What Were Bo's Biggest Financial Milestones?

Summary

Money Guy Show - Episode Summary: "What Were Bo's Biggest Financial Milestones?"

Release Date: February 24, 2025
Hosts: Brian Preston and Bo Hanson
Guest Expert: Erin V.

---

1. Refinancing and the Break Even Point

The episode kicks off with a listener question from Aaron V. regarding the break even point for refinancing a home mortgage and expectations around mortgage rate trends.

Brian Preston delves into the mathematical underpinnings of refinancing, explaining that it's crucial to calculate when the interest savings will offset the costs of refinancing. He outlines a step-by-step approach:

• Amortization Extension: Refinancing often extends the loan term (e.g., from 30 to 35 years if 5 years have already passed on a 30-year mortgage).

• Interest Savings Calculation: Determine the monthly interest savings by comparing the current rate with the new rate (e.g., from 7% to 6%).

• Cost Recovery Period: Assess how long it will take for the interest savings to cover the closing costs. If the homeowner plans to stay in the house beyond this period (e.g., 48 months), refinancing may be advantageous.

He emphasizes the importance of not merely stretching the loan term without substantial interest savings. Brian states, “…refinancing likely makes sense [if you stay beyond the break even point].” [02:50]

Erin V., the guest expert, adds that refinancing should not be pursued indiscriminately even when rates drop. She advises using the savings to build measurable wealth rather than splurging on lifestyle expenses. Erin remarks, “If you're just focused on building the Roth dollars, I hate the idea of you purposefully accelerating more taxes this year if it's not absolutely necessary.” [24:25]

2. Outlook on Mortgage Rate Trends

When Aaron inquires about future mortgage rate movements, Erin V. provides a cautiously optimistic perspective. She acknowledges the uncertainty surrounding rate cuts, noting factors like inflation data and economic conditions. Erin expresses hope for lower rates but cautions that multiple variables play into rate adjustments. She states, “But I sure hope that interest rates go down because I would love people to be able to buy homes…” [05:00]

3. Understanding Umbrella Insurance

A significant portion of the episode is dedicated to explaining umbrella insurance, prompted by a question from Jeff G.

Brian Preston defines umbrella insurance as an extension that sits atop existing policies (e.g., auto, home) to provide additional liability protection. He clarifies, “It's not gap insurance. It doesn't fill in any gaps. It sits on top of the insurances that you already have.” [08:25]

Erin V. underscores the importance of umbrella insurance for individuals with substantial assets. She explains that once you have assets, the likelihood of being sued increases, and umbrella insurance protects your net worth by dealing with insurers rather than personal assets. Erin notes, “If you have assets, you need it… because attorneys are dealing with the insurance company, not trying to get into your net worth statement.” [09:39]

Brian shares a poignant case study illustrating the real-world application of umbrella insurance. He recounts an incident where a client's child accidentally caused injury to a school bus passenger. Thanks to umbrella insurance, the client was shielded from out-of-pocket medical expenses. Brian highlights, “...the insurance that stepped in and protected her from having to come out of pocket for those medical bills was her umbrella insurance policy.” [10:39]

4. Bo's Financial Goals and Milestones

Andrew G.'s question shifts the focus to Bo Hanson's personal financial journey. Bo reflects on his financial milestones, aiming to outperform Brian. He shares how both he and Brian set ambitious goals, such as achieving six-figure incomes and substantial net worth targets, but have evolved to focus more on the "why" behind their wealth accumulation.

Bo emphasizes the importance of aligning financial goals with personal values and the impact on family. He reveals a heartfelt goal of raising his children to contribute financially by buying half of their first car, ensuring they have "skin in the game." Bo articulates, “I want to start having that conversation with her. So I want to have goals with my money around making sure that it's used well and that we're preparing and training our kids to be able to use it well one day.” [15:00]

Erin V. praises Bo's approach, noting that he has surpassed many of his financial goals, highlighting his consistent success. She humorously comments on Bo’s competitive nature, stating, “Bo actually wrote that on a sheet of paper. Be better than Brian.” [14:34]

Brian and Erin engage in a light-hearted exchange about their swimming abilities, underscoring the camaraderie and rapport between the hosts and guest. The conversation circles back to Bo’s dedication to financial planning and setting meaningful goals that extend beyond mere numbers.

5. Audience Interaction and Closing Remarks

The episode concludes with lively interactions between the hosts and the guest, including humorous anecdotes and teasers for future episodes. They encourage listeners to engage with additional resources available on moneyguy.com/resources and to tune in for upcoming topics like "Making a Millionaire Launching" and a surprise announcement.

Bo Hanson summarizes the episode's value, stating, “It’s such a cool thing... ensuring that there is a better way to do money and we're going to continue to be your navigators and hosts to go on that journey.” [26:04]

The hosts reiterate their commitment to providing educational content that empowers listeners to achieve financial confidence and success.

---

Notable Quotes:

• Brian Preston on refinancing: “…refinancing likely makes sense [if you stay beyond the break even point].” [02:50]

• Erin V. on optimizing refinance savings: “If you're just focused on building the Roth dollars, I hate the idea of you purposefully accelerating more taxes this year if it's not absolutely necessary.” [24:25]

• Brian Preston on umbrella insurance protection: “It's not gap insurance. It doesn't fill in any gaps. It sits on top of the insurances that you already have.” [08:25]

• Bo Hanson on purposeful financial goals: “I want to have goals with my money around making sure that it's used well and that we're preparing and training our kids to be able to use it well one day.” [15:00]

• Erin V. on Bo's financial success: “Bo actually wrote that on a sheet of paper. Be better than Brian.” [14:34]

---

Conclusion

This episode of the Money Guy Show offers listeners valuable insights into refinancing strategies, the importance of umbrella insurance, and personal reflections on financial milestones. Brian, Bo, and Erin provide practical advice grounded in real-world scenarios, empowering listeners to make informed financial decisions and align their wealth-building efforts with meaningful personal goals.

For more detailed resources and guides discussed in the episode, visit moneyguy.com/resources.

Transcript

[Advertiser]

Your data is like gold to hackers and they'll sell it to the highest bidder. Are you protected? McAfee helps shield you blocking suspicious texts, malicious emails and fraudulent websites. McAfee Secure VPN lets you browse safely and its AI powered tech scam detector spots threats instantly. You'll also get up to $2 million of award winning antivirus and identity theft protection, all for just $39.99 for your first year. Visit McAfee.com, cancel anytime terms apply. I can say to my new Samsung Galaxy S25 Ultra, hey, find a keto friendly restaurant nearby and text it to Beth and Steve. And it does without me lifting a finger so I can get in more squats anywhere I can. 1, 2, 3.

[Brian Preston]

Will that be cash or credit?

[Bo Hanson]

Credit.

[Brian Preston]

4 Galaxy S25 Ultra the AI companion that does the heavy lifting so you can do you get [e-mail] compatible with select apps. Requires Google Gemini account. Results may vary based on input. Check responses for accuracy.

[Bo Hanson]

Keeping on the home topic, Aaron V has a question. He says, what is the break even point at which refinancing or rate adjustments of your home mortgage makes sense? Also, do we expect mortgage rates to drop this year?

[Brian Preston]

All right, I'll do break even point. Yeah. So a lot of people are surprised to hear this, Aaron. It's really a mathematical calculation. When you decide does refinancing make sense or does it not make sense? And here's the way that you want to recalculate it. Let's say that you bought a house and you were in a 30 year mortgage and now you're five years into it. So you have 25 years left on the mortgage. That's important because I'm going to come back to that. You decide I'm going to refinance. Well, most of the times when you refinance, you're going to refinance into a new 30 year mortgage. So what you're actually doing is you're kicking your payment period out five more years. So instead of paying off that house in 30 years, you're paying it off over 35. You want to be careful of doing that because all you're going to do is end up just stretching out the amortization of that loan. So here's where you do the math to determine what the break even point is. You know what your interest rate is today. So you can calculate how much interest you're paying on your monthly payment. Well then you calculate, okay, what would my new payment be with a lower interest rate If I were going to continue paying on the exact same schedule, meaning I was going to pay it off in that same 25 years, not stretch it out to an additional 30 years. What I want to calculate is what is the interest savings? If I'm going from 7% down to 6% or 8% down to 7%, what is the monthly interest savings that I'm going to accumulate every month as I continue to make those payments? Well then I want to figure out if I add up all of those interest payments, how much time does it take me to save enough interest to compensate me for the cost of the refinance. So whatever the closing costs were for me to work through that, I want to make sure that I have a reasonable belief I'm going to be in the house long enough to recoup that initial cost. So you might figure out, okay, I'm going to have enough in interest savings keeping the same timeline to where I have to live in this house for at least 48 months before I cover what the refinance cost was. Well, if you're going to be there for more than 48 months, refinancing likely makes sense. If you determine it's going to take 10 years to make up the interest savings, then it might not make sense if you don't see yourself being in that house 10 years in the future. That's how I would work through the calculation of the break even analysis. Now what I'm curious about is what does that mean anytime rates drop, should you just refinance willy nilly?

[Guest Expert]

Well, I was just glad because you're right. Even if you have the payoff period stay the same because you change the variables, there's a chance your payment still goes down.

[Brian Preston]

Sure.

[Guest Expert]

Just because you have less principal, you're refinancing and bringing it back. I always challenge people if it's not a cash flow issue. I love it. If you just keep paying the same thing you were paying with now the same rate and that goes beyond the break even point that bo's talk. It's just, it's more of a discipline thing people because a lot of times people in the comments section will say I don't trust the typical person because they're just go refinance and then they go take all the money savings and just go blow it on something else. I think better of you guys because you're financial mutants, you're watching content like this. So it's more of an optimization strategy to figure out how do you get the lower interest rate and actually Turn that into measurable wealth or speed up your journey. So just make sure you're taking that margin that you get from the refinance and not expand it into lifestyle or other things. Now to the other question. Do I think interest rates are going to go down? Man, that is a big one. Because now, look, President Trump is new on the scene and there was even a journalist last week I saw said, do you think that the Fed is going to cut rates just because you told them? Now, his confidence was, yes, but I don't really know. I mean, and that's the reality of the situation is because we keep watching the inflation data to see how much because look, it was starting to rear its head that maybe we had not vanquished inflation like we thought we had. But then our most recent data point was actually pretty good. But it's a big question mark. I will say that they have definitely lowered, lowered the temperature on how many rate cuts there will be going forward just because it seems like the economy is pretty hot. Now. I'm also, there's another, there's an element that has not been discussed is that if goods get more affordable, we'll see what happens. But I don't know. There's a lot of variables. It's too soon to know. But I sure hope that interest rates go down because I would love people to be able to buy homes and I think it would be reasonable if interest rates were in the fives.

[Brian Preston]

So if rates do go down, Brian, I mean, how do you decide if I'm someone who got 7% mortgage and rates have gone down and now I can refinance at 6.75. Does that make sense or do I keep waiting? How do I go down?

[Guest Expert]

Typically, I mean, I think a good practice is do the math. I mean, because maybe you can make three quarters of a percent work. But usually a good rule of thumb is like once it gets below 1%, 1% savings, and then you also, once you get over 1%, you can start letting the lender prepay some of the, give you a little bit of a premium on the interest rate and then cover the cost for you. There's all kind of opportunities to do that, but you need some type of spread. If it's just a quarter of a percent, I don't know that you're getting over the hassle or the friction costs of doing the refinance. But once you get over 1% and greater, it can be pretty fruitful.

[Brian Preston]

Aaron, I would encourage you, if you go out to moneyguy.com resources. We actually have a refinance guide that you can go use. It'll help walk you through some of this stuff. Okay, how do I calculate it? Does it make sense? Is this something that could make sense for me? So if you're not, check that out. Moneyguy.com resources and it's our refinance guide to help you figure out how to make that decision.

[Bo Hanson]

Yeah, and we walk through like an actual example with numbers. So it helps simplify all of it.

[Guest Expert]

And remember, before you refinance, call to see if you can get a rate modification.

[Brian Preston]

Oh, that's great.

[Guest Expert]

That's always a sleeper. It doesn't always work. It's actually probably only 10 to 15% of the time does it work. But it is worth everybody making the phone call.

[Brian Preston]

I've done it. It's worked.

[Guest Expert]

Call your existing lender and say, hey, rates are down. Instead of me going through the hassle of refinancing and you losing a good customer, why don't we you let me pay a fee to restate this mortgage to a lower interest rate? So it's called a rate modification. Great.

[Bo Hanson]

Definitely. All right, Erin V. Thank you so much for your question. If you would like a MoneyGuy Tumblr, you can email winneroneyguy.com Next up is a question from Jeff G. He says, at what point would you recommend someone to look into umbrella insurance and also maybe give everyone a brief explanation of what is umbrella insurance?

[Guest Expert]

By the way, we recently had a comment that kind of critiqued us a little bit, so I'll let you correct it. And then we. But still, I think what is interesting, though, is the way he described does sit on top, but it's just that it increases your liability protections. I'll let you take, Let me, let.

[Brian Preston]

Me describe what umbrella insurance is, and then why don't you talk about where who needs it when you need it, why you need it. So umbrella insurance is exactly what it sounds like. It is an umbrella that sits over the other insurances that you carry. So you might have automobile coverage that covers you up to a certain limit, or you might have home insurance that will cover your home up to a certain limit, so on and so forth. Well, umbrella insurance sits on top of those, as the comment pointed out. It's not gap insurance. It doesn't fill in any gaps. It sits on top of the insurances that you already have. So if there were to be some event that took place that maxed out your insurance or where your insurer is only willing to pay a certain Amount, the umbrella insurance would sit on top of that amount. That's what umbrella insurance is. And the good news is umbrella insurance is really, really inexpensive. It's not uncommon to get millions of dollars of umbrella coverage at hundreds of dollars of annual cost. So it's not incredibly expensive. So a lot of people, Jeff, find themselves in the question where, okay, do I need this? Like, is umbrella insurance something that makes sense for me? I mean, I've got my homeowner's insurance and I've got my auto insurance. Do I even really need it or why would I get it?

[Guest Expert]

Yeah, I mean, if you've got assets, you need it. I mean, and so that's why I like umbrella insurance. It kind of correlates to your net worth. So, and by the way, you can probably go up to 5 million. Once you're worth over 5 million, they're not going to give you insurance beyond that. But hopefully your level of exposure is limited just by. Because that's just a lot of money at that point. So 1 million is where people typically start out. And you think about it because like your auto policy might have a liability protection up to 250,000. And if, you know, taking it up to a million definitely is going to add a lot more liability protection for you. If you take it up to 2 million, it gives you, you're still going to have a target on your back. Once you have assets, people are going to want to sue you. Because we know there's pockets there that can pay. It's just instead of trying to get into your pockets, we're trying to give you some type of protection through an insurance policy so that the attorneys are basically dealing with the insurance company, not trying to get into your net worth statement.

[Brian Preston]

Can I share a quick little case study of when we saw this? Like a real life example of this? You're gonna know the one I'm talking about as soon as I say it. We have a client who had a young child. Now, this child has now since grown up and an adult and married and all kinds of stuff now. But when he was young, as young kids do, he made a bad decision. He decided to pick up and start throwing rocks at a school bus that was going by. He wasn't trying to be nefarious. It was just a little kid throwing rocks at a school bus. Well, a rock went through one of the windows. It was down in the school bus and it hit a little girl in the face. And when it hit her in the face, it caused a laceration. It was a moving School bus. So obviously her parents were like, hey, this is, you know, this is a cut on her face. We want to get, like, a plastic surgeon to make sure that we have minimal scarring and all this kind of stuff. Well, the. The party that was responsible for covering all those medical bills was our client, because it was her young child that did this. Well, when they kind of went through this whole process, the insurance that stepped in and protected her from having to come out of pocket for those medical bills was her umbrella insurance policy. And so one of the things we tell people, especially if you have teen drivers or maybe you have kids that are going off to college, umbrella insurance can also cover members of your household that are not presently residing in your households. Like kids off in college that maybe might not always make the wisest decisions. If you're someone that falls in that scenario, umbrella insurance is a great insurance for you to cover so that you can protect not only your assets, but also your income and the other valuable things that you have going on in your life.

[Guest Expert]

I love what I do for a living because that child was in kindergarten at the time. And now I talk to the mom. She's still a client. I'm very loyal. I still hang out with my high school friends. I still have clients that now their kids are grown and. And children are not. Grandchildren are not here yet, but they've been married now for well over a year. And it's just kind of wild seeing a child go from kindergarten through high school, graduate from a very awesome university.

[Brian Preston]

What do you mean?

[Guest Expert]

I'm not gonna say anymore, but it is. That's one of the cool things about doing this job, too, is because I do it now. Exactly. The case study. And that it was a good. He's a good kid, but he made a dumb, dumb, dumb decision. Even good kids do stupid stuff. And that's part of the messy middle. And that's why if you're a parent dealing with the messy middle and you're like, why are my kids so hard? Why? Don't worry. You know, that's one of the fruits of life, is that you do all the things you can do. Probably better days are ahead on some of those life elements that I'm sure when this mother was going through it, she was like, what am I going to do? Get out of this, you know? But it got better. Now it's all good.

[Bo Hanson]

Great. Thank you so much, Jeff, for your question. If you would like a money guy Tumblr, you can email winneroneyguy.com you want.

[Brian Preston]

To hear Jake comment.

[Bo Hanson]

Yeah, I saw that one too.

[Brian Preston]

He said, did Brian's umbrella insurance cover the Pine cone incident?

[Guest Expert]

Oh, my God. What's funny is that the Pine cone incident I'm seeing, the other party in.

[Brian Preston]

The Pine cone is in the room.

[Guest Expert]

I hesitate. I'm not saying any names because he sometimes pops into these live chats, but he knows I still owe him a lick. Two, maybe two. He got me. Yeah. Thanks, Jenny.

[Brian Preston]

Awesome.

[Bo Hanson]

All right, this next question's interesting. It's from Andrew G. He says, we have heard about some of Brian's financial goals and milestones, like the six figure job by 31 million net worth, etc. But what were some of Beau's financial goals and milestones in the early game?

[Guest Expert]

A lot faster than Brian's. Do everything better than Brian did. That was, that was bold. If you want to know. Bo actually wrote that on a sheet of paper. Be better than Brian.

[Brian Preston]

That's actually what it says at the top of the. Every year when my wife and I go through it, I just put, are we smoking, Brian? That's what I put on there. No, this is great. You know, I had a lot of the same milestones that Brian had when, you know, when he started out. Now obviously we had some income milestones or some net worth milestones. You know, I had a goal that I wanted to make, you know, six figures of income by a certain age. And because of, you know, the way the way stuff works around here, I was able to do that much quicker than I thought. I had net worth goals that I wanted to do as well. I'll tell you, one of the things that my wife and I have begun kind of like circling on now is, and I think this is important especially for people who've had any, like, level of financial success, is really focusing on what is the why behind the wealth. Like, okay, yeah, we can have a goal, I want to hit this net worth or I want to hit this income. And those are fun and they're certainly worth moving towards. But at the end of the day, you have to answer the question, why? Like, what's the goal of hitting that number? Like, does that number change anything? Does it do anything unique? Does it create, if you're financially independent, does it create more financial independence or are there things that you can allow your wealth to do and are there things that your wealth allows you to do that you would not be able to do otherwise? So that's kind of been some of the stuff that my wife and I have been kind of leaning into now. I will Tell you one of the things, and this is, it used to be fun to have, like, the income goals, and those are awesome. But I have this goal, like, I hope that I'm going to be able to raise my kids to buy half their car. That's such a silly goal, but that's like. And I want to fight because my kid, they don't understand this right now, and all then recognize they're going to have skin in the game. They're going to have to work towards this goal. And my oldest daughter, she's going to be 10 this year. We're kind of getting close to that. Like, you know, it's going to take some time to save up and begin building up. And so I want to start having that conversation with her. So I want to have goals with my money around making sure that it's used well and that we're preparing and training our kids to be able to use it well one day. Is that a good answer?

[Guest Expert]

I mean, I think, people, I will give you credit. I think Beau has blown past every one of my goals and then some. He's probably tired of winning at this point.

[Brian Preston]

We're still rocking and rolling, though.

[Guest Expert]

I love it. Remember, if you ever want to know our difference of personalities, this is the guy who wants to play shortstop. I'm the guy that they want to put in right field and hope the ball never comes here to me. So it's just I wanted to play.

[Brian Preston]

Center field when Brian was in right field because I knew that if the ball came anywhere in the vicinity, I would be able to get to both of them. That's where little razzle dazzle there. Little shake and bake.

[Bo Hanson]

You see Chat calling you out, Bo.

[Brian Preston]

What'd they say? Oh, stop eating cereal. Buy real blind. Learn to swim. I can swim, guys. I can swim. I just don't float. I can swim.

[Guest Expert]

I can swim as long as his friend that is shaped like Michael Phelps swims next to him.

[Brian Preston]

Have you seen this guy's body? I don't float. Like, I can move myself through water.

[Guest Expert]

I think technically that means you can't swim.

[Brian Preston]

No, I.

[Guest Expert]

If you can't keep your body afloat, you can't swim.

[Brian Preston]

I can until the muscles give out. But you can only freestyle for so long. You know what I mean? So I can. If I got to get from point A to point B, I can get from point A to point B. But if we just have to tread.

[Guest Expert]

Water, you can do that in a swimming pool. You can do it in a swimming pool. If you get out in the open ocean.

[Brian Preston]

Open water is not my thing.

[Guest Expert]

That means you can't swim.

[Brian Preston]

No, but, like, okay, I can if we're out on a boat. If we ever go on, like, a lake trip or, like, out on a boat, I can jump off the boat, and I can, like, play around in the water, and then I just get back to the boat without a life vest. Like, I could do without. I mean, I do it with a life vest because I'm dangerous, but I could do it without a life vest.

[Guest Expert]

I could do it. I could do it.

[Brian Preston]

I could. I've done it. I've done it. I've done it. I've done it.

[Guest Expert]

I can swim.

[Brian Preston]

Caleb. He's over there shaking his ass.

[Guest Expert]

I have looked in his eyes when he had the fear of the water in there, so I can tell you, I have seen. I've seen the face. A bow. When he realized he couldn't swim.

[Brian Preston]

That was the last. That was the. I can. I can pinpoint it. You know, like, everyone has, like, these, like, cathartic moments in their life where they're like, this is where something changed. That was the last time ever that, like, I let my pride put me in a position where I cared about, like, impressing someone else or whatever. So now I'm just. I don't care, like, if I'm. Yeah, that. It. Beau's pride died in that moment, along with those Oakley sunglasses.

[Guest Expert]

That's what I was about to say. He walked away from a hundred pair. $100 pair of sunglasses because life was just that precious bottom of the Gulf of Mexico. We all take air. We breathe for granted until we're underwater. And then, fortunately, is David Hasselhoff. Michael Phelps shaped friend was there to swim it back for him.

[Brian Preston]

I like how you just gave yourself Hasselhoff, too. Let's do it.

[Guest Expert]

I had to save you.

[Brian Preston]

Let's do it. That's amazing.

[Bo Hanson]

All right, you guys ready for that?

[Guest Expert]

Story will never get old to me. We ought to go. You know what's funny? What? Y'all don't know Full circle. Bo before we hit record today goes. You know, we ought to go to Mexico again.

[Brian Preston]

I did. I literally said that.

[Guest Expert]

He literally. That's full circle. Because that was down in Mexico that that whole thing happened.

[Brian Preston]

It was.

[Bo Hanson]

All I know is that you don't want to have a content team pool party. So.

[Brian Preston]

No, I'm. I. I.

[Guest Expert]

That's because we've got enough employees now that we can't. It's just that it's not a good. It sounds Good on paper. It's not when you have this many employees, pool parties, you know, you know, we will have.

[Brian Preston]

We will have the money guy cookout around the pool. It won't be like a pool party, but it'll be like a cookout. We'll all break bread and that'll be like. That's what we'll do. That'll be the thing.

[Bo Hanson]

Sounds good.

[Guest Expert]

Yeah.

[Brian Preston]

Is this thing still on?

[Bo Hanson]

Yeah.

[Guest Expert]

Like I said, I play horseshoes with the English language, so I didn't say that Right when I was giving clarifying rules to the team.

[Brian Preston]

I think the big takeaway here is we all know that Bo can swim. I think that's the big takeaway. We all know that I can swim. You want to do another question?

[Bo Hanson]

Sure.

[Brian Preston]

Can both swim? Yeah, absolutely. Like a fish. If he, you know, for short distances and without floating.

[Guest Expert]

Without gills. Without gills or fins.

[Bo Hanson]

All right, this next One is from Dr. Niffler. He says, My company started offering a 403B, a Roth 403B. I'm married and my marginal tax rate is under 25%. Should I convert current retirement to Roth or just start investing in the Roth 403B? PS I'm on step three and I love the show. Thank you.

[Brian Preston]

How old is Niffler?

[Bo Hanson]

Didn't get an age. But I'll keep an eye on the chat.

[Brian Preston]

Well, you know what? This was a hard question. Right there until the very end. Right there until the very, very end.

[Guest Expert]

That's step three.

[Brian Preston]

Yeah, the step three got me because I was sitting there thinking, okay, I'm below the 25% tax bracket. You've heard us say that if you're combined marginal federal and combined marginal state rate are less than 25%, Roth is really, really attractive. So making Roth contributions seems like a no brainer. Right? But the question was, should I consider converting some of my pre tax money? And so then my mind started going, okay, well, I'm thinking, okay, well we're going to convert that. It's going to be converted at a low tax rate. That seems reasonable. But then you drop the bomb on me at the very end. Dr. Niffler, you're in step three. Brian, will you hold up the financial order of operations? Step three, high interest debt. That means you have something in your financial life that is actively using compound interest to work against you. And if that's going on, what I don't necessarily think I want you doing is converting pre tax assets inside your 403B, triggering additional taxes that you're going to have to pay when tax time rolls around, as opposed to not triggering those taxes and using the money that you would have spent on taxes to then get out of step three. I think that's the answer to the.

[Guest Expert]

Question, but we can clarify. I mean look, if you're. If it's a 403B so it's your employer plan, the team just put up on our comfort monitor here that you're 32 years of age. So that's the good news. Is employer plan up to the match is step two. So you can do Roth. There's nothing wrong with making it a Roth 403B election for step two. But then after you maximize the employer match, by all means, if you have high interest debt, if you got some credit card debt or some other type of debt that is high interest debt and is working against you, then we got to vanquish and extinguish that debt first. And then we can get to step four, which is obviously getting the emergency reserves expanded three to six months. Then we can get to steps five and six, which are the exciting stages of maxing out the Roth IRAs and then loading up more into that Roth 403.

[Brian Preston]

The other thing that I throw out there, let's assume that the step three had not been there because I want this to be practically useful for other people as well. Should I be in a rush at 32 years old to begin converting all of my pre tax assets into Roth? I think you have to think about, okay, ultimately when I see myself down the road, do I think that there might be an opportunity for me to be an even lower tax brackets in the future where I might be able to convert those dollars at even cheaper rate? Now look, below 25% is great. I would argue that's still a low tax. But there's a realistic scenario where at some point in your life you might move to a state that doesn't have any income tax or you might be able to Convert in the 10%, 12% brackets down there lower. I think you have plenty of time. We're gonna be able to do that. So if you're just focused on building the Roth dollars, I hate the idea of you purposefully accelerating more taxes this year if it's not absolutely necessary.

[Guest Expert]

Especially if you're having to use savings to pay the taxes when maybe at your age, 32 years of age is still young, has a great wealth multiplier. I mean, if you think about for a 32 year old, every dollar has the potential become $18 huge at retirement. That's still a great multiplier. I would lean into that and load it up. I mean, because that's that once you extinguish the high interest debt, I'm really hopeful you can get closer to 23,500 at some point. Plus do the Roth. Whatever gets you to 25% of your gross income.

[Brian Preston]

It's awesome.

[Bo Hanson]

Very cool. All right, Dr. Niffler, thank you so much for your question. If you would like a MoneyGuy Tumblr, you can email winneroneyguy.com and thank you for everybody that tuned in today. If you want any of those resources that we talked about, you can go to moneyguy.com resources. We will be here every Tuesday and a little teaser for y'all. Definitely tune in next Tuesday because one, making a millionaires launching and then two, we also have a little surprise announcement. So just dropping that.

[Guest Expert]

It's such a surprise that I can't wait. We don't hear what it is.

[Bo Hanson]

We have talked about it.

[Guest Expert]

So I was going to ask you, Megan, because there's a chance we're not for sure, but you might not be on air next week.

[Bo Hanson]

Yeah.

[Guest Expert]

Any takeaway? Fresh points, you know, as we close out? Because this was kind of a cool thing.

[Bo Hanson]

Yeah, it's a lot of fun. I love seeing chat and just being to being able to like talk on camera and hang out with y'all and it's been fun, so.

[Guest Expert]

Well, I think you did a great job. The reviews, I mean, the comments were always very positive.

[Bo Hanson]

Yeah, we've got the best audience.

[Guest Expert]

Yeah, I mean, it was. It was really nice stuff. And like I said, I'm putting it out there. I'm not saying definitively it was your last, but there's a really good chance that we have a little change in the seat next week and that's pretty exciting, too.

[Bo Hanson]

Yep, it's been fun. Thanks for having me on.

[Guest Expert]

No, it's been good. Guys. We love creating this content. I got a little sappy earlier because Bo, I don't know what he was trying to do. He was trying to play some heartstrings on me and brought up that we started doing this show all the way back in 2006 and it is wild that we are quickly approaching 20 years of content creation and essentially running the nerdiest financial classroom out there. So you can be the best version of yourself financially and we don't take it for granted. It started with a pure intention of education and hopefully you can see that is still coursing through the heartbeat of this show and I just want to thank every one of you for tuning in. Subscribe like Bo is always reminding us to, but realize that there is a better way to do money and we're going to continue to be your navigators and hosts to go on that journey. I'm your host, Brian Preston. Mr. Bo Hanson Moneyguy Team out the.

[Brian Preston]

Moneyguy show is hosted by Bryan Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance 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.