your emergency reserves. I'd rather you, if you have the ability, drive whatever clunker you're currently driving for another few months so that you can keep reserves and pay cash. Otherwise, that's what 23. 8 is for.

[Brian Preston]

Not too shabby, Brian and Bo. Next question. Europe, it says. I feel like I cannot get out of step two of the foo. My employer does a 25 cent match to every dollar without a cap. At what point do I move on to the next steps?

[Bo Hansen]

I mean a good start is go to our website, moneyguy.com resources how much should I save? And you can that at Least that way if you're in your early 20s, maybe it's 10, 15% and then you can move on to get into Roth and other things. But you're probably going to want to come back pretty quickly.

[Bob Ribey]

Yeah, I'm not going to do the public math on this, but 25% match up to every dollar that you put in there. That means that if you were to max it out at 24, 5, there's just tons of free money that's going to come your way. I think you got to get as much of it as you can because that's what's on the table.

[Brian Preston]

Maybe we'll come back to it, but that was a pretty good answer.

[Bo Hansen]

I will say, what if they got credit card debt?

[Brian Preston]

Next question.

[Bob Ribey]

It's 25.

[Brian Preston]

We'll come back to it.

[Bo Hansen]

We might have something that broke the system.

[Bob Ribey]

All right, next question.

[Bo Hansen]

They're paying 26% on that credit card.

[Brian Preston]

Should your dream or luxury home upgrade ever cost more than your total investable assets?

[Bob Ribey]

And why has a dream upgrade cost?

[Brian Preston]

Should your dream or luxury home upgrade ever cost more than your total investable assets?

[Bob Ribey]

I'm going to err on the side of no. I think it's like home renovation, home improvement or buying the next home.

[Brian Preston]

It says an upgrade.

[Bob Ribey]

I'm going to think home renovation, home improvement. No, that's my answer.

[Bo Hansen]

No, because, I mean, I want to talk about this with a little more detail, but I would feel weird. If you have a $2 million portfolio and you buy a three million dollar house is because toys caught more cost than toys.

[Bob Ribey]

All right, I just.

[Brian Preston]

We'll come back to it. But what. Next question, next question. This is rapid fire. It does not depend.

[Bob Ribey]

I'm making a note on that one.

[Brian Preston]

What is the best way to celebrate financial independence?

[Bo Hansen]

You're up. I would, I would immediately plan a trip or do something that gives you tremendous joy and excitement and, and take some time to, to in the planning stages to, to think about the journey you've been on.

[Bob Ribey]

I think travel, a big trip is a great way to celebrate financial independence, but doing something you've never done before. So don't like, oh, we're going to go, we're going to just go to the beach again. Go somewhere you've never gone before to have an experience you never had before. So that way it really is like a monumental, momentous celebration.

[Bo Hansen]

Big family dinner, too.

[Brian Preston]

Yep, that's a good one.

[Bob Ribey]

Love that.

[Brian Preston]

Do I prioritize saving for a master's degree or Investing in Roth IRA?

[Bob Ribey]

Is it me or you 7,500? Both. Roth IRA. You got. Yeah, you gotta do the Roth. You gotta do the Roth. You gotta do the Roth.

[Bo Hansen]

It depends on your.

[Bob Ribey]

It does not depend. Staggum said it.

[Brian Preston]

You are discouraged qualified. And we will come back to it.

[Bo Hansen]

Oh my gosh.

[Bob Ribey]

I hope you're taking notes because we have a long segment of depending.

[Brian Preston]

Next question. I'm a state government employee. Should I use the Roth IRA my employer offers or go through Vanguard, Fidelity, etc?

[Bo Hansen]

Is there a match?

[Bob Ribey]

When they say Roth IRA, I wonder if they mean Roth IRA or if they actually mean like a Roth 457 or something like, like a Roth retirement account. Either way, one of the things we love is when you get to pick your own custodian, your Vanguard, your Fidelity, your Schwab. You don't have to pay fees for that. You get to choose the investments. Low cost, easy to access and portable.

[Bo Hansen]

Make sure though, if there's an employer match that you get in step two though, free, free money from your employer is very, very powerful.

[Brian Preston]

All right, next question. How much weight should we give an employer's 401k match and HSA contributions when evaluating a job offer versus a higher base salary? Is there a rule of thumb?

[Bo Hansen]

I mean, I think that definitely base salary is more important than benefits, but you're crazy if you don't take into account free money when you're doing your full analysis.

[Bob Ribey]

It's toppings to me. The salary and the trajectory and the opportunity, that's the main course. Then the benefits, employer match, HSA contributions, those sorts of things are the toppings. Now if it's RSUs and options and part of your computer, that's different. But if it's just employer free money toppings.

[Bo Hansen]

That's the frothy part.

[Bob Ribey]

That's the frothy part.

[Brian Preston]

There it is.

[Bo Hansen]

Just for the bingo cards.

[Brian Preston]

Next question. Is it okay to prepay our mortgage with a refi or recast if one spouse is stepping away from work and we will lose a lot of income?

[Bob Ribey]

You need to determine where you are in your financial journey so that you know if prepaying the mortgage is going to inhibit you from reaching your other loss long term financial goals.

[Bo Hansen]

Was it prepaying mortgage or they want

[Brian Preston]

to prepay our mortgage with a refi or recast?

[Bo Hansen]

I'm just gonna say depends, but essentially blow it up because there's so many variables I need on that one. I can't give a good answer with

[Bob Ribey]

a spouse walking away. It's not going to make sense.

[Bo Hansen]

I don't Want you having more debt over time.

[Bob Ribey]

But they're talking. No, they're talking about prepaying. They're talking about doing less debt.

[Brian Preston]

But someone said the forbidden phrase. We're moving on to the next question.

[Bo Hansen]

I spiked the football to hope y' all are ready to be here for

[Bob Ribey]

two hours today for us to go through all these? It depends.

[Brian Preston]

Oh, we'll get through it. Is it better to take a pension as an annuity monthly payment or as a lump sum one time payment?

[Bo Hansen]

Oh, you can't even. There's no way you can answer that one without going through.

[Brian Preston]

Brian, you're a creative guy.

[Bo Hansen]

Look, go. I'll pass.

[Bob Ribey]

Lump sum makes the most sense when you've done the calculation to determine. Determine the net present value of the future cash flows in today's lump sum. You do the calculation. You determine which one has a higher net present value. You make the decision based on that.

[Bo Hansen]

Don't y' all feel like Charlie Brown? Because we couldn't. We can't give the details in 30 seconds on that.

[Brian Preston]

Brian, you gotta get back up again. You just said it depends one time.

[Bo Hansen]

These are, by the way, they are now gaming us. These are all systems that should say. There are a couple that I'm like,

[Brian Preston]

that was a good one. They got them.

[Bob Ribey]

You don't have to say depend. You just walk through A, B and C. You know, you say all the things.

[Brian Preston]

That's right. Okay, last question. Best midlife crisis. Purchase a convertible sports car or a vacation home. If it doesn't break the phone.

[Bo Hansen]

Oh, how much money you got in the bank?

[Bob Ribey]

If you're a friend of mine, I'm gonna go vacation home because I will get more utility out of that midlife crisis of yours than I will out of your sports car.

[Brian Preston]

Answer. Good answer.

[Bo Hansen]

The car. The car is gonna have a limited burn rate on you, Whereas vacation homes, you might find there's a lot more costs associated. So I need to know how deep your pockets are.

[Brian Preston]

That was a good answer, too.

[Bo Hansen]

Yeah, but that was a depend.

[Bob Ribey]

More unlikely for the car to break.

[Bo Hansen]

That was a depend.

[Brian Preston]

You did it correctly, though. You did it great.

[Bo Hansen]

I did it properly. But it was in a dependent.

[Brian Preston]

You satisfied the rule.

[Bob Ribey]

Say you don't. You're saying the quiet part.

[Brian Preston]

That's the fun of it. Brian, I was. I'm cool with how you answered it. I thought it was great. All right, that concludes our. It does not depend.

[Bob Ribey]

You. You. And then you were like, you were done.

[Bo Hansen]

Okay, let me. I can hit a few of these.

[Brian Preston]

We have a few Okay.

[Bo Hansen]

I think like the vacation car, vacation home version.

[Brian Preston]

Should we go in order, you think?

[Bo Hansen]

Okay, okay, okay. We can do that. I'm sure I'll forget.

[Brian Preston]

I knew Bo would want to go in order. He was like, yeah, go in order, Go in order.

[Bob Ribey]

You set off a guy. Get the point.

[Bo Hansen]

I'll make this show go much faster.

[Brian Preston]

We had one where somebody could knock it out of step two because they have a 25 cent match on every dollar without cap. And there was a lot unsaid. So what else do you want to say? Does depend for that all knowing?

[Bo Hansen]

Bo, what if their credit cards at 26%?

[Brian Preston]

Yes.

[Bob Ribey]

If I put in a dollar, that means you put. My employer puts in 20.

[Bo Hansen]

It's also gonna probably have a vesting schedule to it. So there's issues with that too.

[Bob Ribey]

Yeah.

[Bo Hansen]

Whereas the credit. Credit card companies go hit you at 26% no matter what right away.

[Bob Ribey]

Okay. So now as I'm having time to think through this, I want you to not have credit card debt. And I also want you have an emergency fund. Because I am thinking through. It'd be pretty negligent to have that.

[Brian Preston]

It's a painful one.

[Bob Ribey]

I can't have an emergency fund. But if my employer were just like, hey, I can't wait to do dole on you free money. I'm doing everything in my power to live as small as I can. And I mean, like some really creative stuff to be able to like do step two, race through step three, race through step four, so that then I can go back and load up that step to the full extent. Because if the employer just wants to, like, give you money, man, I want you to be able to capitalize on that.

[Bo Hansen]

Well, that's why the realistic is that if you, if you're in your 20s, you're probably gonna do the employer match first, 15% of your pay. And then that way you can pay off the credit card, get the emergency reserves, then even potentially do your Roth because you're. But if you have a Roth 401k, you might go back to the 401k after you get the emergency reserves. Just because you could do the Roth 401K and get that free 25%. So it is going to modify. That's a very generous benefit that you need to plan accordingly.

[Bob Ribey]

That's right. Hey, did you see Aaron dropping with her? She made a joke about a midlife crisis. Girl, you ain't midlife yet. You can't have a midlife crisis if you're not midlife yet.

[Bo Hansen]

Fair.

[Bob Ribey]

She not there yet.

[Bo Hansen]

I feel like you can say that, Darren, because y' all are, y' all are in a similar stages of life.

[Bob Ribey]

I'm not there yet.

[Bo Hansen]

But Erin, you know, she let us know we got some things she's, she's feeling a little bit. She's got some good upgrades in her life and things going on. So I think she probably.

[Brian Preston]

And she said she bought a unicycle for her midlife crisis.

[Bo Hansen]

She bought a unicycle.

[Bob Ribey]

Sounds dangerous.

[Bo Hansen]

Aaron, don't hurt yourself because the body, it takes a little longer to heal the older we all get.

[Bob Ribey]

Don't hurt yourself. But also make sure you film that and put that up. You rock that unicycle.

[Brian Preston]

All right, we had, Beau had a note on should your dream or luxury home up upgrade ever costs more than your investable assets.

[Bob Ribey]

Here's what I just want to, I want to be intellectually honest here because I agree with you. If you got a $2 million portfolio, you should be wary, wary of going to buy a three million dollar house. But like what if you're upgrading and you've got like a $500,000 portfolio? But I'm thinking like around here trying to buy a home in middle Tennessee point, like the way that home prices have increased any second home, certainly in an area, you know, like, like where we have the, the costs have just risen so much. I think a lot of people may find themselves in a million dollar home before they get to a million dollar.

[Bo Hansen]

That's a great qualifier and that's a great depend in the fact that if you're like under 40 and you're like in the messy middle with kids, I could see how there's a point where yes, the cost of your house might exceed where you're investing.

[Brian Preston]

And you can still do that following money guy home buying rules.

[Bob Ribey]

Absolutely.

[Brian Preston]

You could do 3, 5, 25.

[Bo Hansen]

But if you're a. So I'm willing to qualify that for somebody who's in their 30s, in the messy middle stage, you're trying to buy the house that you go raise the kids. There is an asterisk that I will say. But what I, I still hold true. I don't know how old this person was that was asking a question. If you're in your 40s, though, and now you're doing it because maybe on paper for qualifying for underwriting, you look like you're upgrading for the sake of upgrading. And I see a lot of people, people in our area do that. And it drives me crazy when I ride through the. I go do the tour of homes every year.

[Bob Ribey]

I do too.

[Bo Hansen]

And I could, I love it so much. You know. And I think about, I'm like, who is buying these? Because I could afford these homes.

[Bob Ribey]

Have you gone? Have you gone look at these homes?

[Bo Hansen]

I, I could afford these homes that we go look at in these tour homes. But then I always ask myself, and this is why I end up doing commercial real estate, is because I'm like, wait a minute, I could buy this house for $6 million. But then I think about, do you realize the opportunity costs that I'm giving up those assets, My army of dollar bills living in a six to seven million dollar home versus letting that money, even investment asset. It just blows up in my mind how that, that's why I don't like the idea of buying the trophy piece.

[Brian Preston]

That's true. And this is saying luxury or dream home upgrade. So 3, 5, 25 doesn't even come into play. There's so money guy home buying rules that apply.

[Bo Hansen]

Yeah.

[Bob Ribey]

Like if you're buying your dream home, you need to be far enough along in your financial journey that the dream home is not, not an impediment to you being able to achieve your financial goals.

[Brian Preston]

Because like upgrading to have a house large enough to raise a family isn't necessarily a luxury home.

[Bo Hansen]

You know, the diminishing return on, on what luxury is, gets so, so small. Unless you got an incredible view. Now you put the ocean out there. You put a mountain.

[Bob Ribey]

Mountain.

[Bo Hansen]

That, that's where million. You know, I get, I get why people pay for that stuff. But you're gonna find a diminishing return once you can buy the water pumps to give you instant hot water. That's not as expensive as you think. And you can have tankless water heaters where you have unlimited hot water.

[Bob Ribey]

Yep.

[Bo Hansen]

You go find out that there's just, there's not much more that you're getting out of. It's just like you look at square footage. That's what like when you upgrade your phone, there got to a point that you just weren't getting the speed. They could tell you how much faster your phone was processing and you just didn't feel it anymore. I'm telling you, it happens that way with upgrades. So that's why be honest with yourself on what you're really getting out of this luxury home because it might be the opportunity cost is too much.

[Brian Preston]

Yeah. Tell me if there's a perfect answer there, but definitely be cautious is what I'm saying.

[Bo Hansen]

Well, I just want people because I think a Lot of you, you're like, we are, we come from humble beginnings. You start having some success and you're trying to figure, nobody tells you how to be wealthy and you're trying to figure out where's the balance from living your best life but also squandering this money. And also, and this is, you know, some of the influencers I've talked to in our, in our, in our influence that we're buying massive houses. I said if you're raising kids, pay attention to that too. Because if you want your kids having that traditional, I'm gonna go down the street and play with my neighbors and you know, and play in the woods and do all the stuff that is considered more in the past.

[Bob Ribey]

It's hard to do in a traditional.

[Bo Hansen]

If you live in a super nice neighborhood where everybody's 60 plus and, and they all living on 2 acre, 3 acre, 4 acre tracks, you're probably not going to get the same neighborhood experience that maybe you want to repress or push down the lifestyle out of choice so that your kids get the better raising experience. Because you can mess your kids up by giving them too much and living in a weird experience too.

[Brian Preston]

Right? Well, Brian, there were two questions where you said it depends and didn't really end up answering.

[Bob Ribey]

Do you want to shout which one was that again?

[Brian Preston]

One was, do I prioritize saving for master's degree or investing in Roth ira?

[Bo Hansen]

Well, I think, you know, this goes back to. In the beginning of your journey, your career choice is one of the most important decisions you can do. So don't go back to school. We've told you. Education. I love education, but I'm mad at the institutions for how much more expensive education costs have gotten over just even inflation. So they don't have your best interests. So you need. It's on to you. Buyer beware you. Is the degree actually going to generate additional income for your family? Don't go off the brochure anymore. Unfortunately, they want your money, so pay attention. If it will really, truly increase your earning potential over a lifetime, then that is very valuable to do. I mean, without a doubt, I wouldn't be who I am if I had not gotten the accounting degree.

[Bob Ribey]

But you ain't got no master's degree.

[Bo Hansen]

I don't have a master's. But now I would have to. I would have to. I told you. Jonah.

[Bob Ribey]

Yeah, yeah, yeah. No, he had to.

[Bo Hansen]

I told Jonah would have been a year further in his career, but he was already. And I said, go back and get the master. So you can sit for the CPA exam. And I think it was good advice.

[Bob Ribey]

It was great. I don't disagree with anything you're saying, but I would do everything in my power to fund Roth IR. Roth IRAs as early, as often as I can.

[Bo Hansen]

So like that.

[Bob Ribey]

If it's between like, oh man, I gotta write a check for this master's degree for $7,500 or I got to put 7, 500 in my Roth, I'm going to figure out how. I drive Uber, I do Uber eats. I'm going to go figure out what I can do to be able to pay for that master's degree without sacrificing getting money in that Roth. Because I just, especially if you're young, if you're around the age that most people go pursue a master's degree, go to moneyguy.com resources, put 7,500 in the wealth multiplier your age and see what every single Roth contribution can turn into for you. Man, I would love for you to not miss out on that if you didn't have to.

[Brian Preston]

All right, Bo, did you have any other notes? I know we talked about an annuity, taking a pension or a lump sum and prepaying a mortgage.

[Bo Hansen]

I can say one quick statement. Every pension plan has different assumptions. When they design a pension, they have to put in what is their guaranteed rate of return. That's built into it. There's also how well funded the pension is. These are all variables. And a lot of times you'll find out is that they, when they come up with these early retire options, sometimes they goose them, meaning that they, they, they, they give you really good incentives because they're trying to offload the liability, then you should probably in those situations take the lump sum. Because if they, if they front end loaded this by giving you a lump sum that's really over the top. But in other situations we've seen where they made too good of a promise and they have a tremendous amount of assets in the bank. So this thing's not going to blow up. They're not going to the Pension Benefit Guarantee Corporation and getting out of the obligation. Then you should take the annuitized benefit. That's why it really does depend. This is our bread and butter. Don't just make assumptions, do the math. And sometimes people don't have the ability to do the math. That's where we come in and we help clients take it to a relationship to the next level.

[Bob Ribey]

Yeah, it's really interesting. We've had clients same age, same size portfolio, relatively Same pension offering different companies. One client, it made sense for them to take the lump sum. The other made sense to annuitize just because the pension differently. Now check this out. We've had clients for the same company, but they retired on different timelines. One retired five years before the other because of the way their pension plan worked. For one of them, the lump sum made the most sense. And for the annuitized, it is not something that stays constant in time. So we tell people is when you're like four or five years out, do the math. And then, then do the math again, three to two years out, then do the math again one year out and then do the math up till the day you have to make the decision on the pension because it can change which one is most advantageous.

[Bo Hansen]

And there's also the math gets really complicated because when you die with a pension, once it's annuitized, your beneficiaries don't get anything. So you have to take into account the higher withdrawal rate because essentially it's a higher, you're burning through the assets, taking it to zero because you're dying with zero on those assets. And there's a legacy factor that we can build that into our analysis to figure out so you can make sure you measure twice, cut once, and you know all facets of this complicated decision.

[Bob Ribey]

And the last one that he wanted to start with was the thing about the mortgage. All I wrote was, Mort, I don't know what the question was.

[Bo Hansen]

It was should you midlife crisis, should you buy a car versus a house?

[Bob Ribey]

No, no, no, not that one. It was should you refinance to pay down the mortgage if your spouse is stepping away?

[Brian Preston]

Yes.

[Bo Hansen]

Well, I want you to reread the question debt free as possible.

[Bob Ribey]

Reread the question.

[Brian Preston]

Is it okay to prepay our mortgage with a refi recast if one spouse is stepping away from work and will lose a lot of income?

[Bob Ribey]

My spouse is stepping away. We're going down. So we're going to recap, we're going to try to prepay a bunch of money on the mortgage to get our payment down is the question.

[Bo Hansen]

Here's the problem. If you, if, if you do that, you lose access to that money. So if life throws any curve balls with you and the house is not completely paid off, it's a riskier endeavor. Sometimes it's better to have money in the bank and then that way, yes, you still have your existing mortgage payment, but you also have access to capital that you can pay down. Whereas the banks are very Unforgiving if you did anything wrong.

[Bob Ribey]

And I don't want to pick a fight here, but in the comments all the time, I know we're going long. Sorry Ruby. I know we get this coming all the time. Oh gosh, you always. I've never heard anybody say, oh, I'm so sad. I have that paid for house. That's not true. We actually. You have an experience of someone that you had a conversation with who said that very.

[Bo Hansen]

Yeah, she came to me. Y' all have heard me tell this story before. I had a widow who unfortunately her husband passed away and I think she was in her 40s when this happened. And she came into some life insurance proceeds and a lot of people had come to her and said, just pay off your mortgage. And so she just paid off her mortgage because she got an advice, somebody saying, hey, just be completely debt free,

[Bob Ribey]

which is a noble idea.

[Bo Hansen]

And then she said, you know, and especially in our neck of the woods. And then. And she came to me and she goes, brian, it was a disaster. She goes, because nobody told me how expensive it was to raise these kids without my husband's income being here. And I just got in a situation. She didn't have enough emergency reserves. She didn't have. There's a process before you write that check to the mortgage company that you go through is because the banks don't give you. When you're in a desperate situation, they don't get excited for you. They look their chops because they know that hey, we're a house with a lot of equity potentially is going to become ours again. Be careful with that. Sometimes you need to. That's why we have an order of operations is because I don't want you to run yourself so thin on the capital of liquidity of, you know, having cash reserves and so forth that you can't even pay the bills. And so this poor woman was in a situation. Yes, she was debt free now, but she didn't have the money coming in to pay for her kids, to pay for the other stuff that money would have probably she needed a period of time probably where she would have had this lump sum of money, several hundred thousand dollars to help her figure out how life is going to work while she was making the monthly mortgage payments. Then yeah, down the road after she figured out how much is appropriate in cash reserves, how much she needed to live off of. Then yeah, maybe throw a little money at the mortgage to pay it down even quicker. But there was a lot of steps skipped just because it was easy. Give advice of just pay off the mortgage.

[Bob Ribey]

That's right.

[Brian Preston]

Wow. You really covered a lot of bases and financial mutants, you really stumped them in the rapid way far today.

[Bob Ribey]

Thank you.

[Brian Preston]

That was good. A lot of stuff really did depend

[Bo Hansen]

just to close the circuit. For me, it's easier on the midlife crisis or whatever.

[Brian Preston]

I knew it.

[Bo Hansen]

Buy a car, expensive car. Because yes, that was versus a house because there's just a lot more ongoing expenses to buying a vacation property. That's why you'll find a lot of people buy vacation properties and they realize, oh my God, this is a headache. I just went down to ours last week and immediately I have somebody who helps me out and comes and does stuff when I'm not there. I was like, the landscaper stinks. So we, you know, I started trading tax pool pump needed something. There's a mouse in there that I felt like Wiley Coyote and. And the Roadrunners because I was baiting traps. And the thing for some reason wasn't

[Bob Ribey]

there's a mouse in the pool, not there's mouse in the house.

[Bo Hansen]

No mouse in the house. So I mean it was all, all these things. When you do vacation properties, just know that there's going to be curveballs. It takes your time. It takes. Even if you have somebody who helps you with this stuff. Whereas a car, if you're going to go do a splurge, the car is going to be the easier of the two.

[Bob Ribey]

It's gonna be the less, less risky. Likely.

[Bo Hansen]

Yeah. I didn't really want a house, but I looked at how my wife, our life was being used and I was like, okay. And it was a good purchase. And even with all the headaches of a second house, it fits my life very nicely.

[Brian Preston]

Yeah. All right, really good thoughts. Thank you for all of the questions submitted today. Thank you for joining us for the live stream. And we'll be back every Tuesday at 10:00am Central Time. And until then, be sure to check out moneyguy.com resources where we load you up with free calculators and downloads about tons of the stuff that we've talked about on the show and more. So be sure to go check that out. Moneyguy.com resources.

[Bo Hansen]

I mean, I don't know if anybody's left because we've gone over but. And everybody's probably have to get back to their day job. But hopefully you can tell from the way honesty and transparency we flow through on the show. We come from humble beginnings, but we try to tell you the way money really is. I don't think there's a lot of people that are out there doing that. And that's what that's our promise to you guys. We love. That's why we've created the financial order of operations. We want you to be able to use money, this tool of money, and do it that much better. And that's why we get really excited about creating this type of content. I'm your host, Brian, joined by Mr. Bob Reby and the rest of the content crew. Money Guy out.

[Bob Ribey]

Happy birthday, Jake.

[Brian Preston]

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 not constitute financial, tax, investment or legal advice. All investments involve a degree of risk, including the risk of loss.