Are You a Wealth Builder Or Buster?

20:20I'd like a, you know, a 60-40 split is what we talk about with pay raises is let 60 % go towards your automated investments. And so you can ultimately get it up to 25 % of your gross income. Count that employer match if your income's under$200 ,000, but do something so that that money's growing. So you don't get into you get to be my decade of in your 50s and beyond and have huge regrets because you didn't take any bit of time to sacrifice and build something for the future.

20:50Brian Preston:Galaxy Nine, thank you for the question. Fellow Messy Middle, represent. Shay S is the next. What do you think? Was that the equivalent of saying busta? No, you nailed it. No, that's, yep, you're great. Okay, we're going to move on to Shay S's question. what happens to my HSA after death? I'm 44. Today I have 90K and I max it annually, investing and never using it. Will my kids be taxed? Can they use the funds if they don't have a high deductible health plan? Interesting question. We love HSA. What happens if somebody inherits it? I mean, we did a full deep dive HSA show. This is probably a number of years ago.

21:31I mean, we've been doing this since 2006. So things, but this part of the tax code hasn't changed. I know for a fact it hasn't. And we actually shared the tax code in that earlier episode to where it showed that indeed your executor or executrix can indeed go back and claim that tax-free distribution from the health savings account. But you make a great point, Shea. If you're doing this strategy where you're – and for those who don't know, we love health savings accounts because they are triple tax advantage. It's one of the few vehicles out there where you get a tax deduction for your contribution.

22:06distribution it grows tax deferred while it's in the account and if you pull the money out for qualified medical expenses it grows completely tax-free so you got it all you got going in and coming out if you structure it right so that's why there's a lot of incentive to not use it as a clearing account but to actually let the money grow and invest but you probably need to write a note to your executor put it with your will and all of your other important documents that this is what you're doing so that that is not, you know, overseeing because it's sometimes chaotic after you leave the earth. You want to make sure you let the people you love know what you're doing.

22:40Brian Preston:Yeah. If your estate does not have copies of the receipts or of the charges, they won't be able to reimburse that money for free. And then once you pass, you can't then use those dollars in the same way that you could prior to death. And so one of the things that we tell our clients to do is we love building up HSAs, treating them like long-term retirement vehicles, But what ends up happening, and this is what we've seen practically, is someone will build up their HSA and they might have$100 ,000,$200 ,000, a substantial sum of money in there, and they'll have all these expenses that they've accumulated over the last 30 or 40 years where they could reimburse themselves if they need to, but what they'll start doing is they'll just start using that for their retirement medical expenses.

23:19Brian Preston:Hey, I had to go do this thing. I'm going to use my HSA. Okay, I got to go do this. I'm going to use my HSA. And then if we're doing some tax planning, we get to the end of the year, we're like, hey, I know we did that tax planning where we wanted to make sure we stayed below the Irma surcharge, but we're going on this trip and I got to make a deposit. And so I need$10 ,000. What do I do? Well, the HSA is a great place to go get tax-free money for those expenses that maybe you weren't counting on that won't affect your other tax plan that you're doing. So our clients kind of use it as a current medical expenses in retirement, plus one-off, uh-oh, I didn't know I was going to have this expense need.

23:54Brian Preston:And it's tax-free, completely available money. That's how most people end up, and most people spend them down, I would say, relatively quickly in retirement. Very rarely do I see someone passing away with a large HSA balance because it usually shifts once you retire. I've seen it with clients where we've done it during Roth conversions. When we're doing Roth conversions and we need to legally manipulate the tax code. And I've even seen it when we're downsizing like a house and we didn't sell the first house. We built the new or moved to a retirement community, and there might be a little overlap before you sell the old house.

24:31HSA is a great place to go grab that money without a tax benefit, without a tax issue, so that we can make the transition to a smaller home and then sell and then load the money back up into our taxable accounts. Yep.

24:47Brian Preston:Shay, thank you for the question. Appreciate you being here. if you are watching us live right now be sure to get your rapid fire questions into the chat just put rf at the beginning of your question and we may choose that for our rapid fire segment coming up a little bit later in the show and also even if you're not watching this live because this will stay up and go out there do the survey i i we really need people because i asked rebe i was like rebe how are the numbers looking you're like good but man it would be nice and you know i know a lot of people procrastinate unfortunately so we just want to make sure that we match the numbers that we did last year because i know there's a lot of new people out there and i want to make sure their voices are heard too love it devo 6912 is our next question money guy team are less people wealthy because they do not understand compounding and time or is it do you think they have high housing, vehicles, or lifestyle costs and never give those costs a second look.

25:50Brian Preston:This is like a what-do-you-think question. Can I give the hot take here that's going to make me sound like an old man? I'll be the old man on the front porch and then let Bo be the nice guy here because hopefully I get enough goodwill from talking about TLC earlier. Is that, I mean, the stat, because I had mentioned it in that Wealth Window show, but I had talked about, you know, where the source was. Well, now we know the sources from the Federal Reserve that the typical 65 to 74-year-old doesn't have more than$200 ,000 saved for retirement. And look, without a doubt for young people right now, housing stinks.

26:29And we've done a lot of content on that. But housing didn't stink for those baby boomers who were between that 65 to 74 age. But yet there's no savings. So I think that, yes, it is harder for younger people to think about it with housing. But if you go look at the stats for the people who are the generations ahead of the current generation, they had cheap housing and they still don't have money for retirement. So I think there's definitely a discipline component that is disconnected that people just procrastinate and don't realize how valuable it is to start saving something, just doing something.

27:04I don't care if it's just getting your employer match and then just maybe funding a Roth IRA while you're in your 20s, 30s, and 40s will literally change your life.

27:12Brian Preston:I think that we as a society, we struggle with deferred gratification across the board. It's why we're probably not as healthy as we ought to be. We don't make as wise decisions around that as we should. It's the same with our finances. I think it's really easy. Oh, well, I want this thing today, so I'm going to do it. Or I want to have this thing. And so we live in this consumption society with the idea of procrastination. Oh, well, I'll save next year. When I get the pay raise, then I'll save. And they end up pushing it, pushing it, pushing it. And it is a reality that housing is expensive and vehicles are expensive and lifestyle, even in today's society, can be expensive.

27:50Brian Preston:But we really do have a belief that anyone can build wealth. No matter where, we've even done episodes on how to build wealth if you only make X number of dollars. And we've kind of done it with different strata. It is possible. But if you have a lower income, if you have less margin, you have to exercise a whole lot more discipline and you have to be willing to do that for a longer period of time. I think it's a combination. I think that people don't understand that, you know,$95 for a 20-year-old can turn into a million dollars invested monthly until 65. They don't understand it, but then they're also blinded by, I want what I want right now, today.

28:28Brian Preston:I don't want to think about the future. I'd rather have it right now. It's why we have such a big debt problem. Not only are we really bad at deferring into the future, we're also really bad at robbing from our future selves. It's why we have this debt epidemic that's going on in America. We were reviewing a show that we're going to be recording after this show, the live stream, where it was showing the savings behaviors of Americans from the 1960s all the way through 2020 something. I can't remember if it was last year or the year before, but we were saving over 10 % as a country all the way until the early 80s.

29:03And I think that that's, and realize this is from the 60s and 70s and even early 80s, most people had pensions. It was a pension era. So it was 10 % and then they had people had pensions on top of that. We lost something and I blame, I weigh a lot of this on the banking system has gotten really good at encouraging consumption through credit cards, through other products. And we try to create and educate you guys so you don't fall in this consumption trap that has been laid for you when there's so much opportunity. Because with index funds and access to where you can do everything on your mobile phone now, it's actually the easiest time in the world to actually start doing something.

29:41But so often people just get distracted and I think then they create their own trap of debt that they can't even get out of.

29:48Brian Preston:Not only is it the easiest time in the world to invest, It's also the easiest time to get distracted because now you pull up your investing app and all of a sudden on the side there's sports betting or prediction markets. There's a thousand different things vying for your attention that can very easily pull you away from doing the thing that's worked for the last hundred years, living a lesson you make, putting it to work, investing in low-cost indexes, and watching your dollars grow. Don't try to beat the market. Be the market, and you're going to be just fine. You're going to be just fine. Love it.

30:19Brian Preston:Devo6912, thank you for the question. Appreciate you being here during the live stream.

30:26Brian Preston:FooCastBullish is up next. Okay. I don't know what that means, but that's the usual. I like it. Yeah, get creative with the Foo. Hey, MoneyGuy team. Would you prioritize paying down a 7.5 % HELOC or funding a Roth IRA? I have no other debt. FooCast, I bet they're going to ask you your age. So if you're out there and want to share that in the chat, we would love to know because that might help. I do know the age. Now, if you have a 7.5 % HELOC. Why was that even taken? When you say no other debt, does that mean you don't have a mortgage either? I bet there's a mortgage outstanding somewhere, right?

31:01Brian Preston:There's probably a primary mortgage outstanding on that. And then you have this home equity line of credit. A few things I'd want to know. I want to know your age, and I'd love to know what your current balance sheet looks like. How much do you currently have saved and invested? Do you have a big pot of assets that are working for you that are growing and compounding right now where it makes sense to really attack the 7.5 % HELOC to knock it down? Or have you procrastinated? Have you not been building and you really don't have any investment assets built up? I'd like to know the answer to those questions.

31:32Brian Preston:And I'd also like to know the size of the HELOC. Is this a$150 ,000 home equity line at 7.5 % or is it a$10 ,000 home equity line? Well, that gets to the point of the context of what created the home equity line. because if you went and bought a car with a home equity loan, that's a disaster. I mean, at least then I can give you the context of, let's correct your path of the mistake that was made and then how we get back on track. Treat it like 23-8, you know, so that way maybe we can still do our Roth IRA and correct the mistake. And then if it's something where you actually did make an improvement on the house, I mean, I will tell you, I don't mind people using home equity loans, but it needs to be just a momentary bridge to get you through this moment in time and probably not any longer than three years.

32:23You could maybe convince me four years because I don't want this thing to occupy all of your free cash flow. If you can't do a home improvement and not pay off the home equity line within that three to four-year period, you might just need to defer not doing the home improvement so that you're not sacrificing your future retirement. So that's why I hate retroactively, but we have to triage your financial life exactly where it is. And that's why Bo's point of it depends with all the additional context so we can make sure that we're not just saying, hey, no, no problem. Just pay off that, pay the 7.5 % home equity line.

33:01Don't even worry about the Roth until you get it figured out. I need a little more context so we can give you the right pinpointed plan of action for your specific situation.

33:12Brian Preston:I don't think we ever got that information from Boocast. I was watching. I did not see it come through. But that's all right. I think you talked around the possibilities there. So we appreciate the question, and we're going to move on for one more question before we get to our rapid-fire segment. So RF in front of your question in the live chat if you want to be part of our rapid-fire segment. But first, B892 has a question. It says, Hi, Money Guy team. I'm 25 with 105K in annual income on step four of the FOO. Wow. I want to change to a more fulfilling career that would likely drop my salary by 20K and have less benefits.

33:51Brian Preston:How do I plan for this? I mean, this is probably the time to do it. Yeah, if you're in step four, you're building up an emergency fund. What I would do is I'd probably build up that emergency fund even more than I think I need. like if I'm building it up for six months, but I know I'm going to take this step back in pay and I'm probably gonna have to do some lifestyle adjustments because of that. I may want to build up to maybe seven, eight, nine months of liquidity, just so that way I don't have any shocks to the system. And then I got to work really, really hard. If I was used to living off of 105 ,000 and now all of a sudden I'm going to be living off of 85 ,000, my net take home is likely going to drop assuming I'm saving the same percentage.

34:31Brian Preston:I want to make sure that I adjust my lifestyle accordingly to make sure I can do that. And by the way, there's nothing wrong with that. We see people all the time, Brian, who want to come and work here that they're doing very well in their careers and to end up coming and like restarting and repivoting, they might have to take a step back. And that's totally okay because it's a better lifestyle choice, better long-term opportunity, better metrics looking forward. But you have to decide for yourself, okay, what are the things that matter? What's this going to, What's this going to affect long-term for my plan?

35:01Brian Preston:And am I willing to accept those trade-offs? B, let me be like your favorite nerdy uncle that you like to approach with decisions like this. I would ask you, I was like, you're at the perfect stage to make a choice like this, but is this a short-term solution, meaning that you have to take this step back to get you out of the unhappiness of the situation you're in, but this is only the first of multiple steps? Or is this truly you're going to take a step back for a much bigger opportunity down the road? Because Bo, as Bo just alluded to, we do have career changers that come in here. And I got one of my favorite things as an employer is because we've had some brilliant engineers, people from the medical profession, musicians, producers who've come on and done this.

35:49And I like to think that for many of them, this has turned out to be the best career, not from just a quality of life, but also even economically for their families has turned out to be a great opportunity. That's the filter B I need you to do is because you have to look, despite what society tells you, jumping around every two years is not ideal for creating the resume that lets an employer or your future self feel like you built community or the best version of yourself. Think long-term, begin with the end in mind of how you, this transition is going to change. Measure twice, cut once. If this is the right decision, do it, but just make sure you're not thinking just in this moment in time for the next 12 or 24 months.

36:32Let's think what 60 months or even 10 years looks like if you make this step.

36:38Brian Preston:Love it. Thank you so much for the question. B892, appreciate you being here. With that, we are going to move into our It Does Not Depend rapid fire segment where Bo and Brian answer your questions in a combined 30 seconds without saying the words it depends and just in case there's something really important they can't fit into that time we will address them in a segment at the end and I do have a little bit of a twist halfway through this one as a surprise no I don't make me do that no I already feel like a buster We'll get 30 seconds on the clock. I'll go first since you went first last week.

37:17Brian Preston:And we will kick it off with the first question for rapid fire. Are you ready? As ready as I'm going to be. You're supposed to say I was born ready. Born. Let's get some confidence going. Born ready. There we go. All right, first question. In retirement, do you have a set percentage of net worth that should be your primary residence assumed it's paid off? No, it's your primary residence, as long as it's paid for in cash. And I would take into account the living expenses and make sure that fits within your withdrawal trade. I would also say no. We've had a lot of people who retire in a home that they might've bought 30 years ago, but it might've been on the coast or something like that.

37:57Brian Preston:And if you look at the value of their home, it might represent a large portion of that worth only because they've owned it for so long. What we care more about is your liquid portfolio that's going to provide for your living expenses. You want to make sure that's large enough. I wouldn't worry about the size of the primary. All right. We've done the first question. Number two, what are some financial mutant hacks or tips for moving? Financial mutant hacks or tips for, pay someone else to do it. I mean, that's not a financial, that's not a financial mutant hack. That's not a financial mutant tip, but I do not like moving.

38:28I mean, try to minimize it as much as possible. And then, you know, protect your back. It's more longevity.

38:36Brian Preston:Health is wealth. Health is wealth. I mean, that one, can we say, that one needs to have a lot of depends. I'm just going to say it. I need to come back to that moving. Financial hacks and tips for moving. I mean, like. I got some thoughts. Yeah, there's like doing the cheat. All right. Wow. Having the buddies come. That really stumped you. Well, no. There's so many different labels because, look, I've moved four or five times. All right, we're going to come back to it. And I had to do it different ways in different stages of life. That's exactly right. Yep. Question three. I need to know, whoever asked that one, I need to know where you at in life.

39:08Brian Preston:Tell me where you're at in life, and then I'll give you our facts. If you ask that question, put it in the chat. We'll watch for your answer. Where are you in life? They'll come back to it, give you some moving tips and thoughts. Okay, I've got some notes written. All right, question three. Does the rule of 55 apply to a solo 401k when you are a sole proprietor? Are you ready for this? This is a doozy. No. Do you know why the rule of 55 does not apply to a solo 401k? Because in order to have a solo 401k, it has to be an active plan that's opened up. This is one of the things we've sort of investigated and tried to figure out over the past couple years.

39:40Brian Preston:Our position is that solo 401k does not qualify for Rule of 55. Because you can't have a solo 401k if you're not an active participant in the 401k. Did it say solo or was it SEP IRA? It says solo 401k. Yeah, good. And Bo crushed it. Sorry, I didn't mean to go long. Dude, no, it's fine. I'm still over here thinking about moving things. All right. Next question. Ramsey Solutions has a rule that, quote unquote, things with motors should not have a value over 50 % of your yearly income. Do the money guys have a similar rule? You know, I've heard Dave do that in an interview. I think he did it on the Bobby Bones interview, and I was really impressed at the time because, I mean, it is one of those things, but I've never, I mean, that seems like common sense to have, because all those things are depreciating.

40:29I mean, every one of those things is depreciating, So I wouldn't want 50 % going towards depreciating assets.

40:36Brian Preston:Yeah, I think it's a good rule of thumb. But again, stage of life matters. If I'm a retired individual with a huge portfolio, but I don't have a huge income, but I want to buy the nice car, I'm not going to fight you on that. That's time. Do you want to come back to that? No. I mean, yeah, sure. You don't have to. Okay. Oh, okay. We'll see. It's a nice rule, but I'm sure I'd have to go do the math to figure out. We'll come back to it. We'll come back to it. Yeah. All right. next question. And then after this question, we're going to have a little twist. So stay tuned. Is it okay to pause investing except for your 401k match for just a year so that I can save for a home?

41:15Brian Preston:Yeah, it's absolutely your financial goals are your financial goals. And you want to use your money to achieve whatever your goals are. And if one of the goals is home ownership, and in order to do that, you have to pause investing to get there. That's okay. You just to recognize there's a big opportunity cost for doing that. Yeah, I'm okay with it as long as it covers step two, three, and four. Anything after those, it's okay to defer, but don't skip out on the match. Don't skip out on paying 20 % interest to banks, and then definitely have a cash reserves. Well done. All right, for the last few questions, we are going to change it up and put 15 seconds on the clock.

41:53Brian Preston:No, we can't do that. Let's just see what happens. Humor me. You go first. If it doesn't go well, we'll tackle them all in the ending segment. So with 15 seconds on the clock, the question is, is it worth it to withdraw Roth IRA contributions to pay off high interest debt? No. I say no, too, because those dollars, it's very costly. Look at the opportunity cost standpoint. If I would find every other mechanism in the world to pay that off without pulling out the Roth dollars. Go work a second job. Wow, look at that. Under 15 seconds. Had plenty of time. Solid answer too. Next question. How do you acknowledge your accomplishments?

42:36Brian Preston:I finished my credit card debt earlier this year at 24, but feel underwhelmed still that I have less than a month in my emergency fund. That's okay. You're still in the beginning stages. It's small wins, small wins, small victories lead to big wins, big victories. And then join the moneyverse and go enter your wins there because you'll be surrounded by people just like you. Hype squad. Moneyguy.com slash moneyverse. Look at that. Bam, bam, bam. 15 seconds. Next, does it ever make sense to target brokerage instead of maxing your 401k after getting your 401k match and maxing Roth IRA? No, this is something we've covered.

43:15I think it's a marketing hype that there's groups out there saying this, but unless you're part of the fire movement and you're retiring like at 50, 55, I would rather you get the tax favored investing.

43:26Brian Preston:Yes, there are times when you need to do that. We're coming back to that one. Agree, disagree, want to fight. All right, last but not least, is the S &P 500 too concentrated in tech? If so, how do you recommend diversifying? No, I don't think it's too concentrated in tech. Right now it does have a tech bias, but I don't think it's too concentrated in tech. When you have a diversified portfolio, you'll branch out outside of just S &P. It's been over-concentrated in tech for probably the last 30 years. Not too shabby. Not too shabby, friends. How'd 15 seconds feel? Not good. That's like somebody asking you to help them move the couch.

44:09No, but worse, can you help me move my piano? That's what that felt like to me is because it's even worse than moving a couch or a refrigerator. It's like asking somebody to move a piano.

44:18Brian Preston:15 seconds was like moving a piano? Yeah, it's painful. Okay, noted, noted. Let us know. Give us some feedback. Do you like adding some 15-second timers in there, or do you like 30? With that, let's move on to our it does not, or maybe it does depend segment where we're going to go revisit some of these questions. The first one was the moving, the tips for moving. So 32, step one, just finished grad school and take the CPA exam. We'll be in step three as soon as I start work. Thanks to good things. Awesome. Okay, that's the context. next so i i was going to give the experience share is that early in my life i did it on the cheap u-haul um called my friends and family to help me move because i didn't have a lot of stuff didn't inconvenience a lot of people next move upgraded to where i did u-haul but i used professional services to help me move the heavy stuff meaning i did all the self-packing but then i had because you can now add on professional services to help you actually load and unload the truck.

45:17And then the third, I mean, when I started moving into the nice house, like when I moved to Tennessee, I overlapped, meaning I didn't sell my first house until I'd already moved into the second house. And that's a luxury, but man, oh man, does it make moving easier? Because I didn't feel like I had to do it all at once and then have this, pack up your whole life and then hope that the timing works or create an interim period where you live in an apartment. But that's a privilege that you get to do after you've done all the other steps to where that's kind of like a step eight thing of the financial order of operations.

45:49Brian Preston:Yeah, I generally have a rule. Don't move furniture after the age of 30. But you're 32, so I'm going to give you a little bit of a pass. Here's what I would do. I'd call a bunch of my buddies and be like, hey, you got pickup trucks. I'm going to rent a U-Haul and then bring pickup trucks. We're going to load those up. I will buy pizza and beer, and that'll be what I pay you to do this and get it knocked out. Now, two tools you ought to buy that are game changers. the first furniture pad sliders and straps okay i'm sorry keep going what are you doing keep going i'm sorry i get excited furniture pad sliders you know the little little disc that you put on the ground you can set the furniture you can actually move it around the house nice and smooth before we actually have to lift it and second the over the shoulder straps over your shoulders down under the piece of furniture you can lift and move anything like that it makes it so much easier it will save your back and you're like holy cow this is not nearly as hard as I thought.

46:42I still have the straps at my house because every now and then I've had a few neighbors. I don't look, go ahead. And I'll tell you one of the reasons I don't like moving anything. I am in my fifties and I don't have back problems. And we have millionaire clients who have back problems because they did inappropriate stuff. So really measure twice, cut once on moving heavy stuff past a certain age too. But Beau is exactly right. That way, straps are great for moving appliances. They're great for moving couches. They're great for moving dressers, everything. I've done this stuff for clients because also going upstairs because they're somewhat secured by you.

47:17You don't have to bloody up your hands holding the stuff. And it's so cheap if you go buy straps on Amazon. It's worth the cost of the straps.

47:27Brian Preston:Look at you. Truthfully, every household, it's kind of like have your water filter and your go bag, your fire starters and those things, and then buy moving straps. These are things that should be in every person's house. Flashlights, you know, go bag for if things got really bad in your area, like the power was out for a week, and then moving straps. I love it. I have some shopping to do.

47:56Brian Preston:Make sure y 'all put an affiliate link on this episode. How many of y 'all have life straws? Do you know what those are, where you can turn anything into drinking water, essentially? Look at the content team all has their hands up. Bo, do you have a life straw in your house? You see, my wife has these glass straws that she likes to drink out of the clay. Do you have LifeStraws in your house? No, I have a, I think I, the water filter I have is a LifeStraw brand. It just happens to be. That doesn't let you go turn pond water into drinking water. No, I don't think so. Have you tested? Have you went and drank out of some like rank water?

48:26No, but I've watched enough YouTube videos. I'm an expert.

48:31Brian Preston:All right. All right. Make sure, put a link to the LifeStraws as well, guys. Okay, we have a couple more to expound on. I'm just kidding. I'm kidding. That one's a joke. Didn't mean that one. I missed it. You know what's funny? Actually, my mother-in-law, I don't know why, but she did buy. They're not MREs, but they're basically like the dried. I got a ton of those in my pantry. Like the dried food packets and stuff. I got a bunch of those. No drinking. Why do you have them? She gave them to you for Christmas? I was like, here, there you go, son. Happy, Merry Christmas. Munch it in MREs. Save your life.

49:06Maybe. That's what she's thinking. I just saved my kid's life. Maybe.

49:10Brian Preston:Maybe. All right. The other one that you kind of waffled on or just felt like you had more to say was about Ramsey's things with motors. Yeah. Not having a value over 50 % of your yearly income. You had some more. It seems like you had some more thoughts on that. Okay. So I had to think about it. So because we're rapid fire. So that means like if you make a hundred grand, you can't have a car more than 50 that worth more than$50 ,000. Okay. Well, what do you do about retirees? There you go. That was the whole, that was my whole point. That was where you were going. Yeah. If someone lives on a much lower income or less.

49:46No, because it's disconnected from the reality of your net worth would drive. What type? I think I'd rather use. No, I don't. I think, I think, look, no, I don't, I don't, I don't know of that for the, it doesn't make it through the whole. continue. Now look, in your early journeys, we're on the same page as Ramsey, is that we want you to limit depreciating assets as much as possible. But I think there is a disconnect as you get older and have more success, because I'm trying to free you to use and live your best life in retirement.

50:18Brian Preston:Yep. And I think about even like, I got a bunch of buddies who like own boats, and I'm so happy they own boats, so I don't own a boat. But that those rules would kind of start to fall apart? Probably. If you think about, like, if you've got a boat, I'm not saying you ought to have all those toys. There are certainly people that can't afford those and do that. But I would worry, would that hold in those situations? I think it's good when you're young. I mean, this is back to the rule. I think Dave is so good at getting people out of debt that it definitely helps out the 20, 30-something. But I think if you're somebody who's gone beyond the basics, that's when those rules get very nuanced.

50:54Brian Preston:By the way, we also realize that, you know, we did the whole Busta and TLC reference, you know, no scrubs in your best friend's ride. We kind of realized that's the financial mutant in this story. They don't have a nice car. I know that in TLC's song, that would be the Busta. That was Brian. But in part of my life, that's actually the financial mutant because you want your best friend to have the fancy car that you can hang out of. That's right. On the side. So we have, just let it be known that we think the, I'm trying to remember how the lyrics, Can somebody remind me of the lyrics in your best friend's ride?

51:29Hanging out in your best friend's ride? You just keep talking. I'll get you some lyrics. That guy's the financial mutant.

51:35Brian Preston:Keep talking. I'll get you some lyrics. You're very slow. I was kind of hoping that we'd already be there. A scrub. Nope, that's the very beginning. Let's see. Best friend's ride. No, I don't want no scrubs. No scrub. A scrub is a guy that can't get no love from me. Hanging out the passenger side of his best friend's ride. trying to holla at me. That's the financial mutant. I don't want a scrub. That is the financial mutant. A scrub is a guy. Left eye was wrong. So you're saying she should want the scrub. She should want the guy hanging out of the passenger side. Just ask him if he funded his Roth IRA.

52:11Now we're on to something.

52:12Brian Preston:You want the scrub. That's what you're trying to say. Not a buster there. Just doesn't have a car payment. Oh my goodness. Were there any more? There was one more. Last but not least, does it ever make sense to target brokerage instead of maxing a 401k? Oh, gee, you said you disagree with me. Maxing Roth IRA. I know. Personal finance is personal. There are seasons and times when you're moving through the financial order of operations. As you get closer to when you're actually going to use those dollars, like when you get into step seven, you're thinking about, all right, I'm about to retire and I want to make sure I've got my three buckets filled.

52:48Brian Preston:Maybe it doesn't make sense for me to continue saving in my employer-sponsored retirement account, my 401k, because I need to have those bridge assets for some reason or another. Maybe I'm retiring before 55, or I want some liquidity or flexibility for something. It may make sense at that time to shift and not max out the 401k, start building an after-tax brokerage account. We see people do that, but that's later on in your financial journey, not at the beginning. But if you're in the first saving of 25 % of your gross income, you know, because there are people who if you make under$100 ,000 and you're saving, you know, somewhere between$80 ,000 to$100 ,000, you might reach 25 % without maxing out your Roth, I mean, your 401k, and then could still even get to doing it after tax in step seven.

53:33But that's what you're going to want to do the tax favorite stuff. For sure. For sure. On the first 25%, that's why I think that is bad advice when you're helping people on the foundational side. Of course, when you're close to retirement, it gets much more nuanced because it then gets very personalized. But I do know there's firms out there that are marketing this because they want to have a contrarian point that they can say this is the way to draw more clicks and eyeballs. And I'm here to tell you, just be careful when people try to create sensation that's disconnected from what is probably the advice that you need to be doing at the beginning of your journey.

54:09Brian Preston:Yep. All right. We don't disagree. We said the same thing. I know. It's just we need it. There was more nuance. You need more than 15 seconds. You can't do that in 15 seconds or 30 seconds. You've got to. Personal finance is very personal. Now, I will say in the beginning steps when you're trying to figure out what to do with your next dollar, I think there's a lot of things just like in math. There's an order of operations. there's definitely a financial order of operations. Don't let somebody's marketing or contrapoint get you in trouble when they're giving advice that might be great for a 55-year-old or a 50-year-old.

54:40Brian Preston:All right. Let's... Have you read the lyrics to No Scrooge before? What else is in there? I know. If you don't have a car and you're walking, oh, yes, son, I'm talking to you. if you live at home with your mama oh yes son I'm talking to you definitely financial mutant I'm sitting here thinking like this guy's just saving money see I told you this was a TLC episode I will never be able to listen to this song the same way this guy's just saving money I don't know if that's the association we want she might not have had it figured out with burning houses down and so forth but maybe one of the others got it.

55:26Brian Preston:Oh, man. All right, we're going to close it out with a question from our friend Grill This Smoke That. Oh, hey, Ben. Ben's in here. What's up, Ben? He says, I want my family to start chasing waterfalls through travel. Once we are at steps seven and eight, what percentage of income is acceptable to dedicate to experiences for the family? Ben, we know you personally. You should go spend a ton of money on travel. I just know how good Ben's doing. And by the way, if you're not watching Grill This, Smoke That, like I see it all shows up all over my TikTok. I know it's on Instagram and everything else.

56:03Ben makes me so – I want to go buy one of these grills just so I can cook breakfast the way he cooks breakfast. Or he made something the other day, pancakes, where he used like food coloring and made a Georgia G. And I was like, how does he do this stuff? But he is killing it. And I think you should go make all the memories you want to make. Okay, now give the real advice.

56:23Brian Preston:Yeah, so the answer is, is once you're in step seven, Brian, hold the thing up for me. Once you're in step seven rate of the financial order of operations, that lets me know you're already saving 25 % of your gross income for the future. Well, the reason why we say to save 25 % is so that after that point, you can spend lavishly on whatever you want. So how much is acceptable to spend on travel after that point? As much as you want. If you want to spend all of your extra discretionary cash flow on travel, that's totally fine. That's what the 25 % is supposed to do for it. It's supposed to free you so that you can spend guilt-free.

56:56Brian Preston:It doesn't matter if I spend on the hobby or I spend on the travel or I spend on the increasing lifestyle. Whatever that is, 25 % is that threshold that you cross over that now frees you to use your money however you want for today. So I think if you're already in step seven and eight, absolutely. And we would argue, if you're looking for some advice, spending money on travel and making memories and creating experiences, way more valuable, way more fun than spending it on things and cars and homes and that kind of stuff. So I think if you are at that place where you can start doing that, by all means, start doing it and don't feel guilty about it.

57:34Brian Preston:Cause I think that's awesome. That's exactly where you should be. Everybody's going to go check out Ben's stuff and then you're like, wow, my feed is now just covered up in his stuff. Because once you watch one, because you're going to watch the whole video, you'll get to keep getting this stuff over and over again. And I think that's part of why he's so successful with it. That's not a bad thing. Well, we love that. Thank you, Ben, for the question. Thank you, everybody who submitted a question today. It's been really fun. Remember, you can continue to shape what we talk about on the show, but you only have a limited time.

58:04Brian Preston:Tomorrow, our financial mutant survey closes. So go to moneyguide.com slash survey to get in on that before it's too late because we want your voice to be heard. It matters. We want to speak to your pain points. And this survey will only take a few minutes of your time. It's completely free. It's going to shape the show for the next coming year. So please do that. We are really excited about it. We love doing these episodes every year. Really a favorite annual tradition, if I say so myself. No, we love this. And you guys could, there's so many things going on in the world right now that you could be spending your time doing, but we do not take for granted that you give us this time.

58:41I mean, and some of you guys, I mean, that's why go check out the money verse too. Cause I mean, the quality of this audience and the people, I mean, it blows my mind. Y 'all would be shocked at some of the comments. And I know the context of who these people are and are in our midst. And I'm just like, this is the right people to be hanging out with. If you want to have the right influences on your life, if you want to kind of have, cause I know it's hard. Money is a taboo subject. It's hard to talk about, but you can create a community where you can carry forward and have these conversations, make some friendships.

59:13It's fun that we get to do this with you. We don't take it for granted. I'm your host, Brian, joined by Mr. Bo, Rebe, the rest of the content team in the wings. We're out of here. Money Guy Show, out.

59:24Brian Preston:The Money Guy Show is hosted by Brian 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