10 Things to Do Before 2025 Ends

18:22Brian Preston:I put money in my Roth. I was ineligible. I need to go undo that contribution. I want to distribute that contribution. It won't be taxable to you unless there are earnings attributable that have to come out as well, but you can then pull that money out, undo it, and look at one of these other strategies like potentially a backdoor Roth IRA contribution. Yeah, and we've done tons of content on that. We're trying to give you the ins and outs for year-end planning, but definitely if you make too much money for the Roth, make sure your account structure is right. This is a measure twice, cut once, but definitely look into backdoor Roth contributions too.

18:53Brian Preston:Okay. So once we've maximized the tax-free accounts, we've put the money in the HSAs, we've put the money in the Roth IRAs. Now we get to go back to our employer-sponsored account. Now we get to go back and hit that maximum salary deferral limit, either in our 401k or our 403b or our 457 or our simple IRA, whatever room we still have to max out. We want you to say, okay, between now and the end of the year, is something in my life going to happen that's going to allow me to hit that salary deferral threshold. I think it's important. Let's go ahead and throw the numbers out there so people know what they're dealing with.

19:25If we're, you know, if you're in a 401k, 403b, all those, the alphabet soup that Bo threw out there with the numbers,$23 ,500. That is your 2025 number. If you're 50 and greater, it jumps up over to $31 ,000 because there is a catch-up and there's a unique thing that just kicked in. There's a, what's called a super catch-up for those that are 60 to 63, pay attention to these unique opportunities because the government, once again, is trying to incentivize your ability because it's good for society for you to have money in retirement. So they're trying to give you these little one-ups so you can go in there and maximize your financial opportunities.

20:03Brian Preston:And we want you to recognize that our tax code is, it's a little nuanced and there are things that can have big impacts, even if you're just over by$1. So one of the things we want you to think through is, okay, if I can, if it's in my power to be able to max out these salary deferrals before the end of the year, will this open up some other tax opportunity for me? Is this going to move me into a lower tax bracket? Is this going to potentially make me eligible or available for a tax credit that I was not going to have access to otherwise? If you do not know how to do that, if you don't know how to run a tax projection, if you don't understand how the tax form works, consult with a tax professional and say, hey, can you give me some insight?

20:44Brian Preston:If I were to max out my 401k or max out my 403b, are there things on my tax return that would change because of that? And you might be amazed to find out that there are things that could be impacted just by doing an extra three, five, $10 ,000 into these retirement accounts. Well, and think about this. If you're a person gets a big year-end bonus. Guys, I've seen, I've helped employees and even some of our employees where we've loaded up some of those year-end bonus money goes to max out these retirement accounts. If you're self-employed and you haven't researched solo 401ks and other unique planning opportunities, because if you want to know loopholes, legal loopholes that the government incentivizes you to do, employer plans are great.

21:29So take advantage of doing a little bit of research to save yourself tons of money on taxes.

21:33Brian Preston:Now, as a quick aside, because we get this question all the time, a lot of people say, guys, guys, I'm saving 25%, but I'm not maxing out my 401k based on my income, based on where we are. We're doing all the stuff. We're doing the Roths, me and my spouse, and we're doing the HSAs and hitting the family max. And we're putting money into our retirement accounts, but we're not maxing them out. Does that mean that we still need to max them out? Well, if you're already at 25%, not necessarily. If you're at 25%, we then want you to move to step seven, hyperaccumulation, and begin answering the question, how am I actually going to use these dollars?

22:08Brian Preston:When I'm saving, when I'm building, when do I think I'm going to need to be pulling out? And when you answer that question, you're going to know then, okay, do I need to max out or should I open up an after-tax account? Should I start saving into that tax bucket at this stage? Tomorrow morning is knocking. Stock your fridge now. How about a creamy mocha frappuccino drink? Or a sweet vanilla? Smooth caramel, maybe. Or a white chocolate mocha. Whichever you choose, delicious coffee awaits. Find Starbucks frappuccino drinks wherever you buy your groceries. There are two types of business owners. Those who are busy and those who want to be busy.

22:43Toast is designed for both. With tools to keep you humming and help turn grind into growth. That's how you turn busy into business. Toast. Built for busy. And that's why that leads to, we're going to say this is number six, but this is really the introduction to step seven, the hyperaccumulation phase of the financial order of operations. We called it finish the drill. I love this step. It's often misunderstood is because this is the step where we really, if you think about steps one through six is to keep your life out of the financial ditch by making desperate decisions, or it's tax incentivized because of what's going on on the tax code.

23:19It is step seven that allows us to say, hey, how are we actually going to use this money? How is my personal finances structured? And you'll quickly realize, hey, if I'm part of the FIRE movement or FINE movement to the next endeavor, I might need access to this money. So I'll need a different account structure than just traditional 401ks. But it might also be, if you're somebody who you don't make a ton of money, but you're super disciplined, yes, you have moved into step seven without even maxing out the 401k limits, but that's a-okay because it's still now in step seven. You can think about how am I going to use this money in retirement to make sure that I'm structuring this appropriately with all my benefits.

23:58Brian Preston:So you're hearing over and over, the goal is to be saving 25%, getting to 25%, hitting that number. And so a lot of folks ask, okay, guys, what counts in this? Well, when we think about the 25 % savings, right, we're thinking about saving for future financial independence. So we're thinking about contributions that are going towards employer-sponsored plans. That's 401ks, 457s, 403bs. We're thinking about IRAs. We're thinking about HSAs if you're one of the 15 % that's actually investing them. Maybe you're an educator contributing to a pension that counts in the calculation. Maybe you're someone under$100 ,000 of single income or under$200 ,000 of household income.

24:35Brian Preston:Okay, then you can include your employer match. If you're putting money in an ESOP or an an employee stock purchase plan, that counts. Or if you're saving that third bucket, that after tax bracket, that counts as well, assuming that you're saving those dollars for future financial independence. Here's what it does not count. It does not count prepaying your mortgage. It does not count the principal payments on your mortgage. It does not count the investment in the real estate or rental property. Those are not part of your 25%. We want 25 % going towards your liquid portfolio for your financially independent future.

25:09Brian Preston:Yeah. And the last one on that list is that taxable brokerage account. And it's a banger because what I love about this is that for a lot of you, as you're starting to plan and figure out how you use this money, it has the maximum amount of flexibility. It still can be used for retirement, but here's what's so cool about the after-tax accounts is that it doesn't have limits on contributions. But as much in there as you want. You load it up. It's also still tax advantage. You think about capital gains rates, dividend tax rates. These things are still going to be taxed at a lower rate. It's not going to be ordinary marginal tax rates.

25:41It's going to have favored tax rates. That's a powerful thing. Potentially even 0 % capital gains if your income is low enough. And think about that for retirement transitions. There's no penalties for early access. This is why I mentioned it early for all my fire slash fine movement people. You get to have access to this money, whereas every other retirement account is going to start talking about$55,$59.5. all these other random dates. And then this is a unique opportunity. And I kind of, this is where I get so excited. I start throwing and spitballing it out there, but I've already said this is you start using this money in retirement.

26:11Think about how cool it would be to legally manipulate the tax code to keep your income below a certain threshold and have a 0 % long-term capital gains rate.

26:22Brian Preston:Yeah. In 2025, if your adjusted gross income is below $48 ,350 for single individuals, that's 0 % cap gains rate. And if you're married filing jointly and your income is below 96 ,700, you're in the 0 % capital gains rate. That means you can go buy that stock, buy that index, buy that investment, have it grow. And when you go to sell it, so long as you don't go over these income thresholds, you pay no income tax on it at all. It's an amazing planning opportunity. So we want you to make sure when you're saving 25%, If that taxable bucket makes sense for you, you're taking advantage of it. Because once you do that, once you're saving 25%, once you're building toward your future, then you get to start focusing on some other stuff.

27:06Brian Preston:Then you get to start focusing your attention on your abundance goals. Yeah, this is the one. Man, it's nice because a lot of people, I think, get this out of order. They're funding the kids before they even fund their own retirement. And I'm all about funding some kids' education because there's even some tax benefits for it in a lot of states. but it's also having my own oldest daughter as a senior in college. So we've used a 529 account to pay for those goals. It's powerful. So we actually think this is the perfect time for you to consider, hey, once you get to step eight of the financial order of operations, prepaid future expenses, let's go ahead and take care of those kiddos too.

27:43Brian Preston:And it might not just be college. I mean, that's a great example, but a lot of people don't recognize, yeah, you can save for college. You can use 529s and their state tax incentives to do that, but maybe you just want to get your kid excited about building their financially independent future. So you want to help them open a custodial Roth IRA and maybe do that parent match, or maybe you want to start saving for their first car or their first down payment for their first house, or you might want to start saving for a wedding with them. You can use UGMA or UGMA accounts. These are all amazing vehicles you can use to help your kids begin saving for the future, but you have to wait until you get to step eight of the financial order of operations before you begin doing.

28:23Well, also, look, we kind of buried the lead. We said prepaid future expenses because it does. It makes you think of college and so forth, but always I have a nickname for step eight and it's abundance goals because this is when you get to actually potentially consider doing things of increasing your lifestyle. This if you want to plan and save for an upcoming vacation, large purchase. I even had a, you know, if you are an aspiring real estate investor, this is something you can consider getting into real estate, whether it's residential or commercial. And even like last night, this is why I love how content writes itself.

28:55I had one of my college roommates write me and go, hey, you know, I love these European cars. I'm thinking about getting another Porsche. But I do not like the maintenance on these things. And I was like, good for you. I just had this same situation in my life as well. And the good news is when you're making bad decisions like a European car, these things are expensive to maintain. They're expensive to fuel. They're expensive to repair, to insure, and all the other things. Why not rent your bad decisions versus own your bad decisions? It is step eight that you would probably consider leasing or doing other things like that.

29:31And that's okay because you didn't do this at the sacrifice of your younger, better version who should have been saving and investing for the future. And that's why when I've been at car dealerships and you see the 30-something-year-old out there looking at these European cars, you go, oh, I don't know that they fully funded their Roth IRA or their 401k. But when you see the 50-something-year-old and you know you can just tell that they carry themselves in a way that they're step eight, I think this is the part where you can do vacations, you can do lifestyle, and it's A-OK.

30:04Brian Preston:So if you're going to make bad financial decisions, you want to do it in the most efficient way possible, but you can't do that until you get to step eight. Everything is a money decision. I mean, you're going to quickly realize, I know this, I was a tightwad at one point in my life, but you do at some point the way you travel, the way you save, the way you spend, You don't realize if you've done this right, you will change how that happens. And we've tried to write a no hypocrite policy so that this thing actually grows with you. That's the beauty of Financial Order of Operations. It actually keeps you from being a tightwad when you shouldn't be, when it's actually to the detriment of your relationships and your goals.

30:41We're going to get you through that.

30:42Brian Preston:So what you're saying is at this stage, you get to define what abundance is for you. And abundance for one person might not be the same thing an abundance is for someone else. and that's okay. That's why the financial order of operations liberates you to use money as the tool that you ultimately want it to be. And maybe you're someone who says, okay, I've done the things and I've gone to the vacations and I have all the stuff, but now I just want to start shoring up my financial life. And going into this end of this year, maybe I want to make 2025 the year. Maybe this is the year where I want to go ahead and knock out that mortgage and I want to prepay that low interest debt and I want to pay off the house and get that off my balance sheet.

31:25Brian Preston:Maybe you're someone who's getting that year in bonus and you've saved the way that you're supposed to save and you funded the abundance goals, even all those things that you know what, I'm going to do it. I'm going to write the check. I'm going to knock this out. Let's put some guardrails on this before we celebrate because I know what's coming. I can see the tea leaves. I think that this is something that I would encourage my financial mutants. look, I'm going to let you, once you get beyond saving and investing 25%, if you want to go pay off the low interest mortgage, it's okay. It's not optimized, but it's a-okay because that's a choice that you can make at step eight.

31:57But really step nine, the heart of this thing is that you are thinking about this in terms of, you know, am I 45 and over? Because the wealth multiplier for a 32-year-old is completely different than it is for somebody who's 50 years of age. And I can give you an example. For a 30-year-old, the wealth multiplier is 23 times over. For a 50-year-old, it's three. Very different. Do you see the compare and contrast on what your opportunity that your money has to kind of multiply upon itself? And that's why, and look, here's the other thing that you'll realize about this. I got to the situation to where, yes, I had a low mortgage rate.

32:36I had two and a half percent mortgage rate, but because the balance was well below$100 ,000, the actual opportunity cost of what I was forfeiting was getting to be less than $1 ,000 a year. And I was like, wait a minute, I am sitting here struggling with this decision on something that's less than$1 ,000. I'm like, what am I doing? Let's write the check. And that's why, yes, it was in 2025 that I have now mortgage-free. You guys have celebrated with me. I thank you for that. But I want to say, I love that I respected the financial order of operations. I was older than 45, sadly. And I definitely have enough assets working for me that this was not a sacrifice for my future self.

33:17This was just something, hey, one more way I can de-risk my life and take advantage of this.

33:22Brian Preston:Now remember, we're talking about 10 things to do before the end of the year. And number nine, this is not one that you save for the end of the year, but this is one that's worth revisiting. We want you to remember generosity. Remember, this is a great time to begin thinking, are there causes that I have not funded? Are there causes that I want to support, that I want to donate my money to? And are there efficient ways that I could be doing that? Is this the year where perhaps I should open up a charitable giving fund and I should consider donating some of those highly appreciated securities? Or maybe I've done the tax projection and it looks like I'm just going to give just enough to be right at the standard deduction threshold.

33:59Brian Preston:Maybe I don't want to do my giving that way on an annual basis. Maybe I want to bunch my charitable giving so that I can take advantage of this. This is a great time to revisit that and make sure that the dollars that you have align with the goals that you have and you're doing the most efficient way possible. Well, I thought I felt a little convicted this morning. I was, as I was getting ready for the show today, it hit me. I think I wear like six shirts for, on our show. I need to add more. But then when I look at my closet and I see I have six shirts that I've like deemed camera ready. And then I have probably 35 shirts that are just not camera ready quilt of life that I've acquired over the last 30 years.

34:39I need to clean my closet up and my wife would agree with that. So this is the perfect time as we're approaching the fourth quarter, get in there and start figuring out, is there something you can donate? Not only will you help someone out, but you'll also give yourself a financial benefit to lower your income taxes with these contributions.

34:57Brian Preston:I love it. And so the number 10, as we're thinking through things to think through before the end of the year, it's worth doing an assessment. And okay, have I reached a stage of life where I figured out that the gravity of the financial decisions I'm making is so great that I'm uncomfortable making them by myself. I used to be able to make decisions on$100 ,000, but now making the decision on a million dollars seems like there are bigger implications with that. Or maybe life has just gotten complicated. I heard about all these tax strategies at the end of the year, and I just, I don't know what I don't know.

35:31Brian Preston:I don't have an education that I want to make sure I'm not missing anything. Or perhaps you're just someone who's gotten busy. And all of a sudden, the things that should not be falling on the back burner of your financial life are falling on the back burner. You're being pulled in a thousand different directions. You just want to make sure you keep your eyes on the things that you want to keep your eyes on. If that sounds like you, then perhaps one of the things that you ought to do before you get to the end of the year is consider taking the relationship to the next level. Consider fulfilling the abundance cycle and asking a professional to come alongside you on your financial journey.

36:05Yeah, I think a lot of you guys, you watch our content for years ago. Man, I like how these guys think about money. I've never heard financial people talk about it in these common sense, but also maximization-type strategies. it doesn't have to end with just the content because as Bo just shared, personal finance is very personal. And if you do this right, what is simple in the beginning will become harder and harder and more complicated because it's just success creates that complication. We'd love to be your co-pilot as you are the CEO, the CFO of a multiple seven-figure enterprise. You don't have to go alone.

36:41You don't have to figure things out for the first time. There's actually a better way to do money. I'm your host, Brian. Mr. Bo. Money Guy team out.

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