← Money Guy Show
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- [00:01]
A
So good, so good, so good.
- [00:03]
B
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C
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B
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- [01:01]
C
You're not going to be happy until you have X, right?
- [01:05]
A
I am, I am so excited to talk about this because I think there is this idea all, all of us fall into this camp or a lot of folks fall in this camp where man, if I just had a little bit more, if I just made a little bit more, if there's just a little bit more in my bank account, surely this that would ultimately lead me to be more happy. But Brian, I don't think that that's true.
- [01:29]
C
Look, a lot of people, I think they this is where you can turn money into an idol or you can turn money into something that it just is not. And I think it's. But. But I also want to be honest because we've been poor.
- [01:42]
A
Sure.
- [01:43]
C
And now we kind of live in this, this abundance. And I will tell you, money can be an amplifier thing. So I don't want to be so tone deaf. You're like, money doesn't actually buy any happiness. No. You a boat as somebody might put in a song lyrics or it can get you, you know, good tickets to a concert where you. There's a reason when we watch the Bachelor, you know, the everybody falls in love with everybody because they have set up the right scenario for things. But getting to the point of what money can and cannot do, I think it is important for us kind of dispel some of the rumors.
- [02:16]
A
Yeah, it's interesting. Now you guys are all financial mutants so perhaps you're already in that camp of money can't buy happiness. And I get that. But would you believe according to a study by Empower, 51% of Americans, so one out of two of your peers actually say that money can buy happiness, that it is something that can be acquired by monetary means. So if that's the question, then the next question that it becomes is, well, how much will it take? How much money would be required in order for me to be happy?
- [02:52]
C
And here's the most human nature answer you can give. The answer is more.
- [02:56]
A
More. No matter where you are, more.
- [02:59]
C
You see that in how many times have you set a goal for yourself? You reach that goal and you look around, you go, huh, I think I'll be a little happier when I get more. And that's what even the data shows is 74% of people say having more money would solve most of their problems, not what they currently have. More 74%. And then how about 71% said even as little as $5,000 would boost their happiness for at least six months. And I'm here to tell you, there was a moment in my life where I would think about, you know, you listen to the radio driving in that dates this right there. Just the fact that I was listening to the radio and they'd have a morning on the drive in shows, they'd have, you know, giveaways where like, we're going to pay your bill. Sure. But, you know, whatever your biggest bill is for the month, we'll pay it. If you're, you know, caller 97 or whatever, you know, if it was 97 Fox or 99, 7, if you, if you're from Atlanta or 96 Rock and all the Atlanta stations that were big back then. And the thing is, it really would change your life because you're thinking about covering the basics and it's not.
- [04:07]
A
So we're always talking about, like having more and more wealth and more saved up. But I think a lot of people, when they're talking about having more, they mean income. And what's really interesting right now is that there is a, there's a large disconnect between what is reality when it comes to income as well as what is perceived when it comes to income. Because would you believe that right now the average American believes that they would need to earn $284,000 a year, $284,000 a year in annual income, to quote, unquote, be happy that is so far away from so far off from the median income in America? I think that there is, there's a, there's a perception disconnect, for sure.
- [04:56]
C
Well, I mean, it's practically triple median average median house three times. And that would put you in the top 3% or in the, you know, better than 97 percentile.
- [05:06]
A
Yeah.
- [05:07]
C
Of the rest of your peers. So that's a disconnect. So that's what we wanted to kind of figure out what is. There's gotta be some research on this. What can actually make people happier.
- [05:16]
A
Yeah. So we said, okay, if. If it's not money, that will do it. And we believe, because obviously we have done this ourselves. We've also worked with clients all over the country in different various stages of life. And we've seen that exactly what Brian said. Money is not the mechanism that delivers happiness. So if money's not the thing, if wealth is not the thing that delivers happiness, what actually will make you happy? And there was a great article. This came out a number of years ago. This is inspired by Jonathan Clements. And one of the things the article walkthrough is that one thing when it comes to true happiness, the experiences you have, the environment you're able to place yourself in, will likely lead you to happiness much more than how many zeros are in your bank account.
- [06:02]
C
Yeah. You know, by the way, I want to give a little love to Jonathan Clements. He's. He passed away last year. If y' all follow his content, y' all know I have a special place for him because he was also. It was one of Jonathan's Wall Street Journal articles that I showed to Clark Howard back in 2005 that kind of inspired even the Money Guy Show. So this is so Jonathan and I always loved. He wrote books, he wrote articles for the Wall Street Journal. He did great research on what it takes to create happiness. And I love the fact that he focused on experiences over possessions. But then the next one, because this is what I found in my own journey when I started, you know, because I think a lot of us say, If I have $1 million, or if I, as Chris Jansen said, if I could buy a boat. What I think people are really saying a lot of times when they do this is what's really important is if you have the people around you, it's your family, it's your friends. That's why the experiences coupled with having friends and family that bring you happiness and fulfillment, that's where we're really getting into, you know, what money can amplify for you and your life.
- [07:04]
A
So obviously, having experiences rather than buying things, spending time with people that you care about and building relationships, but it's also about what you do with your time. Two other areas they said what actually to happen is one was giving back, figuring out how do you serve your community, serve those around you? How do you pour back into Those that have poured into you and then also engaging in passionate work. It's not about just checking in and checking out and going to find the vocation or the thing that pays you the maximum dollar, but it's about actually feeling passionate about the things that you're doing, whether it be through your vocation or in your extracurricular time. If you can find the things that actually bring you fulfillment and devote your time, energy, efforts, and talents towards those things, there's really high likelihood you're going to be happier because of that.
- [07:52]
C
And then this next point is more prescriptive, but I think it's getting to the point of just understand the value of your time. And that's where, you know, there's a lot of research that shows people who. Now look, we do a podcast on a YouTube channel. So a lot of you guys, we like commutes. You know, we need you to have long commutes because you could actually absorb and enjoy our content. But there is a lot of happiness research, research that shows that sitting in the car 35 minutes to an hour each way can actually take away from your overall happiness. Be aware of that. And then the kind of. The closing point here, and I always thought this was great, is spiritual fulfillment. What that means is, can you build a life outside of yourself? I thought this because you saw tendencies of this with the giving back. Because a lot of people turn money into an idol and the fact that they think that it will drive their happiness. But a lot of the research shows is that this is why it's better to be generous. It's better to give than to receive spiritual fulfillment. Trying to get outside of yourself so that actually when you wake up in the morning, you feel like you're making the world a better place, but you're also connected to something bigger than you. All of this will lead to a more fulfillment or happiness state than, I think, people who are just focused on what money can do to. To the end of trying to get to a million dollars or $5 million without knowing the why of what that money can do.
- [09:19]
A
So all of these are the things that can actually make you happier. But I don't want us to do it as service. Obviously, if you have wealth and if you have money and if you're able to save and if you are able to build, having resources does allow you to do more of these things. It allows you to have more experience. It allows you to spend more time with friends and family, allows you to give back more. But it is a tool moving towards these Common goals. It is not the goal in and of itself. And I think far too many people do that. They say, okay, if I just get to a million, then, if I just get to 10 million, then what we would then ask is, okay, well, so what, you have a million dollars in your bank account. What would you do tomorrow if money was not an option? Okay, great, are there ways you could begin doing that now? Are there ways you can start moving towards that goal even today, so that you're not having to wait for some future happiness, some future fulfillment or something? You can do both in the here and now and also in the future.
- [10:18]
C
Well, and I think the kind of close. Put a, put a bow on this is a lot of people, because you're, a lot of, you are like, where's the 75? Because anytime anybody does financial content on happiness, you hear that $75,000 stat from Princeton, that research. And look, we've already dispelled that, we've done other shows on what money can do. I think that that is understanding, covering the basics there is without a doubt. That's why when we built the financial order of operations, the first few steps are to help you keep your life out of the ditch for making desperate decisions. That $75,000 that came out in the Princeton research, you now, if you adjusted it for inflation, would be around $107,000 today. That's the amount of money that lets you at least not be stressed out about how you're going to pay for the food for your family, how you're going to pay for the rent. But that's why when we cover topics about fulfillment, because that's really, when we talk about happiness, I think people are really talking about fulfillment. It's how do you become the better version of yourself and how do you own your time and, and that's why we love creating this content, is because we not only give you the analytics of the math, but we also try to give you the why so you can make sure as you're going through your twenties, you maximize the moment while putting a little bit for the future. While you get in the 30s and you're messy middle, you don't miss out on everything that you should have. I don't want you to have that goal of that I'm going to defer, defer, defer. And I live my best life in my 50s and 60s. No, I want you to enjoy your 20s, your 30s, your 40s. You only have one life on this planet. We want to make sure you give the right balance of what's money? What's happiness? What's fulfillment? And so you can be a financial mutant that lives your best journey through this walk.
- [12:00]
A
All right, I got three steps for you. Maybe you're new here. Maybe this is the first time you're hearing some of this, one of the first things you can do. Brian, will you hold the thing up for me? You already have referenced it. If you're trying to figure out, okay, well, how do I use my money as a tool to move towards these goals to We've designed a roadmap for it. It's called the financial order of operations. You go to moneyguy.com resources. Download your free copy of it right now. That's step number one. Step number two, you should subscribe to this channel. If you are not subscribed, you will not know when we are putting out brand new content. And by the way, we have some bangers coming out over the next couple months. So make sure you subscribe to the channel right now. That's step number two. Step number three. We love that we can answer your questions. It's why we show up here every single Tuesday morning at 10am Central to load you up. Because we really do believe there's a better way to do money. So if you want to get our take on something, you want us to weigh in on your personal situation, answer your question, make sure you get it in the chat. Right now we have the team out in the wings collecting your questions because our goal here at the money Guy is to load you up to help you go beyond common sense. So with that creative director Raby, I'm gonna throw it over to you.
- [13:13]
B
I'm excited to dive into your questions today. But real quick, I have something new and free that I wanted to make sure that everybody knew about.
- [13:21]
A
I like new. I like free.
- [13:23]
B
So do I. And this one is one we've been asked about a lot. It's specifically for our military service members. We have a brand new, very robust ebook out on our website right now. Go to moneyguy.com resources. The maximizing your financial benefits for military service will be right there at the top. All you have to do is put in your email address. It's completely free. We hope that this is a place where you can get a lot of your questions answered about the specific nature of your career path, your different retirement options, how buying a house becomes more complex. And so we know that while your job can be very rewarding, it's very high pressure. It comes with some unique opportunities and challenges. So we Wanted to provide you a resource for that. So go check that out. Share it with any friends that may benefit from that moneyguy.com resources. Very excited about that one. Honestly, we get that question more than you might think, like, all the time. Very vocal in the comments. And so I'm just really excited to get that out there for everyone.
- [14:22]
A
I've got a couple. Yeah, I've never, I never served, but I'm so thankful for all the. Why do you laugh at that? Because that's.
- [14:28]
C
If y' all didn't know, I don't mean to step on your point.
- [14:31]
A
That's.
- [14:31]
C
But I love. Because somebody asked me if do. Do you and Bo hang out? And I'm like, I don't have the right pedigree. Because now Bo. Bo. Bo is like, you know, to hang out with Bo after hours, you have to be an operator. No, that's not a former operator. So Bo does hang out with a lot of military guys. That is what I didn't mean to say.
- [14:50]
A
That's exactly where I was going. You know, I, I. A lot of these, like, military benefits, military families, they don't apply to me. But one of the things, as soon as it's dropped, I immediately reach out to my buddies, like, hey, guys, I don't know if this is valuable for you, but I'm just so thankful for all that you've done for us. Hey, go download. It's totally free. Check it out. Let it be useful. And so I'm sure that a lot of you have people in your life that same way. Hey, this is. If you know someone who could benefit. There are no strings attached. We just want to serve and love on those folks that are serving and protecting us. So it's a great thing to get out there. Feel free to use it inside of your circles. That's what I've been doing.
- [15:23]
C
Yeah. I mean, this. Once again, Franklin has dividends. I mean, we moved here for, you know, I moved here for my daughter to go to that unique school that she goes to, but it is. There's so many creatives that live here. But then also, I didn't realize so many retired, popular military folks. It's pretty amazing, this area and that's created some opportunities for you. But one of the things I like is just like we just did a collab with Aaron on Able Accounts, and we have an ebook out there for families with special needs children. And then I love the fact that we had so many questions from people in the military that we. These were books that were written to be sold. But then after we. We got to creating the content, we were like, you know what? This is so valuable. And I think it's such a small slice of the population. Let's not sell it. Let's actually just give it away. Let the abundance cycle kind of pay for itself. And that's what we're doing. So I'd encourage you, please go take advantage of the research that we've done, how we've tried to compile this, and hopefully it will help accelerate yalls journey to building your own abundance.
- [16:31]
B
That's great. And with that, let's dive into some questions. We will start with Beth's question. It says, we want to do an addition on our home. We have no mortgage. It says before we met you, so I'm guessing maybe they paid it off, but we can decide that later if we need to. We are prodigious accumulators in retirement accounts by money guy standards. What is the best way to access money to do this?
- [16:57]
C
Wow. Okay. So I can see already an issue. This is one of the troubles we share. When you're a debt crusader and you know, when I talk about this is why I'm so. A lot of people look at and go, what in the world is step seven doing for you? And what I love about step seven, the hyper accumulation, is this is the first time you actually look at your money because a lot of the savings is to keep your life out of the financial ditch. And then, you know, when you're going through steps one through four, it's to keep you out of the ditch. Steps five and six is really where you're starting to build your army of dollar bills. But it's step seven that says, how am I gonna use this money? What are my goals? So that way you can have a time and a place for every dollar. Since you've kind of been a debt crusader who then transitioned to maximizing the retirement savings, you're finding out, hey, I have this unique need where I don't have. I'm on paper worth a gazillion dollars, but I just don't have access to liquidity. That is a problem I've had. I've talked about financial mutants I've worked with on the client side that were worth, you know, seven figures with retirement assets but couldn't pay cash for the vehicle they wanted. And there are problems when you have money but no access to liquidity. We have to build a bridge somehow so you can still live your life without making bad financial decisions.
- [18:14]
A
Yeah, Beth, I have A few. A few. If we were having a conversation across from each other, I'd ask you, okay, well, how old are you? I'm assuming since you said we pay for the mortgage, I'm going to assume that you're younger, but you may be retirement age, you may be in retirement or near retirement. And also, how much is this renovation going to be? How much is this addition going to be? Is this going to be $30,000 addition? Is this going to be $130,000 addition? Because the size and the scope will affect how you ought to pay for it. And then I want to know what your current income situation is at, what's your household income? What are your sources of income? Because then you can figure out what are the appropriate ways to pay for it. Obviously, if you have a paid for home that you have a lot of equity in, certainly you could potentially go borrow money, do some sort of home equity line or something like that. For a short term, depending on your portfolio, you could potentially do some sort of security backed loan if you have a portfolio that would allow you to do that. Or depending on the size of the renovation or the size of the addition as well as your income, this might be something you could just save for. Hey, if we were to adjust it, if we're already prodigious accumulators of wealth, we're already well on our way to financial independence. We've already done the things, maybe we can back down our savings. We've tested to know where we are and we can save. Instead of diverting money to the retirement accounts, we can save for the next 3, 4, 5, whatever the number is for you, and we can just pay for it in cash. Or if you are of age and maybe you are retired, you're near retirement, this might be something where, if you are a prodigious accumulator, you could do a distribution. So you have a few different options. You can pay for yourself, you can go borrow money, you can distribute money. But you have to know more of the variables in order to figure out which one makes the most sense in your unique and specific personal situation.
- [19:52]
C
Let me give you some mindset things so you actually feel like you have some actionable steps here. Beth, I'm going to think I don't know your age. I wish we knew the age of Beth and her family. But the thing I'm thinking is that if this is something that you're not gonna be able to pay for because it's a big enough improvement in the first 12 months, then you're probably gonna need to. You can go look at a home equity line or something like that. And then I think you ought to go ahead and do the exercise of figuring out you had the curve behind the curve, right where you're supposed to be. I bet you're ahead of the curve, meaning on your long term savings goals since you have a paid for house. You said you're a prodigious accumulator of wealth. If you're ahead of the curve, you can dial back what you're saving and actually start devoting more of that money. But one thing Beau said is I always worry about because I'll put you on the spot. You wanted to put a swimming pool in the backyard.
- [20:43]
A
And we looked at it because I'm a great swimmer.
- [20:48]
C
That's obviously why people have practiced the swimming. No, this is for family memories purposes for sure. Because anybody puts a swimming pool. It's not the most efficient use of money, but it's definitely. Sometimes you get beyond money where it's more about what it can do for you for experiences and family and for. Maybe this improvement for Beth is the exact same way. And what I don't want you to do is wait three to five years to when you can just pay cash for it if you miss out on. Because if your kids are at the age where if you waited five years you're like what did we leave behind by doing this? And you've already shown a propensity of responsibility and discipline that you're living. I see nothing wrong with. Yes, it's going to stink that you're probably going to be paying an interest rate of like 7%. But. But if you can show me a process where you can pay this thing off very quickly and you have a plan and you can look at what that expense is, lay it right next to the moment in time, you have to make these memories. I think it's okay to do this because me and you work through those metrics of math and we're like this is okay. I'm going to be able to pay this off in this time. Yes, it stinks that I'm going to pay this little bit of interest, but I think it's okay because money is nothing more than a tool. And. And I just don't want you to look back when you get to be in your 50s and 60s. Majority of us financial mutants, we're not leaving this planet broke. What you're worried about is do you leave a deficit in the memory making. You could have, but there's a balance There because I don't want you to hear me say that and think that this is YOLO. No, I'm not YOLOing you. That's not 2012. Again, I'm just telling you I think there's a delicate balance there. To live your best life, make the memories you can, but also to use the tool of money to build for the future, but also maximize the moment you're living in.
- [22:30]
A
And look, I don't mind sharing. I did the whole exercise, like I wouldn't look at because we did a renovation, the pool and stuff, and I wouldn't put the sum of money it was going to cost. And I did, I went to moneyguy.com resource and I put in the wealth multiplier and I was like, whoa, right? Like it's. It was a significant investment, but we were at the right place in the financial order of operations, had the right mechanism to be able to pay off the home equity line quickly and work through the strategy there. And even on the other side, that even though knowing what this cost in terms of long term dollars, I have zero regret, zero buyer's remorse on it, because of exactly what you said. We are building memories every single day with our kids. It's changed the way that we use our home. So when you're thinking about this renovation, this thing that you're doing ought to also go through the exercise of why are we making this decision? Why are we adding this renovation? Why are we changing this? Is it something that we're actually going to use that actually makes sense, that actually justifies the cost? Or is it something that, oh, it just is a nice to have? Not an. Because the gravity of that decision will affect how much you're willing to sacrifice for that. Because every financial decision we have has opportunity, cost. If I do this thing, it means I'm going to forego this thing over there. You want to make sure that's a favorable trade off with whatever sort of addition or renovation you're considering.
- [23:49]
C
You know, a lot of times we have answers like this. A lot of variables that we say it depends on. This is why a good financial advisor, if you're at that level of success. Because we don't say it depends to clients. What we do is you have option A, you have option B, you have option C. Let's show you what this does and then y' all get to go on an adventure. It kind of reminds me of like a home improvement show when they're saying, hey, do you want to put Shiplap on this wall? Do you want to put pavers on this back patio? We actually get to walk you through the actual decision matrix of what those opportunity costs are. So you get to live your best life.
- [24:24]
B
Well, Beth, thank you for that question.
- [24:27]
C
I didn't mean to go seven minutes on it.
- [24:29]
B
That's all right. You gave her a thorough answer. And I mean, at the end of the day, that's why you follow the foo so that you can make these types of decisions and take what they were saying and apply it. And since you asked the question, a very exciting thing is that you get a money guy Tumblr day.
- [24:43]
A
Oh, it's a Tumblr day. Let's go.
- [24:46]
B
It's Tumblr day. So, Beth, if you would like a Tumblr, just email winner moneyguy.com.
- [24:52]
C
oh, look at it.
- [24:53]
A
There it is.
- [24:53]
B
Sending you one.
- [24:54]
A
I love it.
- [24:54]
C
Just transformed.
- [24:55]
A
Did you rebir you subscribed to our newsletter? Do you get the weekend Saturday newsletters?
- [24:59]
B
I am more than subscribed.
- [25:02]
A
I thought it was so funny. I don't know if you saw it because you were traveling, but the newsletter this week, there was a meme of the week in there, right? Like, and they do this every week. Quack, quack, quack, quack actually made itself into the meme of the week. So if you're not subscribed, make sure you go onto the website, subscribe to the newsletter so you can see all of these things and hang out with us.
- [25:17]
C
No, I do. I. I look at the newsletter every week because the content team creates that immediately of us. And I like to see what Easter eggs they put in there to see if we're the victim of it or if it, you know, what's in there.
- [25:30]
A
Almost exclusively the victim every single time.
- [25:33]
C
That's not true.
- [25:34]
A
It's okay.
- [25:34]
B
Our marketing mutants are so tickled right now. But it is a good newsletter. We wouldn't do it if we didn't have a lot of fun with it and make it valuable. All right, next question is from Alex. Hey, MoneyGuy team. I am 31 and I have all my money in retirement funds. Solo 401 and Roth IRA. What is your advice? If I want to retire early, like 55ish, but won't be able to pull from those accounts yet. Thanks.
- [26:07]
A
Well, one of the really interesting things, you know, obviously when we think about retirement accounts, Most retirement accounts, IRAs, rollover IRAs, Roth IRAs, they have this like 59 and a half age restriction on it where you can't get to the money with 59 and a half. But one of the unique thing about like employer sponsored retirement accounts, specifically 401ks is that they actually have an earlier distribution rule. If you're going to retire at age 55, you can access the dollars inside of an employer sponsored 401k. So that could be, I mean obviously you're 31, so that's 24 years into the future. Public, did you see me slow down on that? A lot of things can change, but if you're going to retire at 55, I think there's a good chance that you'll be able to access some sort of your retirement assets, whether that be from a 401k that you have available and present at the time or potentially from basis in a Roth ira. But the other thing is that I want you to think about is the way that you're accumulating. I want to know what your savings rate is like how much you put in your Roth, how much you put in your solo 401k, what do those numbers look like and it would be worth the exercise of figuring out okay, based on that, if I project out what those amounts are going to be when I get to 55, is that the path I want to be on? Or might this be an area if I'm in step seven, if I'm somewhere around that area of the financial order of operations where I do start that after tax brokerage account to specifically fund it to a certain degree to give me that bridge from 55 to 60 if I need it.
- [27:35]
C
Yeah, that's exactly right. I was going to say this is definitely a step seven exercise. I would love to as Beau laid out the groundwork. What's the, what's your savings rate so we can see if you graduated beyond step six to squarely be in step seven and then you know, there's nothing wrong with you going and using some of our resources and tools to find out if you're ahead of the curve, behind the curve, right where you're supposed to be with the know your number course, um, do those type of exercises. But then yeah, I think there's nothing wrong with go get the easy tax savings. You know, Obviously the Solo 401k is going to have some huge tax benefits for you when you do your taxes every year because you've got some self employment income rolling through Roth IRAs. You know, I've even detailed in Millionaire Mission my regrets on the small sum of money and what the opportunity cost was. So you're probably not going to want to leave that on the table, but there could be a portion that you say, you know what, it's time to start putting and funding that brokerage account with after tax so that I have a bridge account for when I retire early just in case I don't meet all the variables or requirements of that 55 requirement on my $401.
- [28:42]
B
Alex, thank you for the question. If you would like a Money Guy tumblr, just email winneroneyguy.com before we get to the next question, I just wanted to invite everyone watching in real time to get your rapid fire question. You can write them right in the chat. Just put RF at the front so we know it's for rapid fire. We'll be doing our it does not Depend rapid Fire segment in a few minutes, so stick around for that. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit@ Indeed.com podcast. That's Indeed.com podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored
- [29:38]
A
Jobs Study and play come together on
- [29:42]
C
a Windows 11 PC and for a
- [29:44]
A
limited time, college students get the best of both worlds. Get the Unreal college deal everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 Premium and a year of Xbox game. Pass ultimate with a custom color Xbox wireless controller. Learn more@windows.com studentoffer while supplies last ends June 30th terms at aka mscollegepc. Did you hear about what happened on the Money? I'm not going to say, oh, you're
- [30:13]
C
talking about the money. Verse.
- [30:13]
A
Did you hear about what happened in the Money?
- [30:14]
C
I didn't realize that when we talked about y' all made the joke that I was on vacation. I've got to quit going on vacation because that's where the whole discussion about Mutant Mingle came from. And I found out once again I was on vacation last week. You know, by the way, you're like, I don't remember Brian missing that many Tuesdays. That's because I travel around, try to travel around Tuesdays when I go down to visit my favorite wizards and mouses and stuff down in Florida. Wow.
- [30:38]
B
The wizards even got a call.
- [30:40]
C
And what's funny is I found out that in the Money verse we are creating mutant Mingle through the Moneyverse without us being a part of is so crazy.
- [30:50]
A
So it's just a cool little heartwarming little thing. Ribi, if someone is not in the Moneyverse, how do they get in the Moneyverse?
- [30:58]
B
Just go to moneyguy.com moneyverse and you can click on a button that will help you join our Moneyverse Discord server and to chat with all kinds of other financial mutants and the content team. We like to chat in there as much as we can too. It's basically like the YouTube chat, but anytime we want, which is awesome.
- [31:15]
C
Y' all know I've often, I've daydreamed that we are eventually going to create our own Omaha moment with like Warren Buffett, you know, always, every year he'd have everybody come to Omaha. I think at some point, I didn't realize it when we kind of came up with this idea of the Money verse. This might be some of the grassroots to where we can set up our own annual Woodstock or every other year Woodstock event. No pressure. But this, this could be. This could be a fun little origin story.
- [31:46]
B
Heard it here first, by the way.
- [31:49]
C
They're like right now going, son of a gun. I can't believe Brian just said that. I'm gonna hear about that later. You just. They never know what I'm gonna say. I cherish my ability to just throw stuff out there.
- [32:00]
B
It wouldn't be the money guy livestream without it. All right, let's do another question before we get to rapid fire. This is from what the web. It says, hey, MoneyGuy team, I'm getting married this weekend, so congratulations. That's exciting.
- [32:15]
C
With a Tumblr now too. Class, you consider it a wedding gift
- [32:20]
B
from us to you. My fiance and I are discussing how to combine and manage finances. We want to live off of my income and invest hers to prepare for when she'll be a stay at home mom. That's their plan. Any tips for this?
- [32:35]
A
I love that. Brian, what tips would you give them? Because you, you guys kind of did this a little bit when you were like starting your first business, right? Like, that's kind of the strategy.
- [32:44]
C
Yeah, for sure. First of all, I mean, because I think a lot of people, they make this whole marriage thing complicated. Look, if there's unique assets, like inherited assets or family assets, you know, it's okay to keep those things, you know, in their registration because there's some legal protections and other things. But I do really like when couples get together that y' all Go ahead and set up those joint accounts that all of your earnings while you're married come into that account, go out of that account, and you're. You set up joint savings and investment goals. Because that's exactly right. My wife and I, she was the, the. Because I was making a great living. But then when I started my first business, I mean it, it was kind of embarrassing. I think I went from right at six figures to $17,000 the first year.
- [33:27]
A
Big drop.
- [33:28]
C
You can quickly see my wife's earnings were the majority of the earnings there in those early years. And then we knew we were going to start doing family planning and there was a chance she wasn't going back after. So we came up with a whole plan and actually put on our 3D glasses. And if you don't know what that means when you're making big life decisions, it's okay to, you know, go ahead and pull out the spreadsheet because what was it we just did a making a millionaire where the greatest line came out, where the white the spouse. She said, I can't imagine a life without spreadsheets or something, something like that. We were like, we got to put this on a shirt. So we'll fine tune that a little bit. But there's nothing wrong with you creating the dream plan of way you want your financial life to play out, the down to earth plan. And then don't skip out on the do do plan, meaning that you run a scenario where things don't line up perfectly. And yeah, y' all have a joint account, live off those assets. So that way you also take the power out of the money so that when one spouse is staying home and helping raise the family, they don't feel like you're pulling the strings. You don't want to have a power dynamic that impacts and I see that all the time with couples that they misplay. They don't understand how that's how you can use money as a leverage point to actually create a lot of upset and fight and disdain within the relationship.
- [34:42]
A
And then the other thing that I want to make sure I understand is your question was, hey, we're going to live off of my income and we're going to save and invest her income in preparation for her being a stay at home mom. Are you suggesting that we want to stockpile that cash so that it can then subsidize our lifestyle at that point, or are you just saying we want to get really comfortable living off of my income and since we're not going to spend hers, we're just going to invest that. Because if that latter one is the case, then I think you can follow the financial order. Brian, you hold the thing up because one of the things you want to do, like, while she's able and while she's eligible, she has access to retirement plans and Roth IRAs and all of these different things to get some really good tax incentivized savings in there. That's a great thing to do if you can walk away from that now. If instead what you're saying is we're going to need some of that money to be able to cover childcare call or whatever the thing may be, well, then you might have to think about saving that in some sort of like after tax account that you'll be able to have access to. But I think it's the latter. And if it's the latter, I love that. And you're going to set yourself up in a position to do the really, really hard work now of saving, saving, saving, saving. And then what happens is even when she leaves a workforce, even when your savings rate drops down, you take that sum of money, you put it into moneyguy.com resources wealth multiplier, and see what it can turn into. Say, holy cow, that work that we did right when we got married, boy, was it valuable. Look at how much value that added to our future selves by making that decision.
- [36:12]
C
Well, also. But I do think if this is something that's going to happen in the next three years, four years, there's nothing wrong with you boosting step four, which is your cash reserves.
- [36:20]
A
Sure.
- [36:20]
C
Because that's what I think I've shared with you guys. I've been very transparent about it. When we were on our own journey, I think we built up around $50,000 of just excess cash that we use. That was the bridge account we used for that first three years. Once my wife, you know, left the workforce and realized, you know, it was scary because my business was pretty new at the time and I didn't. It's not like my first child was born in 2003. The podcast, you know, started in 2006 and it didn't even start generating referrals until 2008. And everybody thinks I'm a master marketer, which I was horrible. I'm not a great salesman, guys, because I didn't like going to the Kiwanis clubs. I didn't like going out there and cold calling or doing that stuff. I'm blessed that I think the heart of an educator has shown through and we get all the inbound marketing. But it is one of those things where I think it's perfectly fine to boost the cash reserves because cash is going to be really the energy source for stability in those years of so much uncertainty.
- [37:23]
B
Well, that is great. I am prepping for rapid fire. But first what the web. If you would like a money guy Tumblr, just email winner moneyguy.com we would love to send you one. All right, it is now time for our it does not depend Rapid Fire segment where Brian and Bo answer your questions in 60 seconds or less combined. And they cannot say the phrase or similar phrases to. It depends.
- [37:50]
C
Was it 60 or is it supposed to be 30?
- [37:53]
B
It's 60 combined.
- [37:54]
C
Okay. Okay.
- [37:55]
B
Do you want to do it in 30?
- [37:56]
C
No, I just. I was.
- [37:57]
A
No, it used to be 30, didn't it?
- [37:58]
C
I think it was 30.
- [38:00]
A
Really? We found out that we got shit.
- [38:03]
B
It was not okay. I just. I don't know.
- [38:04]
A
We got so good at 60.
- [38:07]
C
I think the creative.
- [38:08]
B
I thought it was 60 seconds. Come on. Don't. I don't know. Just forget I said anything. 30 seconds.
- [38:13]
A
Hey, you give us 60 seconds, we'll answer a few questions in there.
- [38:16]
B
Everyone's like, what is she saying? All right, 30 seconds combined. And then at the end we'll do our maybe it does depend segment where if you need to, you can say anything you didn't get to say. So with that, let's put 30 seconds on the clock and we'll get started. First question, should you ever upgrade your primary residence to a cost over your investable assets? Defend your answer.
- [38:47]
C
Yes. I mean, I think, I think about myself when I was in my 20s and I bought my late 20s and first house. Without a doubt, my assets were less than what my primary residence was at that time. It was more of the housing was more about the 25%.
- [39:02]
A
It took a long time for the portfolio to be more than the value of the home. So I think if you are doing a second home, your next home, then absolutely it's likely me more than your portfolio.
- [39:15]
B
Well done.
- [39:15]
A
I think we answered that question right. That was the question, wasn't it?
- [39:18]
C
Yeah.
- [39:19]
A
Okay. All right.
- [39:19]
B
Yeah, I think so.
- [39:20]
A
I got a yes from Justin. Okay.
- [39:23]
B
Any little known pitfalls to utmas? Assuming you're in the right step of the foo.
- [39:29]
A
The biggest pitfall is that utmas legally become the child's money at the age of majority. So if they reach 18 and there's an account in their name, then when they turn 18, they can demand that one even more so the custodian will likely reach out and tell you have to put it in their name and their name alone.
- [39:45]
C
The other thing is, is that when you, they get their first job in their 15, 16 year era and you start priming the pump with their custodial Roth IRAs, if you're using the custodian, that's also that your, your, your custodial account, they'll see that's the end.
- [40:01]
B
Okay, next question.
- [40:02]
A
I was like, man, you're talking slow, brother. You got to. I was like, he's, he started on the journey, like he started looking at the trees and he started, you know, I was like, I was like, brother,
- [40:11]
C
it's, I'm glad you went first. I was like, I was totally filthed.
- [40:15]
A
You were going to go.
- [40:16]
B
He was just hoping I was still going to do 60. You were going to.
- [40:19]
A
I was like, man, he is telling us like he's setting the stage for a story right now. That's awesome.
- [40:25]
B
All right, next question. We use three months of emergency fund for action for an actual emergency unexpectedly laid off before replenishing. Should I sell stocks from a former employer or broader portfolio to rebuild that emergency fund?
- [40:44]
C
I mean, obviously be tax smart about it, but yeah, there's a good chance that you'll need to replenish that cash reserves because I don't know if you're what your updated situation is, but you need to keep cash because that's the currency of chaos so you can survive.
- [40:57]
A
The thing that I think is that right now, market depending on your company, is it likely at a really good spot? One in the hand is worth two in the bush. I would consider selling that stock, getting that cash, having that liquidity. You don't want to be out there swimming naked.
- [41:10]
C
Love it.
- [41:13]
B
Next question. First time homebuyer, 25 years old. Should I put, should I save and put 5 to 7% down or withdraw from brokerage to hit 20%?
- [41:26]
A
The first one, I would put 5 to 7% down. So long as you're following a home buying rules, which is 3 to 5% down in your first house. You can live in the house for longer than 5 to 7 years and your total housing costs do not exceed 25% of your monthly gross income.
- [41:41]
C
Man. Yeah, I mean it's, I just, I want to make sure you're doing Roth IRAs and things like that. I don't want you putting that towards down payment. But if you're so loaded, maybe you have family at legacy assets, then you might want to put down more money.
- [41:55]
B
Brian played hype man there. Bo went exactly 15 seconds and then he just went, yeah, yeah,
- [42:03]
C
flavor. Well that one, that one should have had it depends in it. I didn't say during the question.
- [42:11]
B
Next question. We are getting married next June. Should we combine finances now or wait until we get married? We are 26, we bought a home together and we have a combined net worth of 280k and 130k in retirement accounts.
- [42:28]
C
A lot going on there. I think you wait until you're contractually to become one, but I'd go ahead and start setting up steps to prepare to to become one.
- [42:39]
A
I also agree with waiting. A lot can happen. How many times have you heard about engagements that end up getting called off and what the more intertwined you become, the more difficult it is to untwine. And so I would wait till you're officially married to do all of those things.
- [42:57]
B
Well said. Next question. I hit my first million at 35.
- [43:03]
A
Let's go. Moneyguy.com Become a.
- [43:06]
B
Well, it says it's all in retirement accounts. What's next?
- [43:12]
C
Well, I mean follow the financial order of operation. Likely when you get to step seven, which it sounds like you are in, you'll start thinking about how you're going to use that money and that will take you in different directions of maybe you want to have a brokerage account and then you can move to step eight, which is abundance goals.
- [43:27]
A
There's a good chance that now the gravity of your decisions is bigger than it used to be, the complexity in your situation is more than it used to be and your time is likely limited. If that's true, it may be the time to consider taking the relationship to the next level. Moneyguy.com Become a client.
- [43:41]
C
Wow, we got a lot into that 32nd.
- [43:44]
B
He was going to make it. I was like, is he going to get this?
- [43:46]
C
Holy cow, he even got a plug into the company on that 30 second question.
- [43:50]
B
Incredible. Next question. Do I need an after tax brokerage account if I don't plan to retire early?
- [43:59]
A
Do you need it? Not necessarily. But is it a nice to have? Sure. Because the dollars you pull out of it are not going to be encumbered. Now if all you have are Roth, those dollars be completely tax free. So so long as you retire after 60 and all you have is a buttload of Roth. That's the technical term. And a buttload of pre tax should be okay.
- [44:15]
C
I like having after tax assets because that means I can pay cash for vehicles and other life decisions. And then I also like it because it opens up. If you want to get into real estate, investing, and other things, you're going to need to have access to liquidity.
- [44:29]
B
All right, next question.
- [44:30]
A
We're getting good. I know we're good at this. She gonna drop us down to 20 seconds.
- [44:35]
B
I know. Up by accident, and I should go down.
- [44:38]
C
You should.
- [44:39]
B
In time.
- [44:39]
C
You're good at this. I'm out here. Just. I'm swimming. This must be how Bo feels in the ocean.
- [44:44]
B
Oh, he has to.
- [44:47]
C
I'm giving it all I got.
- [44:49]
B
Yeah.
- [44:51]
C
Said earlier.
- [44:51]
A
I was in the. Yeah, I was out. I was playing. I was in the pool this past week playing with the kids, and I was like, you know what? I'm. I'm gonna show Brian.
- [45:00]
C
Did you tread water for 10 minutes?
- [45:01]
A
I was like, I'm gonna go start treading water. And I was like, can you do it?
- [45:06]
C
Can you do it? No. No.
- [45:08]
A
But I did. I did a thing. I did a thing so crazy. One of my buddies, he's like, okay, one of the ways that we can test. We test buoyancy. So that way you kind of know what happens is you take a really deep breath, hold your. Hold your knees.
- [45:20]
C
Is this a Navy SEAL told you this? I told you.
- [45:24]
A
Until you take a really deep breath, you hold your knees, and you should be able to, like, your back. Your back should just cross. I do that. Deep breath in my lungs. Hold it, hold my knees. You know what happens to my body is fall forward. Oh, you straight.
- [45:36]
C
Are you sure it's not your posture, though? Because you have to hold your head a certain way to float on your back.
- [45:40]
A
No, no. This is on your. You're supposed to do on your stomach. You take a deep breath, hug your knees, and lay in a cannonball position. And you should be buoyant enough to float. When I do that all the way down to the bottom. I'm not buoyant, dude. That's why swimming.
- [45:54]
C
I don't think that defies you fill up enough oxygen in your lungs, you should. You should float.
- [46:03]
A
Brian. I'll do. Let's come. Come over. Come to my house.
- [46:05]
B
We'll bring this into our. Maybe both.
- [46:07]
C
Just looking for content where it can be shirtless. Now, look, it might get great engagement, but I don't know that I'm willing to sign up for that, even if I'm in great shape. If you saw how starkly white I am under these shirts, Nobody wants to see that. It looks like I have a shirt on when I have no shirt on.
- [46:24]
B
This has gone so far off the rails.
- [46:26]
A
Looks like I have a shirt on with no shirt.
- [46:29]
B
I don't even know. Okay, I'm just going to go back. We have a few more rap our questions. I wanted to get to this is CPA life. We're just gonna jump back on. We've fallen off. We just jump back on.
- [46:37]
C
It's real. The struggle's real. That's CPA life.
- [46:41]
B
The next financial question.
- [46:43]
A
I still have on a shirt.
- [46:44]
B
Oh, my goodness. The question is, is it better to pay for pet insurance or have a sinking pet emergency fund?
- [46:54]
C
Oh, don't ask. Two southern boys.
- [46:55]
A
Oh, I'm going to sinking pet emergency fund. I am not a big proponent or advocate for. For pet insurance. Cause it's so specialized. If I have cash over here in my merchant fund and I incur some sort of medical bills, I can use the cash to do that.
- [47:10]
C
I don't think you do pet insurance. And then I would encourage. If you're from my generation, you saw old Yellow where the red fern grows, and you take that into context. He said it.
- [47:25]
B
Not yet.
- [47:25]
A
That was not an official money guy endorsement.
- [47:27]
C
Right. That was not a true answer. I'm just saying this. This is what shapes people of my generation, is that they showed us this type of stuff in grade school. So it shapes you a little bit.
- [47:37]
B
Oh, my goodness.
- [47:38]
C
I'm not saying. Look, my wife would have us spend probably a gazillion dollars on her dog. 13 years old.
- [47:43]
A
I like it. Since her dog.
- [47:45]
C
Their dog. It's their dog.
- [47:47]
B
All right, two more rapid fire. If we make too much to contribute to a Roth IRA, should we convert traditional dollars in step five so we can do backdoor Roth? I'm 35 years old with 450k in retirement.
- [48:02]
C
I'm confused in the fact that if you have a large income, you should be able to do both five and six together. It's not an either or. You should be able to. Did I mishear the question?
- [48:12]
A
They were just saying, hey, I make too much money to contribute to a Roth. Is back to a Roth.
- [48:15]
C
Yeah, I love, I love. Well, I think it's probably a step six to a degree.
- [48:21]
A
Yes. If you can do the backdoor Roth in step five, I would do this backdoor Roth. Assuming you have the right account structure, you can't have any other IRAs or then the Roth conversion would be taxable. We're going to come back to that one.
- [48:32]
B
Okay, coming back to it.
- [48:33]
A
We said everything. Right.
- [48:34]
C
But that was a trick question.
- [48:36]
B
But not a little bit.
- [48:38]
A
Yeah.
- [48:38]
B
Least. Did Han shoot first?
- [48:44]
C
Do you even Know what they're talking about?
- [48:46]
A
Who's Hans?
- [48:47]
C
Do you know who Greedo is?
- [48:48]
B
You know that?
- [48:48]
C
Do you know Greedo is.
- [48:50]
A
You didn't say Hans.
- [48:51]
B
Han.
- [48:52]
A
Han, no.
- [48:53]
C
Not pumping. We pump you up.
- [48:58]
B
Where's their timer? They're already off the rails again.
- [49:01]
A
Did Han shoot first? Shoot who?
- [49:04]
B
Who shot first?
- [49:04]
C
Greedo. Keep going, Greedo.
- [49:09]
B
You don't have an answer. All right. And that concludes our It Does Not Depend Rapid Fire segment. And more today's special edition. We're going to move on to R. Maybe It Does Depend segment where we go back through and you can say anything.
- [49:25]
C
I love that you said you're such a biff.
- [49:28]
B
You really are such a biff.
- [49:29]
C
Or Chad, whatever we want to call you. That's why we make a great team together.
- [49:36]
B
All right, I have a few notes.
- [49:37]
A
I'm guessing that. I'm guessing that the green guy and Han Solo shot each other, but they argue about who shot first. Is that the context? Am I putting together my.
- [49:45]
C
Well, I mean, it's because, you know, because Han. Is he a good guy? You know, because he. He's, you know, he's already a smuggler. Right. So he's got this. But, you know, he's. He's also our hero.
- [49:53]
B
It's kind of a rogue.
- [49:54]
C
It's. Yeah, it's. It's. It's. It's an interesting.
- [49:56]
A
So what's. As a. As someone who knows. What's the answer? Did Han shoot first?
- [50:01]
C
I mean, I think there's controversy. Yeah, I think Hans. I mean, he walked away.
- [50:07]
B
Right?
- [50:10]
C
Close the contact. The person who shot first is the one that walked away from it. It was under the table.
- [50:16]
B
All right. We had a question where I cut Brian off. He was about to go into a story. It was about the utma. Did you.
- [50:23]
A
Yeah.
- [50:23]
C
I was just gonna say, look, my daughter. It was a big shocker for me, is that you do the custodial Roth account when she's 15 years old, and then you show her, like, the Fidelity app, and then, surprise, there's her custodial account, too. And it was. It was just a big shock. So we had to have a conversation much sooner than I wanted to about, you know, because I'm trying to prime the pump of her good behavior. And then, surprise, we get to have a conversation also about how we've been saving monthly for her. And that was just. That's a downside to custodial accounts. Something to consider is it's tied to your child's Social Security number.
- [50:58]
B
Yeah. And then the other One. There was one where Brian really wanted to say it depends about the first time home buyers either pulling from brokerage or putting 5 to 7% down. Was there anything you didn't get to say?
- [51:08]
A
Is it really true that in the remastered versions they changed it? Like in the original one, Han shut first, but in the, in the new ones that came out nodding to me.
- [51:18]
B
That's what I don't actually know.
- [51:21]
A
That's wild. So you watch a movie as a kid and one thing happens and then they change it. I couldn't get on board with that. That's what they're saying.
- [51:29]
C
I didn't even.
- [51:30]
A
It depends on what version you watched as to who you think.
- [51:32]
C
Well, we all know I'm old enough. I saw the original.
- [51:37]
A
I'm sorry, you were talking about Roth conversions. Can you go.
- [51:40]
B
I was talking about home buying.
- [51:42]
A
Oh, I'm sorry. Go back to that one.
- [51:44]
B
Brian said it really does depend for that 25 year old first time home buyer look.
- [51:48]
C
Oh, oh. What I was trying to say, if they were, if they were. Some people have so much, you know, you never know. It's like if you, if you've had somebody who's been saving for their benefit or other things and you have big chunks of money sitting out there, then I hate for people to pay PMI and other things. But for most people on their journey, that 3 to 5% down payment is supposed to be your bridge into homeownership sooner. But I don't. It all depends upon what you have in assets. As a financial advisor, I always like to see what do you have and let's try to maximize this using the financial order of operations. But it is going to depend upon how big your, your, your pot of assets are.
- [52:31]
A
I agree with you, but can I disagree with you just a smidge? Is that okay? Even, even if you're like a 26 year old, let's take a big old pot of assets. I'm going to have a real hard time assuming that you stay inside the 25%, taking a big chunk of that and paying 20% down.
- [52:45]
C
It's so with interest rates, I mean, think about interest rates on mortgages over like six and a half percent. I mean, if you, if somebody had custodial accounts of like $220,000 and they've got a great income and they're saving and it's not hard to turn some of those investments into liquid cash. I think there's potentially, I mean, I'd want to know what their savings habits are. You know, are they Funding their Roths? Are they loading up their company 401k? There's a case to be made where maybe you take a Porsche. I know it's not optimized, but money is nothing more than a tool.
- [53:21]
A
Okay.
- [53:22]
C
I'm not. It truly is. It depends. I would want to know also what their risk profile is, what money they have coming down the pipe, what their career trajectory is. There's a lot of variables that would really go into that decision matrix.
- [53:35]
A
Got it. Okay. All right. The Roth conversion.
- [53:39]
B
Yep, that was the last number. Go back to the Roth conversion one.
- [53:42]
A
Can you just reread that question?
- [53:43]
B
If we make too much to contribute to Roth IRA, should we convert traditional dollars in step five so we can do a backdoor Roth? We're 35 years old with 450k in retirement.
- [53:55]
C
Yeah, I want you. Yes, definitely, go ahead and do the backdoor Roth. Structure it. Right. Make sure you also don't have any other rollover IRAs or anything else like that. So yeah, you can treat the back door as step five, but that also puts. Because your income is so high, I'm counting on you to also be doing step six. So it's an. It's both, it's an and, it's not an either or. I think you need to be make sure you're doing five and six.
- [54:21]
A
Now I want the way that you read it gave me another little insight that I think is worth just notating. Let's assume that you have now crossed over the over the threshold where you can contribute to a Roth. If your question is, hey, I can't contribute to Roth anymore, should I start doing Roth conversions annually in order to build up my Roth dollars? Maybe not if they're not backdoor Roths. If you're just converting pre tax assets to Roth and you're incurring taxability to turn those dollars into Roth, depending your tax bracket, that might not make sense. So there's a very big difference. In a true tax free backdoor Roth conversion where you put a traditional IRA contribution non deductible into traditional and you convert it to Roth tax free versus converting pre tax traditionals or IRA rollovers into Roth. I would likely not recommend doing that if that was the question you're asking. I'm not sure which one it was, but surely you got something to work with there.
- [55:20]
B
Well, great. That concludes our rapid fire segment with so much bonus content in between. So you're welcome for that.
- [55:28]
C
See, I will say because y' all probably noticed we're not doing as many themes Because I think y' all made some solid points that sometimes the themes took away from that. But we. We're so zany that we put enough weird stuff in there even without having to have a gimmick on it. You're welcome.
- [55:44]
B
Ryan Preston brings his own theme.
- [55:46]
A
He does. He does.
- [55:49]
B
All right, let's do another personal finance question before we wrap this thing up. This one's from the OCR dog.
- [55:55]
A
It says, hey, what's the name of the. Do we know. Have we announced what show is coming out this Friday? Do. Have we said that yet? Do we know the name of. Do you know the name?
- [56:04]
B
I mean, I could. Yeah, I do. I don't want to get it wrong.
- [56:06]
A
It's a show we're super excited about. We think you should watch it. We think you should watch all of them. But this Friday, Friday was one that we're super excited about. You made me think of that. If you want to know when it comes out, make sure you subscribe right now to the channel so you get a notification when that show goes hot.
- [56:21]
B
It'll be a surprise.
- [56:22]
A
Sorry, Reeves. Didn't mean to throw you off.
- [56:23]
B
That's all right. Do you want to hear OCR dog's question?
- [56:28]
C
I want to hear about some ocr.
- [56:30]
B
I don't know if it's about that, but it says, does an inherited traditional IRA count towards the Roth IRA pro rata rule? I'm in step nine of the foo, and I don't want to run afoul of the rule. And I'm trying my best to proactively plan out my accumulation.
- [56:50]
A
It's one of the unique little carve outs. Inherited IRAs do not count against the pro rata rules. So long as you've zeroed all of your other IRAs out except for the inherited IRA, you can still do backdoor Roth, contribute to a traditional, do not hit the deduction, convert that to Roth.
- [57:08]
C
Yeah, the ones to watch out for is a lot of times those early small business IRAs, like the SEP IRAs, simple IRAs, those. And of course, rollover IRAs from a former job. But inherited IRAs, they're. They're unique upon themselves. That one could have been part of the 32nd.
- [57:27]
A
I mean, that was, that was a great one, was straight, let's do another
- [57:30]
C
one because I thought we were done with the rapid fire segment.
- [57:33]
A
I do just want to throw, throw one thing out there. If you are not aware of this, inherited IRAs have changed over the past couple of years. The rules used to be one way you can Strike. Then they changed and then they kind of changed again and then they came up with final ruling.
- [57:47]
C
Yeah.
- [57:48]
A
If you've inherited an IRA in the last, I'm going to say in the last seven or eight years, it's worth doing the research to make sure. Am I actually in compliance? Meaning we know that now there's this 10 year thing. If I inherit an IRA, I got to distribute all the money within 10 years. But oftentimes you also have to take an rmd in those 10 years. You can't just wait and let it balloon all the way at the end. And the rules are a little nuanced, a little wonky. So if you've inherited IRAs, make sure you're checking that so you don't run afoul and get a gnarly letter from the IRS a couple years from now.
- [58:21]
C
This might be one of those things where you can try to keep your life as simple as possible, but complexity finds you. I mean, this is. How many times do we have clients who all of a sudden are landlords, they have RMD issues. These things. You can try to keep your life as simple as possible, but success is going to create complexity.
- [58:39]
A
That's right.
- [58:41]
B
Well, this next one I have pulled up, I feel like we have to do because the username is All I Want for Christmas is a Tumblr.
- [58:47]
A
Oh, wow.
- [58:48]
C
Oh, wow, what a good name.
- [58:49]
B
So the OCR dog and All I Want for Christmas is a Tumblr. If you would like a Tumblr, just email winneroneyguy.com and it's your lucky day, you get one. And with that, the question says, how do you move to a cash management plan? Do you have separate high yield saving accounts for emergency fund and sinking funds? How much do you suggest to keep in your checking or clearing account?
- [59:13]
A
Oh, that's great.
- [59:14]
B
It's a great blocking and tackling question. Like, how do you actually move out of like strict budgeting?
- [59:18]
A
I think would be helpful, Brian. I think we're going to just share what we do. Like. So, like the question is, well, how do you move from a cash management plan? There's budgeting, which essentially is when you start out, I have these categorically, I'm going to spend this much on here, I'm going to spend this much here, I'm going to spend this much here, I'm going to track it, make sure that I stay inside that. Categorically well. Then once you kind of morph and you kind of have an idea of, I know what I spend eating out, I Know what I spend at the grocery store, I know what I spend in these other categories. I want to make sure my savings is right. I've got, I'm following the financial order of operations. I'm saving 25% of my gross. Well, then I don't have to track and monitor as much how much I spend when I go to a restaurant or how much I do when I go here. So that's moving to a cash management. But you, you make a great point. If you're not doing some sort of like zero based tracking, you want to make sure you have an understanding of where you are, your cash levels so that you don't get yourself into a hiccup. So, Brian, I don't mind sharing what I do, but you want to share what you do for like.
- [60:10]
C
Well, I thought, you know, kind of give context and a teachable thing. I know when I was trying to figure out back when I was in my mid-30s if I should do Lasik surgery or not, it was every year I'd go for my eye exam and they're like, man, your eyesight is stable. Your prescription, yeah, it's screwed up right now, but it's pretty stable. It just doesn't move. You could move to a different thing. Instead of wearing contacts every day, you could do Lasik because your prescription's so stable and then you wouldn't have to think about putting in contacts every day. I feel like there's a lot of correlation to going from budgeting where you think about when you first start managing money for yourself and your household. It's hard. I mean, it's because you've got money coming in, you got money going out and you don't feel like you're completely in control. But there will come a time where you also build muscle memory or stability where it feels like from a behavioral standpoint, the money's automatically going where it's supposed to into your retirement accounts. It's being spin out. You set up automatic, you know, spending accounts. You make the good habits as easy as possible, the bad habits that much harder. So cash flow is stable. And then I found in my own cash management plan. Once I set up just setting up automatic savings plans and investments for all the different categories. I then as I got pay raises or as my income went up, I practiced what was called for scarcity. I thought about what do I need as a household to be functional and still create happiness and not to feel like we're doing without. But then I would squeeze myself to maximize the savings element and the investment element. So I was living my best life and controlling and building my time ownership that much sooner.
- [61:47]
A
Yeah. And so practically the way that looks for me is I have high yield savings account. Actually, I'm still buying a money market mutual fund for my emergency reserves. It is my emergency fund, but I guess you could also kind of call it a sinking fund because it's more than what my prescribed emergency fund should be. Only because we like to have some dry powder available if there's an opportunity that presents itself that we might want to move and capitalize on. So that's where I keep all of my cash. But then I have a checking account, like an everyday checking account. And for me, my personal buffer that I keep in there is about one full months of expenses. So whatever I spend in a month, I kind of have that as an extra slush in there so that as money comes in and money goes out, I never worry about it getting too low. I'm never going to worry about an overdraft or something like that. And that works. So one month roughly here, and then I have my emergency fund over here. And then all of my consumption I put on credit cards because I get all of the points and all the stuff and then I pay it off once a month so I can kind of track where my cash levels are at all times.
- [62:46]
C
Yeah. And if you want a cash level, Todd, if you think working within the financial order of operations, step four is like, you know, the three to six months when you touch cash. Step one is highest deductible covered. That's keep you from desperate decisions. Step four is three to six months. There is another level when you get down to step eight, and that's where my cash has actually gotten expanded a little bit more. And that's where I've gotten into doing real estate investing and other things. But there's a time and a place for each one of those actions. The first one is to keep your life out of the ditch and making desperate decisions. The next one is to protect you in case you lost your job or had prolonged period. Step eight is where you're thinking about cash as an opportunity fund. And that's where I detailed that in great detail. And even we got some new things coming out down the road. But I would encourage you to go check out Millionaire Mission where I really lay out how I've handled cash as a wealth builder and an amplifier as well.
- [63:40]
B
Love it. Great answer. Thank you for answering all the questions. There have been a few times where I was not fully paying attention today and it is because I was reading the money verse. I just want to come clean. I just want to come clean. And I wanted to just invite you one more time that if you want to keep chatting with us even after the camera turns off today, go to moneyguy.com moneyverse and we would love to see you there and chat personal finance and just have a good time like we have today. So thank you so much for being here. We will be back every Tuesday at 10am Central right here on YouTube and Spotify wherever you listen. We'll release this later too. So yeah, we just love being here for you. Thanks so much for joining us.
- [64:18]
C
We did a show meeting before we came in and we were going over some of the shows we're recording in the next two weeks. Guys, it's hot. I'm pretty excited about it. I even told Will. I was like, man, what we get to do is pretty daggum fun. So I'd encourage you. Please sign up. Please subscribe. I don't take for granted. I mean we were talking, we kicked off the show talking about what creates happiness and fulfillment. And I'll tell you what, I wake up every morning on Tuesdays especially and really do feel like we're making the world a little bit better through education and I just want you to be part of that journey. So please be a financial mutant. Sign up for our content. I'm your host, Brian joined by Mr. Bo Moneyguy team out.
- [64:58]
B
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 of loss.