When Should You Make BIG Financial Decisions?

Summary

Money Guy Show: When Should You Make BIG Financial Decisions? Release Date: May 5, 2025

In this insightful episode of the Money Guy Show, hosts Brian Preston and Bo Hanson delve deep into the complexities of making significant financial decisions. From understanding the intricacies of bond investments to navigating the challenges of unemployment and retirement planning, Brian and Bo provide listeners with expert guidance and practical strategies to enhance their financial well-being. The episode is structured around real-life questions from listeners, fostering an engaging and educational dialogue.

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Understanding the Complexity of Bond Investments

The episode kicks off with a discussion led by Brian Preston on the often underestimated complexity of the fixed income or bond market. Contrary to the common perception that bonds are straightforward and low-risk, Brian elucidates the multifaceted nature of bond investments.

Brian Preston [01:27]: "Bonds are complicated. There is a lot that goes into the fixed income side of the equation... How far out on the yield curve do I want to go with my fixed income? What credit quality should it be? Do I want them to be callable or non-callable?"

He emphasizes the importance of focusing on asset allocation over individual security selection, advocating for the use of index funds even within the fixed income market.

Brian Preston [03:10]: "This is one of the reasons why we love that when it comes to investing, portfolio allocation often has a bigger impact than individual security selection."

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Listener Questions and Expert Advice

The heart of the episode revolves around addressing listener-submitted questions, each tackling distinct financial topics.

1. Glide Path and Bond Funds

Listener: Rich
Question: "Is researching bond funds as simple as purchasing taxable ones in Roth accounts and non-taxable in non-Roth accounts?"

Discussion: Brian responds by highlighting the complexities involved in selecting bond funds, including decisions about taxable versus non-taxable bonds, types of bonds (corporate, government, agency), yield curve positioning, and credit quality. Rich adds that while index bond funds are a good starting point, they may not always be the most efficient due to the diverse risk profiles within the bond market.

Rich [04:04]: "Bonds can go all over the spectrum. Some are just as risky as equities. You have to be careful with how you structure."

The hosts agree on the importance of professional advice, especially when nearing retirement, to navigate these complexities effectively.

Brian Preston [05:17]: "Even when I hear you saying, should I just hold my taxable bonds inside of a Roth IRA... there's tons of nuance."

2. House Hacking

Listener: Zach W.
Question: "Where does house hacking specifically belong in the financial planning steps?"

Discussion: Brian defines house hacking as purchasing a property with the intention of living in one part while renting out others to offset mortgage costs. He explains its strategic placement in financial planning, especially in high-cost housing markets.

Brian Preston [07:15]: "House hacking allows you to own a property and have others help pay for it, reducing your overall cost."

Rich cautions about the risks associated with real estate investments, advising a thorough risk assessment and ensuring emergency reserves are in place.

Rich [10:32]: "Make sure you're conservative enough that your emergency reserves reflect the risk of the situation."

3. Emergency Funds During Unemployment

Listener: Adam
Question: "I've been unemployed for almost 11 months. How low should our emergency fund get before making big decisions like selling our house?"

Discussion: Brian expresses empathy and advises evaluating all possible options before making drastic decisions. He suggests exploring alternative employment opportunities and emphasizes the importance of not making permanent decisions based solely on temporary circumstances.

Brian Preston [12:07]: "Figure out all the hard decisions you could make and which ones make the most sense."

Rich introduces the concept of the hedonic treadmill, recommending that during tough times, consolidating decisions to minimize prolonged stress and unhappiness is beneficial.

Rich [13:43]: "Do everything as fast as possible. Make your adjustments and get back to your baseline happiness factor."

4. FIRE (Financial Independence, Retire Early) Strategy

Listener: Mason
Question: "I'm 23 and thinking about FIRE. What percentage split should I do between a 401k, Roth IRA, and brokerage, or should I use all three?"

Discussion: Rich redirects the focus from the allocation split to the importance of the savings and investment rate, especially for those aiming for early retirement.

Rich [17:30]: "The bigger question is your savings and investment rate. How much are you saving?"

Brian echoes this sentiment, highlighting that a high savings rate is crucial for achieving FIRE goals and recommends adhering to a structured financial order of operations.

Brian Preston [18:32]: "Focus on the savings and investment rate first. Then, follow the financial order of operations."

5. Investing vs. Paying Off Auto Loan

Listener: Eric G.
Question: "I recently bought a new car, put 40% down with $23k remaining on a 6.5% interest rate over 48 months. Should I put an additional $16k toward the loan or invest it?"

Discussion: Brian commends Eric for putting a substantial down payment but notes the deviation from the recommended financial guidelines.

Brian Preston [21:12]: "You have run afoul of 23/8 constraints by financing over 36 months and exceeding the recommended payment percentage."

Rich advises two potential actions: paying down the loan to reduce the payoff period or increasing monthly payments to adhere to the 23/8 rule.

Rich [22:33]: "You can either pay down the loan to reach the three-year payoff or increase your monthly payments."

6. Advising Mother-in-Law on Retirement

Listener: Corey S.
Question: "My mother-in-law is planning to retire next June at 65. She has around $300k in retirement and $80k in a standard savings account but is scared to move it to a high-yield savings account. How do I tell her she may not have enough?"

Discussion: Brian acknowledges the sensitivity of advising family members and recommends involving a professional financial advisor to facilitate objective discussions.

Brian Preston [25:05]: "Propose sitting down with a professional who can provide a retirement analysis without bias."

Rich emphasizes the importance of understanding the complete financial picture, including Social Security, pensions, and living expenses, to accurately assess retirement readiness.

Rich [26:35]: "Track her cash flows from Social Security, pensions, and compare them against her living expenses to determine if her savings are sufficient."

Bo adds that factors like debt status and lifestyle choices play a significant role in retirement planning.

Bo Hanson [27:56]: "Retirees are usually debt-free and have a smaller footprint of expenses."

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Conclusion and Final Thoughts

As the episode wraps up, Brian and Rich commend the production team for the new studio setup and encourage listeners to utilize the resources available on moneyguy.com. They reiterate the importance of structured financial planning and making informed decisions to achieve financial goals.

Brian Preston [29:25]: "MoneyGuy.com Resources has tons of free calculators and downloads to keep the conversation going."

Rich [29:58]: "You're your ultimate power source for compounding growth. Every month you're saving effectively is a step towards your financial potential."

The hosts conclude by reminding listeners that financial journeys are ongoing and to stay engaged with available tools and content to maintain and enhance their financial health.

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Key Takeaways:

• Complexity of Bonds: Bonds are not as straightforward as they seem; understanding their intricacies is crucial for effective portfolio allocation.
• Asset Allocation Over Selection: Focusing on how assets are allocated rather than individual securities can lead to better financial outcomes.
• Listener-Centric Advice: Tailored advice addressing specific financial scenarios helps listeners make informed decisions.
• Importance of Savings Rate: For ambitious financial goals like FIRE, the rate of savings and investments is more critical than the specific allocation of those investments.
• Professional Guidance: In sensitive situations, such as advising family members on retirement, involving a professional can facilitate better decision-making.
• Resource Utilization: Leveraging available resources and tools can significantly aid in financial planning and confidence.

For more detailed advice and resources, visit moneyguy.com and explore their comprehensive financial tools and guides.

Transcript

[Brian Preston]

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[Bo Hanson]

Rich has a question next. I am doing the glide path myself and was researching the bond funds. Is researching the bond funds. Is it as simple as purchasing taxable ones in Roth accounts and the non taxable in the non Roth accounts also? Love the new studio. Thanks, Rich.

[Brian Preston]

So this is something that a lot of people might find surprising. The fixed income or bonds. Another word for bonds or fixed income. The fixed income marketplace is wildly more complicated than the equity marketplace. And for those of you who are not familiar finances, you'll think that's a hot take. It is, in fact, not a hot take at all because bonds are, are complicated. And there is a lot that goes into the fixed income side of the equation. Just want to kind of start there. A lot of people think, oh, bonds because they are more conservative, because they're lower risk, they must be a lot more simple. That's not the case. And so when it comes to thinking about, okay, well, I'm trying to figure out how do I do a fixed income allocation? It gets really, really difficult. I mean, you just mentioned two pieces of it, right? So do I buy taxable bonds or do I buy non taxable or like municipal bonds? Well, that is a piece of it. But then you want to talk about what type of bonds am I buying? My buying corporate bonds, am I buying government bonds, I'm buying agency bonds. How far out on the yield curve do I want to go with my fixed income? What I want the credit quality of my fixed income to be, do I want them to be callable bonds? Non callable bonds. I want them to be convertible bonds. There is all kinds of complexity and nuance that happens inside the fixed income space. This is one of the reasons why we love that when it comes to like investing, when it comes to portfolio allocation, we like to focus on the big things that have the biggest impact. And for us most often that's more about asset allocation than it is about individual security selection. It's why we love index funds. We even love index funds in the fixed income markets.

[Rich]

But it is one of those things where you know, because we all know I have just an affection towards index funds that is beyond the average American. I mean I tell you, do we do content on it, you know, a dollar cost average every week. But I will tell you we have no problem buying index fund index bond funds. But they're not always because it's such an inefficient marketplace. It's not always. The best might not be investment and it's not going to be the only bond investment that you do is because I mean bonds as beau laid out can go all over the spectrum. And you know a lot of people when they hear bond they think that they're super conservative. There are actually bonds out there that are just as risky as equities. I mean if you get into. And so that's why you have to be careful with how you structure. I will say in the beginning, but this is not you though Rich, because you're talking about a glide path. A glide path is somebody who's retiring.

[Brian Preston]

On their way to find.

[Rich]

That scares me a little bit is because you need to be kind of harnessing and looking at the complexity and making sure that you are landing this plane with all things considered appropriately now we give you a lot of grace in the beginning of the journey. We're like hey, just go buy the index fund. Just because your behavior of saving and investing is so much more important than the selection of the investment. But you're kind of on the backside of that when you start talking about glide path and retiring in the next three to five years, man, you just don't know what you don't know. And this is just one question you have that makes your life a little more complex is bonds. But I'd also ask if you stress test your retirement plan, are you just going off the back of the math, back of the napkin math of a 4% withdrawal rule? I mean there's, there's a lot that should go into your retirement planning that creates a natural level of complexity that that's When I think you take the relationship to the next level now, you know, a lot of you, that's why we can give so much free content away, is because your life in the beginning should be pretty simple. Even financially. As we tell you the good behaviors, you start doing it. If we do our job well enough, success naturally creates complications. And that's where we kind of step in as advisors.

[Brian Preston]

I'll even throw one other thing out there. I don't know what your portfolio structure looks like, but even when I hear you saying, hey, well, should I just hold my taxable bonds inside of a Roth IRA or inside my Roth, even when I think about not asset allocation, but asset location, if I have other places where I can hold my fixed income, even if it's in after tax accounts or even if it's in qualified pre tax accounts, I might like to do that more so than raw. So again, there's tons of nuance. It is a. And it is a stereotypical time that a lot of people think, man, maybe I should take this relationship to the next level.

[Bo Hanson]

Good stuff, Rich. Thank you for your question. I'm really glad that you were here to ask it.

[Brian Preston]

Prototypical, not stereotypical. It's a prototypical, not stereotype. There's no stereotype there.

[Rich]

If you saw my SATs, you know, I don't get that.

[Bo Hanson]

Well, Rich, what I was going to say is if you would like a money guy Tumblr, just email winner, money guy.com. we'd love to send you one since we answered your question today.

[Brian Preston]

Somebody just said the studio chairs look way more comfortable. You know what, I think that the guys agree they are way more comfortable.

[Rich]

They're also. These aren't. They're not boosted up.

[Brian Preston]

They're not bar. We were like barstool height. Now we are chair.

[Rich]

Now we're normal chair height.

[Brian Preston]

Feet are flat on the floor.

[Rich]

And I like, I like this. I gotta tell you, the custom, whoever made the custom desk, it's. It's gorgeous. It's really, really pretty. And we have.

[Brian Preston]

You can't show them that part.

[Rich]

Not supposed to show that. Emma.

[Bo Hanson]

It's a secret drawer. Not so secret anymore.

[Brian Preston]

Not so secret anymore.

[Rich]

Oh, man.

[Bo Hanson]

All right. Ready for another question?

[Rich]

Sure.

[Brian Preston]

Yes, ma'am.

[Bo Hanson]

Zach W. Says, love the set. Thank you guys for the set. Love today. We're excited about it too. Then he says, where does house hacking specifically belong? In the food. My wife, who's 24 and I 30, have 150k of income. We're at step five. Is house hacking considered step eight, since it would be our residence. What do you think? And can you define house hacking just in case that's a new concept for.

[Brian Preston]

Everyone, since you're the guy that wrote the book on the food. I'll say what house hacking is. You talk about where, where it fits in. So a lot of people recognize that in this unique housing environment we're in, where the prices of houses have gotten really, really expensive, interest rates are not all that favorable right now, somewhere between 6 to 7%. The cost of homeownership has gotten really, really difficult, especially for young people trying to get into their first home. So one of the ways you can get around this or one of the ways you can try to just get on the ownership side is by what's affectionately known as house hacking, where essentially I buy a property, but I have someone else come into that property to help me pay for it. This could be buying a single family home and having roommates, buying a duplex and renting out one side of the duplex, buying a quadplex and renting out three out of the four. And then you living on property on premises as your primary residence, what it allows you to do is own a thing, get into the ownership side, but have other people help you pay for it. So that way you get the cost down. It's a wonderful way to get early on real estate exposure in terms of your primary residence. Now, Zach's question is, all right, I get it. Understand it makes sense. When do I do it? Is it. Is this a step 8 type thing?

[Rich]

I don't, you know, I look at it as. Because, by the way, Zach, well done in the fact that, you know, when I think you get into real estate, traditional investing, meaning you buy single family homes, apartments, whatever it is, commercial real estate, that is a step eight, because a lot of people jump into real estate way too early and they don't realize that whole element of leverage that you get so super excited about, how it can really help you on the way up, as real estate appreciates, can also be the bane of your existence if you get into a bad real estate marketplace. So it's just higher risk and typically you need additional pockets or deeper pockets so that you can cover those periods where the real estate marketplace may be stuck in a. The doldrums or just drags bottom for a few years. So now let's bring it back to house hacking. What I like about house hacking, and this will kind of lead to the answer too, is that your banks will let you use a primary mortgage interest rate, which is cheaper. When you're living on premise that it's your primary residence, they give you better rates than if you were going out there and getting a residential rental property. You're going to pay a premium on that because you're not living there and it's an investment. This is a way that you essentially get to bring an investment property in with and you're not breaking any federal laws.

[Brian Preston]

Lower down payment.

[Rich]

You also get a lower down payment because you're, you're putting the money in. So I look at this as, yes, it is a way to get into residential real estate investing, but it's also a better way to get into how can you afford, you know, a primary residence in this crazy new economy, new new world we're in, where real estate ran above inflation and affordability has gotten into a bad place. But with all that said, now that I've told you how much I love it and praise it, you still have to make sure that you, you're running the numbers on that leverage to make sure you don't get in out over your skis and you get yourself in a pickle of a situation. Because what happens if you go a few months to, let's just say three to six months, that you just can't find a roommate or you find out the whole it's a roommate versus it's a duplex? You know, you just, there's things that.

[Brian Preston]

Go wrong work real well.

[Rich]

You need to still make sure you're conservative enough that your emergency reserves and your down payment all reflect the risk of the situation. But we absolutely love house hacking. I think it's something that a lot of people should consider if you want to take that step and you don't mind the hassle factor of essentially being a landlord as well.

[Brian Preston]

And I love it if you're going to do it again. My experience, this is not like tried and true. It is a little bit easier to do when you're younger. So you said you guys are 24 and 30. This is the time that if this is something that you were going to try. And I didn't mention if you have kids or what the job situation is. I mean, you still, when you think about buying. Any home we have is a home buying hub. You can go to moneyguy.com resources. We have a checklist of things you need to think about when you buy a home. We have a home affordability calculator. I mean, make sure you work through these things first. But if you work through them and it makes sense for the Life situation and circumstance you're in. I think house hacking could. Could very well make sense.

[Bo Hanson]

Fantastic. All right, well, Zach W. Thank you so much for the question. If you would like a money guy Tumblr, we'd love to send you one. Just email winneroneyguy.com Adam's question is up next. He says, I've been unemployed for almost 11 months, and I'm wondering how low we should let our emergency fund get before we make big decisions like selling our house. What do you think? Because this really is when the rubber meets the road, what that emergency fund is for. But there's some other factors at play here, too.

[Brian Preston]

I want to start by saying, Adam, first of all, I'm sorry, like, unemployment is, like, an unfortunate, sad, not great thing. It's not a great place to be. And so I don't want to, like, minimize it all because I recognize it's tough. That's a really, really hard spot to be in. But as it continues on and as you find yourself 11 months into this thing, you probably are in the situation where you're starting to think, man, I got to make some really hard decisions. Now, what I would encourage you to think about is what are all of the hard decisions I could make and what are the ones that maybe make the most sense? Because what you said is, hey, what, you know, should make a big decision, like selling our home. Well, maybe you got your home at a really good time, and it's in the part of town that you really want to be, and you got a really good mortgage rate on it, and your family's there and you're building memories. Before I played that card, one of the things I might think there's, okay, are there other things that I might do if I've been unemployed, I've been able to. I've not been able to replace the vocation I'm looking for for 11 months. Might there be other employment opportunities that I could seek? Maybe it's in a field different from what I've been doing, or maybe it's below the level that I was at previously. But I just got to figure out how I get back in the game, how I get back on the employment side, because I'd rather you be able to do that for a temporary time than make a permanent decision like leaving a home that you may not really want to leave. If you could, you know, see in the future, be five years in the future and look back, I just make sure that I would measure twice, cut once before I made some of those huge decisions.

[Rich]

Well, I think you, you, you know, you were leading towards how do you get back employed. And the financial side, I want to talk about the behavioral side with. Because by the way, Adam, 11 months, I think you are at the point you got to start making some big decisions. And here's what I know about life and there's all kind of research to support this. The hedonic treadmill. You, you typically hear people talk about hedonic treadmill when it talks to, about consumption decisions. Because, you know, you, you hear about lottery winners who go out there and they buy a new house, new car, new vacation property. They're just doing everything all at once. And they're not spreading out purchases or life decisions and enjoying it as maximum as possible. Well, you're in the opposite situation. Is that for good things in life, you should spread out big decisions because you want to make sure you can enjoy the moment and celebrate those things. But when you face bad, difficult things, the research on the hedonic treadmill is, is that you should probably go ahead and do everything as fast as possible. Make your adjustments. Yeah, all the hard decisions, don't string them out because you're unhappy. Your happiness factor will struggle because you'll be, you'll, you'll just keep having to make hard decisions. This month we decided we were going to sell the house. This month we had to get rid of one of the cars this month. You know, you see how this just spreads out. This month we decided we have to move to another part of the country. No, y'all sit down, come up with a plan and then put that plan into action where you're doing all the things at once so you can get back to your baseline happiness factor and start reaching success again that much faster. That's what the research shows, is that I think in 11 months of unemployment is that it's probably time to start really measuring twice, cutting once on the big life decisions. And don't forget, we often talk about, you know, put on your 3D glasses is that there's nothing wrong as you're making those hard decisions. Do it in the 3D glasses way. And the fact that you put your dream plan of man, if we make these hard decisions now, this is where we're going to be back in no time to write, where we need to be. The down to earth plan. And then what happens if you have the doo doo plan where it just doesn't ever recover? Because I've had a lot. I don't know. Adam didn't give us his age, but I'VE had a number of my clients that unfortunately just the entire industry moved away from them at a certain age and they, they essentially were quasi retired from that industry because it's just they got laid off. There were no opportunities for them. Enough time went by and they had to pivot or, or consider themselves partially retired.

[Brian Preston]

I, again, 11 months in, I think about trying to make those decisions sooner rather than later. The, the ultimate crux of your question is how low should we let our emergency fund get?

[Rich]

Don't let it just.

[Brian Preston]

You don't want to play with that fire because if you get to that other oh zone and you start having no other recourse, then stuff starts happening like, okay, it's not do I sell the house, it's man, can I save the house or do I have to.

[Rich]

Walk away from kicks in?

[Brian Preston]

You want to not put yourself in a situation where you have to make desperate decisions. So I would start figuring some of that stuff out sooner. Right.

[Rich]

Time lets you be the owner of the flexibility and the timing of things. If you let it go too far, you get forced into action and then that's always. That creates desperation.

[Brian Preston]

That's right.

[Bo Hanson]

Well, thank you for being here, Adam. We really are glad that you asked the question and we hope that that helps to give you something to think about. We would love to just say thank you and send you a Money Guy Tumblr if you'd like one. Just email winner moneyguy.com Mason has a question next. He says, if I'm 23 thinking about fire or early retirement, what percentage split should I be doing between a 401k Roth IRA and brokerage? Or are all three using all three splitting myself too thin?

[Rich]

I think the question he's getting into. These are important questions, but Bo, I think he's missing. There's a bigger question here that Mason needs to be addressing. If he's part of the fire movement.

[Brian Preston]

What do you think that question is?

[Rich]

His savings and investment rate.

[Brian Preston]

The rate, not the split of where it goes, but how much am I ultimately saving? Because what you're counting, you know, a lot of folks, we say all the time our goal for saving is we want you saving 25 of your gross. So we even have a deliverable. If you go to moneyguy.com resources, it's not called what can 25 do for me, it's called how much did you save? And this shows that for like normal retirement timelines, if you can save 25% of your gross income, you're going to set yourself up for a bright financial future. Well, folks who are in the financial independence, retire early movement, they're trying to accelerate that timeline. So most often, 25% won't get the job done. You likely need to have a much more aggressive savings rate much earlier on if you want to seriously consider doing fire.

[Rich]

Yeah, that's. That's the big part I saw is that Mason, we don't know, because 23, you're just starting out. This is more of an aspiration. I think at 23 is kind of like when I first started, I was like, hey, I want to make sure I save a lot so I can retire at 50 years of age. You're at the beginning of the journey. So the savings rate and savings and investment rate is the most powerful thing you can do right now. And then, of course, I want you going through the financial order of operations, and that's going to be your guide on, hey, get that free money from your employer, probably at your age, you know, in the Roth account for sure. You know, load it up in those index funds. And then after you load up the emergency reserves, you of course, go hit the Roth ira and then you can move on to loading up your employer 401k. I mean, all these things. There's a reason we have a tried and true financial order of operations. But don't back into the wrong question. I think you got to get the savings and investment rate right first and then keep on. Because I think that sometimes young people, they have a little bit of success in the first few years. You've still got to build critical mass. I think that's. I don't want you to have some false sense of that you've had success when you're only at the beginning of the starting line. And yes, you start getting some wins, but you got to stack up those wins and get into your 30s, 40s, where you have critical mass. And then now you really have flexibility. And then if you choose to retire, that's great, but you might choose it like I did when I got to 50 and then beyond. I kind of love what I do for a living, so I don't plan on tapping out just yet.

[Brian Preston]

And if you are someone who is part of the fire movement movement, or curious about the fire movement or curious about the fine movement, we have tons of content out there. Have some more content coming out in the near future. Okay, what are the things that you need to be thinking about? What are the things that you need to be looking at? If I want to seriously attack it, how do I do that so I'd encourage you, Mason, if you've not done this, go to moneyguide.com you can go into our search. You can look for fire or fine episodes. And we have a whole catalog there kind of walking through what are the things that you realistically should think about if you want this to be part of your financial future?

[Bo Hanson]

Mason, thank you for the question. If you would like a money guy tumblr, just email winneroneyguy.com and we would love to send you one. All right, Eric G. Has a question next. He says, I recently bought a new car for the family and put about 40% down with still 23k and a 6.5% interest rate over 48 months. So that's what's left on it. I will be coming into 16k soon. Should I put all this toward the loan or invest it? This sounds like he needs to know about the order and what she needs to do things.

[Brian Preston]

Eric, you. The question started off so good. It started off. It started off so good. Here's what I heard. I was like, man, Eric's crushing 40% down.

[Bo Hanson]

40% down.

[Brian Preston]

He said, 23.

[Rich]

Eight.

[Brian Preston]

I'll see your 23. Eight. I'll raise you 40% double. And I was like, man, that's awesome. And he's like, okay, it's a six and a half percent. Okay, that's not great great. But it's not like crazy crazy. But then he dropped the hammer on me and he said, 48 months, four years that you finance this. $23,000 outstanding. We don't love that. Because when it comes to buying automobiles, especially new automobiles new to you, used any automobile. When it comes to buying an automobile, we want you to follow 23. 8, 20% down. You do not finance it for any more than three years or 36 months. And we don't want your car payment to exceed 8% of your gross income. So you have run afoul of 23. 8. And your question is, well, how do I write this ship? Well, one thing that I love that he's done, Brian, is he has the equity in the car. If he put 40% down, he satisfied that. So he's in a good spot. A lot of times we'll see people run afoul of the foo and they'll put 0% down and they'll finance over long term. And immediately they're underwater. I'm betting in Eric's situation, he's not underwater right now where he owes more than the car is worth. But given he's not inside the food constraints. How should he fix it?

[Rich]

Well, you got two ways. You kind of mentioned you can either if you come into some, some additional money, you can pay down the loan to where it's now, your payments are going to cross payoff point at three years or you can increase your monthly payments. And if neither of those two seem like now your, your situation seems like one of those two choices is going to be what you ought to do because, because you put down 40% but there's other people who've that put down much lower down payments below sub 20% and they've had to make harder decisions like should I even be driving this vehicle right now? So that's how you correct and get on the right side of 23 8.

[Brian Preston]

Yep. But it's doable and, and you should do it. Like you should figure out how do I write this, how do I fix this? Because you may get away with it for a moment but all of these like anytime you like stray from a financial rule, you get away with it until you don't. And when you don't, you're like man, why did I do. That's me. And you're talking about the access to cash trap or like you get away with it for a while but then when you don't, you was that worth it?

[Rich]

Yeah. Just make sure you're not. You're not. We know that with the financial order of operations a lot of people think it's a stair step where you just go from 1 to 2, 3, 4, 5, all the way up to 9. More than likely you're going to have some setbacks. You go from six back down to four because you had to use some of your emergency reserves. So yeah, that's, that's great that it got pulled right up. So I just tell you understand that there's going to be seasons. Maybe it's a house down payment, maybe it's something to do with the kids that you might get away from funding things like you want. It's okay as long as it stays a season and doesn't become a permanent behavior. We want you to being feeling the pressure of hey man, I've got time is my ultimate power source for compounding growth. Every month that I'm doing this wrong is a month that I'm probably messing up, reaching my maximum potential.

[Brian Preston]

Love that.

[Bo Hanson]

Eric G. Thank you for being here. As a thank you, we would love to send you a money guy Tumblr. So just email winner moneyguy.com if you would like to get one. All right. We've got a question from Corey S. It says my mother in law is planning to retire next June at 65. She only has around 300k in retirement and 80k in standard, in a standard savings account. She's scared to even move it to a high yield savings account. How do I tell her she may not have enough?

[Brian Preston]

Well, okay. It's hard when it's your mother in law frankly. Right? Like, like sometimes really difficult. Sometimes having conversations with family members is really really hard. Even though you may be approaching it from a place of love and care and compassion. Relationships are messy and they're sticky and oftentimes especially if your mother in law is not asked for your guidance and advice, you may not just want to like voluntarily give it to her but.

[Rich]

Him knowing all the numbers I think that they're probably, we can assume that there's some sort of conversation with him.

[Brian Preston]

So this is, this is what I think could be helpful because one again one of the things you want to do is I think it might potentially be valuable to say hey mother in law, I know that you want to retire at 65. Hey, I'm not a professional financial advisor. I haven't done, you know, I haven't done this a ton but you know there are a lot of advisors out there who have helped hundreds of people work through retirement. Might it be valuable for us to sit down with someone who maybe charges a one time deal or maybe charges an hourly fee? Just have them do a retirement analysis retirement scenario to make sure that there's nothing we haven't thought of. There's no rock we haven't overturned, there's no contingency we haven't planned for in that way. What it does is it prevents you from being that person telling her hey, no, you can't retire but allows you to open the conversation around having a professional step in and maybe provide some light.

[Rich]

Well, and Corey, I want to give you some additional tools so you can continue the conversation at least in a productive way. You're looking everything you gave there was just assets on the net worth statement. That's the $300,000 retirement account, $80,000 and just a savings account that's probably underperforming a high yield or a money market mutual fund. What you didn't share with us was any cash flow things that could come to her in retirement. That's going to be Social Security. Does she have any pensions? Because that's probably the first thing you need to, to track down is what are those cash flow impacts that will be coming in automatically between Social Security and potentially pensions because then that's going to offset. Then you need, the second thing you need to know is what are her monthly living expenses? Compare and contrast those cash flows that are going to be coming into that and what's left is the amount of monthly retirement cash flow that your portfolio is going to have to try to cover the difference through earnings and also through the principal. And that's the part where you'll quickly figure out is this enough or does do we have to make some hard decisions?

[Brian Preston]

Yeah. And so again, personal finance is so personal. There are situations where $380,000 would be nowhere near enough for a 65 year old to retire.

[Rich]

And there's others.

[Brian Preston]

And there are other situations where $380,000 would be plenty. Yeah.

[Bo Hanson]

My first thought was like is she already kind of frugal? Is her house paid? Like yeah, that's what we don't think about. Retirees are debt free.

[Rich]

Usually if they're debt free, you have Social Security coming in and they, they have a small footprint of expenses. It might not be as dire as.

[Bo Hanson]

What we originally thought. Like we may not want that much in retirement. We may have other goals. But I don't know, I wonder about that sometimes, like when you get to that point. And I think, but those are good, really good pointers for Erica.

[Brian Preston]

You said she wants to retire. Having conversations. Hey, hey mother in law. Okay, walk me through. Why do you want to retire? What's the plan? How have you thought through this? Did you think about this? Did you think about this? What you're burning, right? Like just asking questions can be an incredibly helpful tool to help kind of uncover some of that stuff.

[Bo Hanson]

Yeah, no, really good stuff. Eric G or no, that wasn't Eric.

[Brian Preston]

G. That was Corey.

[Bo Hanson]

Sorry, I read Eric's question last. Corey, thank you for your question. We're really glad that you were here. Corey. If you would like a money guy Tumblr just email [e-mail] as always we are so glad to be here on Tuesdays at 10am Central. We we're so glad to back to be back live with you today on our new set. So thanks for joining us and just kind of having a fun kickoff. Taking the new set for a spin. And remember, just because we turn the cameras off right now doesn't mean that the financial journey stops. MoneyGuy.com Resources has tons of free calculators and downloads to keep the conversation going and hopefully to help you feel a bit more confident about your financial situation starting today. So thanks for being here and be sure to go to moneyguy.com if you haven't already.

[Rich]

Well, I'm super excited. The content team crushed it. You know, I want to give shout out to Caleb, you know, Josh and others. And then of course the writing team and social media has kind of been giving you some previews behind the scenes. Everybody absolutely crushed this set and you know, we say there's a better way to do money. I think we found out today there's actually a better way to even have a new set. So we're pretty excited about that. I thank you guys for joining us today. I'm your host, Brian, Mr. Bo, as well as rebe MoneyGuy team out.

[Brian Preston]

The Money Guy show is hosted by Brian Preston and Bo Hanson. Brian and Beau 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.