Are You Doing Better Than the Average American?

24:40But I want you to answer that one to see if then I can start fighting. Look, here's the thing. No, the answer is no. But if your payments, let's just say your payments,$2 ,340 a month. Okay. If you want to pay$2 ,400 a month, I'm not going to fight you on that. Because I was never a minimum payment on my mortgage. I rounded up to the next$100, you know, and then I got to the point where maybe I did the next thousand. but I would not get crazy trying to be a debt crusader because 5.75, I don't think, I don't know your age, but that's not going to probably qualify to be high interest. And you just have so much value by doing the Roth, the health savings accounts, your 401k at your employer.

25:27There's a reason we have the financial order of operations. And I don't want you to get caught up in the feel good moment of paying off the debt early when you have so much work to do on building your financial foundation? Yeah, I would not pay extra on that mortgage. Would you even do the rounding? No, you wouldn't. No, that's not true. I don't want to be a hypocrite. Brian has a no hypocrisy policy. Not me. I don't have that policy at all. But Brian has that. I'm just too honest. I have to tell you what I do with my finances. I have done that before, only just out of ease, so I could mentally account for it.

26:02Hey, I'm going to round my mortgage up to this, and just so it was an even number every month. It just made the tracking, back when I used to track a lot more meticulously, it made the tracking a little bit easier. So it was, okay, I'm going to round up$17, whatever. It was easy for me to do middle math that way. But I'm letting you nibble on the edges with the fringe small part of this. The heart of the answer is don't do the mortgage first. Yep. $34,$32 is how old Kinsey is. Yeah,$5.75 in my mind does not sound high interest. We need to get that money in your army of dollar bills. You know, we're doing a show in a little bit called The Wealth Window.

26:39Guys, I'm telling you, if you're 32 to 48, get in there and get the money working for you. There are more to come on that when you see this show released. Respect the Foo. Am I right? Am I right? If you want to know more about the Foo and how to follow it, make sure you go to moneyguy.com. We have a huge ultimate guide that gives you all about all the steps. It's going to point you to all of our best resources about it. So be sure you go there and just search for Financial Order of Operations on moneyguy.com. and we will hook you up. All right. I want to encourage everyone watching live to get your rapid fire questions in the chat starting now.

27:12Put RF at the beginning of your question and I will know and the team will know that that is for our rapid fire segment that's coming up. Are you going to be rusty, you think? Yeah, I actually rolled over in bed this morning. I was like, honey, it's been, this is going to be like week three. I might not have forgot. I might've forgotten how to do all this. This sounds like an exciting rapid fire segment we're about to have. I can't wait. Bo was just telling me he felt like he had so much time last time. It was too much time. Maybe I get 20 seconds and he only gets 10. Dude, 30 seconds, I can answer the question and eat breakfast.

27:42It was wild. See, he just bragged. So he only gets 10, I get 20. No. Well, honestly, you get a combined 30? That is up to you guys to hash it out. A lot of times he does that anyways. Cruel. Sick burn. All right. Well, get your rapid fire questions in. I found out that when I'm not around, Bo likes to film content without a shirt on. I want to say that's not true. I mean, even my wife was like, man, you leave town. These guys take some liberties. I want to, it was not my idea. Everyone was like, oh, this was Bo's idea. This was not Bo's idea. Bo was just a willing participant, and I'm happy we did it.

28:18Hey, raise your hand if you've been to a wedding where you took your shirt off. If it's not me. Bo, you want to raise your hand on that? What a sheepish grin. What was that next question? I mean, seriously. I can't even think of why you would do, you know, you know what, dudes, let's take our shirts off. I don't know what to tell you. I don't know what to tell you. You can decide if that's a true story and what context that is in. We're going to move on to the next question. I just don't. Bo, I told Bo, I was like, we were like, we were such close friends, and I love travel and hanging out with him.

28:52But on the weekend, it's like Jekyll and Hyde. It is. Like he is this mild-mannered, and then, you know, I find out. Mild-mannered? I took the boy out of Conyers. I wouldn't be surprised. You know, if you grew up like we did in South Atlanta, it was not uncommon. You look over at the traffic light, and you see a guy who's just riding around shirtless. Oh, I used to get that. And you're like, yeah, I know. And you're like, what context would you get in your car? I think that's what it was. And you're like, you know what? I don't need a shirt on. That's a generational thing. Have y 'all never done that?

29:22Like you drove home, you were like super sweaty from a workout or whatever, and you're like, I'm soaked. I'm going to pop my tarp off and I'm going to dry off. Let's make the sweating as permanent. No, you roll down the window and you get air dry because that shirt ain't going to dry. That's normal. You can take the boy out of conures but you can't get the conures out of the boy. I'm going to fight you on that one. That one's not weird. Driving with a shirt off is not weird if you just got done working out. The whole content team agrees with me. They're all nodding in a fight. You ride around shirtless in your car?

29:54there is nobody here I think that's weird I'm sorry that deserves shame shame shame that is harsh no shirt no shoes I take my flip flops wait you take your flip flops off to drive yeah because it's not safe to drive in flip flops it is not safe to drive in flip flops if you've never had a near miss you know what's so funny I mean, nobody cares about this. I think it's illegal. Walking on a shirt off totally all the time. It's just like a thing. Hey, Matthew McConaughey did it too. Because if you look good with your shirt off, even some of the comments said, hey, Bo looks so good with a shirt off, I would do the same thing.

30:38I don't ever like to be barefoot though. At my house, I even wear slippers. I've got like slides that I wear around the house because I don't do barefoot. So driving barefoot would be insane. I blame the content team. Y 'all are the ones filming the shirtless content. I blame myself, really. All right, let's go to BookNerd1997's question. It says, Hi, Money Guy Show. What is included in the 25 % rule for house buying? Mortgage, PMI, property taxes, insurance, utilities? I'm a single income 28 years old female asking this question. What do you think? And maybe we should go over our 3-5-25 home buying rules as well because this is about that 25th part.

31:20Why don't you walk us through 3-5-25 and I'll jump in. So look, we think already housing, this is something I'm very proud of. We didn't have to change our rules. A lot of other people, because housing got complicated, they had to change their 20 % down to the more modest 10%. And then I think they've even adjusted to 5%. I've always been 3 % to 5%. And the reason is, is back to the no hypocrisy policy. And the fact that I looked around, I knew with my own first house, I think I put down 3%. I started asking other financial advisors here in the building, what did y 'all put down? And I was like, holy cow, this is the dirty little secret.

31:58Nobody puts down 20 % on their first house. They're putting down 3%. They're putting down 5%. So we just went ahead and built that into our rules. Hey, when you're getting into your first home purchase, it's okay if you put down 3 % to 5%. We want to make sure that you also live in this house at least five years. There's a lot of transaction costs that go into buying real estate, you know, between all the recording fees, the real estate agents and all those things. So you want to live in it long enough that you can recoup that. And this is not a short term decision. And then we don't make sure that you just you're not house rich, life poor.

32:32So we try to keep your housing expenses below 25 percent of your gross income. So the question therein is, OK, well, what's including that 25 percent? And this is where we're going to give you a little bit of latitude and a little bit of leeway. When we originally designed it, what we want that 25 % to encompass is what I would call is most people's, the average American's mortgage payment, which would be principal, interest, taxes, and insurance. So the principal and interest plus most people's escrows. So you're going to have your insurance coming out of that and your taxes. Whatever that monthly mortgage payment is, that's where we kind of have the 25 % cap it.

33:08But there are some people that want to be a little more conservative of that, and you're not going to get any fight from us on that. If you want to include the cost of your utilities, if you want to include, PMI is obviously normally part of the mortgage payment if you're someone who's paying PMI, so that would be in there. If you want to put some other quote-unquote housing costs in there to try to make sure you're staying super conservative, we're not going to fight you on that. What we don't want you to do is backing stuff out where you're like, oh, well, if I only think about the principal, well, that's just 25%.

33:38Or, oh, if I don't include the escrow costs, that's something else. We want those to be in there because we don't want you to be in that situation where you are house rich, life poor, and you have no ability to create margin inside your financial life. But look, I think it's usually not people trying to be more conservative. It's people need a little more grace because housing is so expensive. It's hard. So that's why I wouldn't put the pressure on utilities. And even when I wrote Millionaire Mission, I even made a case study in there on if you live in some of these super high-cost living areas, like, you know, think about some of the major cities.

34:11There's even a case to be made that a lot of people who live like in these big city centers, they don't have car payments. And cars typically take up the other 8 % of your income. So I made an argument that you could even give yourself grace to go up to 30 % if you don't have car payments and other debts. But Beau's exactly right. Look, I want our rules to give you some where you know where the guardrails are, but they're not supposed to be so rigid that they can't reflect the real life you live in. And I get right now, it is hard to buy a house. Housing has been completely distorted. And more to come on this, because I'm keeping up with this.

34:50Do y 'all realize that there are like 50 % more sellers than there are buyers right now? We are setting up a buyer's market. It's just people are so just dug in on what they think their houses are worth that you haven't seen a complete collapse in home values yet. So every area is different. It's hard to talk about housing because location, location, location matters. But there's a lot going on under the surface when it comes to housing. Love that. If you are, so when you are thinking about buying a house, Book Nerd, I would encourage you to go out to moneyguide.com slash resources, check out our home buying calculator, check out our home buying checklist.

35:32list. We have tons. We have like a whole hub. We have a whole, yeah, a whole hub there to help you make sure, because for most people, this is the single largest financial decision and transaction you will ever make. So you want to make sure that you make it as wisely as you can. That's why we have so many resources out on the website devoted to that so that you can do it well. Yeah, it's not the latte effect. It's the, it's the cars and the houses. So we want to help you have all the tools and resources. Love it. All right, let's do one more big question. Then we'll get to our rapid for our questions.

36:00Time's moving. This is fun. Time's moving. I remember why we do this. That's great. I'm so glad you like doing this. I'm never retiring. You heard it here first, ladies and gentlemen. Never retiring. Question up next is from MVGTube. It says, how do I balance Roth versus traditional when on the edge of tax brackets? I make Roth IRA and I max Roth IRA and put 14 % into traditional TSP plus the 5 % match. I can switch to Roth TSP, but it will push some dollars from 12 % to 22%. And plus pension, he said. Does this person give their age to? That's age would be helpful here. Age will be helpful. So if you're out there, please put that in the chat.

36:42But I have enough here just to give you some general guidance is that their tax rates, now we don't know their state income tax because if it does push it at 22, if they're in a high state income tax, This could push this over 25 % marginal rate, federal and state. 25 to 30 is that gray zone where I need to know your age and ultimate goals of when you want to retire. Are you going to be part of the fire or fine movement? Those things come into context. But if your income is squarely low enough to where you stay below 25%, we do love Roth. Because that tax-free growth is very powerful stuff. But we need to know your age because the younger you are, the more it also pushes you into the Roth column because you have more time for compounding growth.

37:28I don't know how consistent and steady your income is, but if you're someone who you know and you can project with very high certainty your income, what are the little games you could play? I say, you know what I do? I'm going to contribute just enough into the traditional part of the pre-tax or in the traditional part of the TSP to drive myself into the 12 % bracket, and then I'm going to put enough Roth to get there and then everything else I'll do pre-tax. And then what you're essentially doing is you're maxing out that 12 % bracket. You're allowing yourself not to trip into that 22 and you're still getting a ton of dollars going to Roth.

38:03That's if you want to get like real, real cute, real, real specific with it. But I agree with Brian. I think that based on the information we have, not knowing the state, Roth is going to be super, super valuable for it. Even if you're paying 22 % on those contributions, for that money to go into Roth, I think historically that's still pretty low. And not knowing your age, if you let those dollars compound for the next 20, 30, 40, 50 years even, that's a lot of tax-free growth you can be able to take advantage of. Wonderful. I'm excited to say it is now time for our It Does Not Depend Rapid Fire segment, where Brian and Bo get a combined 30 seconds to give you an awesome answer to your financial question.

38:46I'm rusty. The catch is they cannot say the words. It depends. Now, to make sure we get the best financial conversation out there, we will have a segment at the end called the Maybe It Does Depends segment where they will cover any bases they didn't get to cover in those 30 seconds, just in case. With that, let's get 30 seconds on the clock and let's get started. First question. 3-5-25 rule is great for home ownership, but how could we adapt a similar rule for renting? It's really hard because there's no down payment for renting and most renting you don't spend more than five years there but I do think the 25 % still applies and I would actually like if you'd be much less than that especially for renting because the lower you can get your rent the more you'll have to save up for that future mortgage if that's in your plan.

39:35No I just think 25 is a good number for for housing I mean so you can use that and you get the flexibility with rent that you can live wherever and you do things on your terms. So if you need flexibility in your life, there's nothing wrong with rent. I've got something to add to that at the end if we're making notes. Noted. Next question. What percent of a raise do you invest, spend, and give? So I would say that giving is super unique and specialized to you, right? But I will tell you when it comes, when you think about the amount that you don't give, because I'm of the opinion to give first, and then what's left.

40:11I like if 60 % goes to savings, 40 % goes to lifestyle. Yeah, I was going to say, I put the giving first and then do 60-40. 60 % to savings, 40 % to lifestyle. Until you get to 25%. Then after you get to 25%, go hog wild. Brian said, I have six more seconds. I'm going to put something in there. Next question. When is it no longer appropriate to use a target date fund or single index fund? realistically i think it's when your portfolio value hits somewhere around 400 500 000 those are sort of loose numbers because it depends on the account structure but it's when the benefits of asset allocation and asset location can now be justified for the additional effort that it takes yeah it's one of those those big retirement accounts start getting large the tax location matters that this gets into to um game time to make big changes and that's typically like bo said somewhere between$500 ,000 to$600 ,000.

41:08Man, this is 30 seconds of a lot of time. It's like you never even went on vacation. Next question, what is the biggest thing Brian and Bo disagree on in finance? I mean, it used to be debt payment because, you know, he would bully me on why I shouldn't prepay my mortgage. That's a big part of it. I think when Bo came out, he was very conservative because he graduated college in 2008. but he's gotten now a little more aggressive. So we talk about that stuff too. Yeah, I don't know that we disagree on a ton, a whole lot anymore. I think we're pretty highly aligned in most things financial. Some car decisions we like to pick on each other about, but I wouldn't say we disagree.

41:52Paying back family loans. Okay, maybe we'll come back to that. We got to fight on that. We got to fight on that. Next question. What's you and your client's favorite time-saving expense? And shirts on, shirts off. Huge disagreement on topless. That's it. Okay, we're on to the next question. One of us is very pro-topless. The other is very anti-topless. You're ruining your chances at answering this question. What was your client's favorite time-saving expense? Landscaping, meals, cleaning service, vehicle maintenance, et cetera. What was the question? What are your client's favorite time-saving expenses?

42:22Like, people, what do they buy their time back on? I'll go first. Oh, I mean, it's landscaping and house cleaning. I think most often it's house cleaning because very few people really enjoy the nitty-gritty of that. Some people actually get utility and derive satisfaction from doing yard work. So they don't want to outsource that. But I think a lot of folks, when we see them buying about their time, it's those folks in the messy middle that can have someone else come in and clean their house so they can focus on the other important things in life that matter to them right now. How impressed are you?

42:49That was very good. Right up to the second. He's a professional. I'm just entertainment. Education and entertainment. You get both here. counting unreimbursed hsa eligible costs towards emergency fund what do you think of that i mean it is a break glass but i wouldn't i think in the beginning of your journey it's okay we probably we're going to disagree on this because i want you to get to pass that and then get to roth and building assets but it's um it's it's it'd be ideal if you have a true emergency fund You said you have unreimbursed medical expense. That means the HSA dollars are likely still invested.

43:27If your dollars are invested, that's not an emergency fund. Emergency funds need to be in readily available cash sitting there for you. If you're in your HSA, that's fine. You did better on the SAT than I did. Your reading comprehension is better than mine. Well, look at you now. I didn't read the fine print like you did. We can come back to that one again, too. Okay. Got just a handful more. This one says, I'm 21 years old. I live at home with parents and work full time and pay for school out of pocket. Should I pay off my truck debt at 6.9 % first or open a taxable account first? 26.9%. How big is the loan?

44:09I'm going to assume that you're inside the confines of 23A. If you're inside the confines of 23A, I would argue that 6%, even though it feels high, is not incredibly high interest debt. I would work on building those dollars elsewhere. yeah but i definitely have the debt extinguished before you move out of the house just because you should be i mean if you're living at home you should be saving like 60 so you'd rather him pay off the truck than the best no i'm no i'm not saying that i'm just trying to get motivation i'm just trying to get motivation i feel like brian gave an answer you know when you live at home maximize that let's let's go back to 20 21 year old home guy All right.

44:48I'm rusty. Last but not least. According to the Know Your Number calculator, we will have sufficient assets to retire even if we stop contributing. Should we reduce our savings rate and divert funds towards abundance goals? How old are they? They didn't say. That's the only thing. If you're in your 20s or early 30s, I get nervous because you haven't had enough time to truly build the foundation. You can manipulate calculators. but if you are, you know, 40 beyond, then yeah, you probably can use this as now, because you probably truly are in step eight of the financial order of operations. Okay, it sounds like you were describing Coast Fire.

45:28The Know Your Number calculator is not a replacement for a financial advisor. Someone actually stressed us to plan. Before you make such a gravitas... Oh, we got to come back to that one. We got to come back to that one. That took 25 seconds of it. I gave you no time. I feel a little guilty on that one. And no, Know Your Number is a fantastic tool, but this is a very important thing to talk about. on that one. I did not mean to. We are about to have a very exciting, maybe it does depend segment because we have several questions to come back to. I've already forgotten every one of the questions.

45:54First one we said we wanted to come back to. You're the goldfish of the money guy show. Just swimming around happy. There's some accuracy to that. It's okay. Bo can't say that. The swimming part kills him. We now have video evidence, brother. You can't say it. Look at that. Look at that. He's like swimming. Ryan, that is me just treading water, creating content. He did admit that. I was like, man, you really acted like you played up that you can't swim. Look at that, Brian. Because this was 50 seconds and you act to almost drown. Look at that. That's just, honestly. He's not naked. It's like a team guy right there.

46:32Love it, love it, love it. All right. This is what happens when I go on vacation. Let's dive back into some of these questions and the nuance around it. First one was the 3-5-25 rule is great for homeownership, but could we adapt a similar rule for renting? This is a piece of advice. You can write this in pencil because it's my opinion. When it comes to renting, I'd be careful allowing yourself to go all the way up to 25 % to rent if there are lower cost options out there available. Me and you navigated this when I first moved to Tennessee. There was a really nice apartment complex. Me and my wife, we sold our house in Atlanta.

47:06We're going to move up here, move into an apartment. And we had these options. There was a really nice apartment complex would have still fit inside the 25%, but it was expensive. Like not in today's dollars, but like back then it was very, very costly. There was another apartment complex that was significantly less. It was like 60 or 70 % less expensive and still very nice. Looking back on it, I'm so glad I did not pay that premium to be in the nicer apartment with the higher rent, even though it still fit inside of the affordability, creating that margin, allowing me to save up to be able to fund other goals.

47:38If you're buying a house, I think 25 % is great. But when it comes to strictly renting, I'd be careful going up to the max just because you can. Can I give a counter, though? You're just renting. If you're renting for a family in an average or high-cost living area, you're going to need the 25 % though, right? 100 % it's okay to go to a property. I don't know. I like what you're saying. I was like, is it realistic? Bo assumes everybody makes a gazillion dollars on this. So I think that's why I'm trying to go on the other side of grace. I love that. Time with housing is so expensive. Most people are going to fill up to 25%.

48:16But Bo does have a point in the fact that, because, look, that apartment complex he was considering up here, they had like granite countertops. I can't remember if it was 10-foot tall door frames. They had all this stuff they were bragging about. You didn't need it. I like that. He showed me this place, and I was like, dude, what are you doing? Are you trying to impress people with this apartment? I mean, this doesn't seem like a good use of money. But I do think in this day and time, because this is a little different now, most people need a little more grace in their housing allowance because the 25 % gets eaten up really quick.

48:48If it's what you need, if it's what your family, like don't put a family of four inside of one bed. Bo's going to have you down by the river under a bridge living in a van. And listen, that was my bias. On your VIN diagram of your needs and your wants, just make sure when it comes to housing, you are very, very clear on that because I need to be safe. I'm going to concede that all the time. I may want granite countertops. I think those are different and you need to be true to yourself. If you have other financial goals, you're going to try to be building towards. Right. By the way, the other reason, Bo and I didn't choose that.

49:22Don't tell the story. Don't tell that story. Don't tell that story. This story. Hey, next time we have some little private thing for a book thing or a speaking tour, we'll tell you that story. But not that one. All right, good carrot. I can tell that story. Do I know this story? I'm sure you do. I'm sure not. Let's just say. I know a lot of your stories. There's a reason they're charging so much rent at this place. They had some extra. Staff had extra time. Yeah. We learned. Yeah, we learned some lessons. Learn some lessons, Rebecca. Okay. Oh. Hanson. You hang out with each other long enough. All kind of funny stories out there behind the surface.

50:00Oh, man. And again, I wasn't disagreeing with you. I, all my friends have families. Yeah, yeah, yeah. And like, we live in a higher-ish cost of living area. So just, I don't know. But there's not - Just wanted to give the counter. Like 25 % is still a good guy. In that one, there's not a cheaper option unless you're an hour and a half away. Right. Right? Like that, I would argue - It gets tricky. Shorter commute time in the community in which you're going to live. That's more of a need than a one. There's only one of us here that goes to like parties on the weekend where you have to wear a mask.

50:26And, you know, they have, you know, and you take your shirts off. A mask? Things like that. The high-end rich people. There were no masks. I want to be very clear. Like a masquerade or like we're in a pandemic? People in the comments know what I'm talking about. What we're talking about. Oh, my gosh. Okay, we're going to move on. Next question because I do want to get to this. We said somebody asked what's the biggest thing you disagree on in finance? And you started the 30 seconds like we don't disagree on anything. And then at the very end, you listed like three things. We had a clip recently go off because Bo felt like, you know, if you live at home and you borrow money from your parents, treat it like it's a lender.

51:02And I was like, no, family money you probably should pay back. Depends on the parent circumstances was my opinion. Yeah. Okay. That was all. So here's what I learned. You can lend Brian money because it's going to ache his soul until he pays you back. Bo might keep your money for a while. Yeah. If you're in a gray situation, right? Like, you know what I mean? It's probably true. If you have like - Accurate. That's what I learned. You know what I mean? Yeah. All right. The next one you said you wanted to come back to was about counting unreimbursed HSA eligible costs towards your emergency funds.

51:40Brian, you said a lot. Beau, you - Yeah. What I wanted to communicate there - I think Beau corrected me. He was like - If your HSA dollars are sitting in cash and they are, then that's okay. You can consider that part of emergency fund. But most people, when you have unreimbursed expenses, that means that you have the other HSA dollars. They're out there working, growing for you. If you have money invested, working, growing, that's not an emergency fund. Even though you can go get to it tax-free, you cannot necessarily get to it loss-free. In fourth quarter of 2018, in 2022, in 2008, fill in the blank.

52:13Those are moments when the market is down. If you had to get to those dollars, you're going to have to sell at depressed prices to go get them out. If it's in cash, you can do it. But if it's invested, it's no-go land. This is one of those hacks when I was, I think about my early journey where your broker's a joke, but you're still trying to get money in those very small restricted contribution accounts, like your Roth IRAs, your health savings accounts. If you get to a point somewhere between January and April, and you have the ability that you could put the money in those accounts to get credit for making it and keep them in cash for a little bit of that time, and then you're hoping you backfill your emergency reserve.

52:51So then you can actually go invest the health savings account. You can go invest the Roth IRA. I'm okay if people do that because I've been there, done that, to where you're like, okay, I have until April to fund these accounts. Let's put it in there, keep it in cash. So it's still because if I got in a really bad pickle, I can always get my initial contribution out of the Roth. I can get my HSA money reimbursement out. That's okay. And that's what I meant. But you were right. If the money is invested, it's not really cash. That's not emergency reserves. That's a good clarifier. Next one to come back to was the 21-year-old living at home who had the 6.99 % truck debt, or his other option to him was opening a taxable account.

53:31And again, assuming it falls inside a 23-8, I'm going to argue pay it off on the 23-8 timeline and get those dollars working for you because you're 21 years old. You had made sort of this throwaway comment, well, yeah, but I want the truck paid off before it leaves the house. Here's why I say that. is because when you live at home, you might have a savings rate of 50%, 60%. And when you get to a 50%, 60 % savings rate, I know, but you might, after you're doing 25%, 30 % for saving for the future, you might say, what would be the harm in just going ahead and extinguishing this debt? That's the only reason I said that you might have that debt paid off even sooner.

54:09Sure. And once you get above 25 % savings rate, you get to fast forward in the financial order of operation. You get to do what you want with your money. You're saving above 25%. You want to pay off low interest debt and be mathematically suboptimal? That's totally fine. There's no issue with that. It's for folks who are not at that stage. You need to be a little bit more careful about it. And then last but not least, the Know Your Number Calculator. If you don't know what we're talking about yet, go to moneyguy.com slash resources. It's a brand new retirement calculator, free for you to go play with, learn from.

54:43Um, uh, go check it out if you haven't. But this person said it told them that they could retire with the numbers they put in. Did they give us age? I don't think we saw age from the chat. You can tell me if I'm wrong, but I did not see it come through. I don't, I don't care if they're 25 years old or if they're 55 years old or 65. The know your number tool is incredibly helpful. It's supposed to give you an idea of where you are and where you should be. But I would never tell someone, hey, based on the output this gives you, design your life around that because it's not a full financial plan.

55:16It does not, it is not stress tested. It's not looked at your specific, you know, one of the gripes we get is, and not gripes, it's just feedback. Hey guys, why don't you include this? Why don't you include this? You wouldn't believe all the different things we get about like, why didn't you include it? And the answer is because there's a hundred thousand different things that we could have included because that's what goes into a financial plan before you make the decision to do something huge, like leave the workforce or stop saving or really back down your savings, you better make sure that you've stress tested it and you've measured two, three, four, five, six times before you do that.

55:49We did a Making a Millionaire episode with Danielle where she had arrived at this conclusion that I'm going to be able to coast fire. I'm going to back down my savings rate and I'm going to be fine. And when we actually did the financial advisor work of back testing it and stress testing it, what we determined is, yeah, she had done enough work to cover the bridge at the first part of fire, but she did not get to the second part of fire. She had not saved enough and she was taking a foot off the gas too early. If you go through the Know Your Number course and it tells you you can do that, that's a good indication for you.

56:19Okay, now I need to do the second step. Maybe that second step is getting a financial advisor. Maybe that second step is getting a second set of eyes. Maybe that second step is just me figuring out how do I do Monte Carlo simulations? How do I model out what our vacation is going to look like? What healthcare is going to look like? How often are we going to replace cars? What sort of gifts are we going to do for kids, how are we going to pay for weddings? All of these things that can change, you want to have that stuff fairly granularly figured out before you make a huge decision, like cutting your savings rate, especially if you live inside the wealth window and you're doing it.

56:49Well, I think you, look, you're exactly right. But I do think if your age does have a determining factor, if you're 25 to 35 years of age. They are 36 and 32. Okay. So they are getting on, They're still young in my eyes. Don't say they're getting on up there. That's young. That is still young. Don't say they're getting on up there. They're still young in my eyes, but it is one of those things where it's early enough that you can get some false readings by just your age. Because that's why they're 36, so it's not necessarily for them. But if a 28-year-old does this and does a wealth multiplier calculation with 30 years of growth, you can get to some distortions just because the time and the return are doing, the compounding growth is doing all the heavy lifting.

57:33But somebody who's 36, it starts to take shape. And then definitely post 40, definitely post 45, you're getting to the point where you really should probably get a second opinion on that. Know Your Number tool is a great signal. It's a signal. That's how I see it. Like it's a very valuable signal. So like to the couple that asked this question, all right, that's signaling that you're doing something right. And so like Bo said, those are some next steps that you can consider. That's what I would say. Like, so I, yeah, I think it's super important just to specify that just one calculator isn't a full financial plan.

58:08Hey, I don't want this to end. Can you give us one more question? He's having so much fun. You know, give a few more rapid fires. Just throw some more. No, let's do something a little more fun than that. We can do one more question. Let's do it. Okay. All right. Let's see. We've got one from Allie. Up next, it says, I'm 28, and when I started investing in my Roth IRA, I bought bonds that make up 7 % of my Roth portfolio. Now, I realize I'm probably too young to be investing this high in bonds. Should I sell even if at a loss? So a lot of times, okay. We can't give specific investment advice. I know that, but Roth, you realize how precious you are Gollum going my precious with your Roth IRA.

58:56And look, we're actually the people telling people to buy bonds, but not in the Roth IRA. This is, we lost the plot on that a little bit. And maybe not a ton of them when you're 28 years old. Again, we don't know your unique risk profile, risk capacity, all the different variables will go into that. But the analogy I always give when someone has an investment that's at a loss, they bought something, whether it's a stock bond, mutual fund, index, whatever, they always ask the question, hey, what is the loss? Should I sell it? I've always heard I don't actually lose money unless I sell. And that's not exactly true.

59:28The analogy I give is imagine you were riding through a valley, right? You're riding a bicycle through a valley, and you get down to the bottom of the valley, and one of your tires goes flat. Here's what you would not do. You probably wouldn't ride that bike with a flat tire back up the hill before you change it and put a better tire on there. It might very well be impossible. Right. What you're going to probably do is you're going to figure, okay, even though I'm at the bottom of this valley and I've got this flat tire, I'm going to get something in there. So I'm going to replace it with something that's going to give me a more effective, more efficient, higher likelihood, higher probability of getting out of this valley in a very effective manner.

1:00:04And that's what we do when we look at portfolios. A lot of us subscribe to this sunk cost fallacy. Oh, well, I've ridden this thing all the way down. I got to wait for it to come back and then I can change. If bonds, fixed income, whatever investment is in your Roth is not what makes the most sense for you right now. One of the great things about selling inside a Roth is there are no tax consequences. It's really easy. It's a low cost transaction to do. You might want to go ahead and write that ship today so that you have a better, more fitting portfolio for where you want to go and where you want to be in the future.

1:00:37By the way, Ali, you're obviously welcome to this wonderful world of finance. Because I can tell just the fact that you opened a Roth is very powerful. But then you put bonds in, it shows you still got you're on the learning side of things. I want to go ahead and prepare you for the next thing that's going to happen. Because you're going to listen to this show. You're probably going to take action, go buy an index fund or an index target retirement fund if you don't want to make the decision of how to invest it. But the market's going to have some volatility in the next few years. keep staying the course because that's the part that breaks my heart when brand new investors start investing and then they maybe lose 10, 15, 20, 25 % because the market goes down.

1:01:19Just grin and bear it and even invest more on top of that same Roth account. And I promise you, your future self, what feels risky in the short term and the long term can be a tremendous wealth builder. And what feels safe in the short term can actually work really against you in the long term. And that's what I always feel so sad for new investors. And I've had, you know, friends and neighbors who are new to the country and they figure out about investing and then they've reached some volatility and they quit. And the compounding growth doesn't work unless you can stick with it 10, 15, 20 plus years.

1:01:55And a lot of, for a lot of new investors, they quit before the good stuff comes just because of the volatility. That's the test of discipline that comes. It's that fear and greed battle that all of us humans encompass every year that we're investing. And that's the part of you have to endure the risk so you can get the long-term reward. And I know that wasn't part of your question, Allie, but I just want you to be educated on that so you can bear it when it comes your way, because it will happen. You'll remember that I had this conversation with you. Good stuff. Don't forget, go to moneyguy.com slash survey, take part in our survey, shape the show.

1:02:35Tell us exactly where you are in your financial life, because that is only going to help us make better content, answer even more of your questions, speak to you where you are, your pain points. We can only do that to the best of our ability if you tell us about it. And that's what this survey is all about. Go to moneyguy.com slash survey, share where you are in your financial journey. We would love for you to be a part of that. So it's fun having the whole band here together. It's awesome. This was a lot of fun. We got a full day of recording. I woke up. As a matter of fact, I had a little trouble sleeping last night.

1:03:08Because you were so excited? So it's like Christmas. Like, is Santa going to come? You know, that's what I was feeling that way myself. So thank y 'all for showing up. I mean, I am so thankful that we get to do this with you guys every week. I hope you can tell, you know, the passion that started this show in 2006 literally was always wanted to be a school teacher. And you guys have let this grow so far beyond that because we reach millions of you each month and we don't take it for granted. So thank you for the respite of taking vacation, making memories with my family and friends. But man, oh man, do we love creating this content so you can be better with money.

1:03:45I'm your host, Brian, joined by Mr. Bo, Reby and the rest of the crew, Money Guy team, out. The Money Guy show is hosted by Brian Preston and Bo Hansen. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities, laws, and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through The Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors and does not constitute financial, tax, investment, or legal advice.

1:04:22All investments involve a degree of risk, including the risk of loss.