Are You Making This Mistake With Your Cash?

19:54Brian Preston:Somebody says maybe the issue is the new employer won't accept roll-ins. That could be, that could certainly be a thing, but that's why you can open up a Roth IRA and then you have your access free and clear. One thing to be mindful of, if you do have two different sources inside your current 401k, say you have your Roth dollars, but then you also have employer money, pre-tax money. Don't just like carte blanche roll all of the assets into Roth. Cause if you do that, you could create a taxable event across the employer dollars. Oftentimes when you want to roll those dollars over, you have two checks issued or two ACHs sent all the pre-tax money to a pre-tax rollover, all the Roth money to a Roth rollover, so that way you don't have any unintended or unplanned for tax consequences.

20:34We even split it, where you can roll your Roth portion to an IRA, Roth IRA. You can do your pre-tax to your new 401k at your existing employer, and that way you keep all the things separated.

20:46Brian Preston:Love that. You got to keep them separated. That's exactly where I was going with the offspring there. How many song lyrics can we get in today's show? Y 'all ready for that one? We didn't even try this game, but we're doing pretty good at it so far. Great. Is anybody keeping score? I think we're at two. I think I'm at two. Okay. Okay. This isn't a team sport. It's Bo against Brian, apparently. Well, Tracy T, thank you for the question. We really appreciate you being here and talking personal finance with us today on the show. How many people knew it was the Oak Ridge Boys? Somebody called it Oak Ridge Preston.

21:19Brian Preston:So, yeah, we got some folks out there. They were out there. Oh, that's a different one. That's Hanson. I was going to say, I don't think that voice works for that song. I knew that one. That's three, by the way. Oh, man. Well, hey, we're going to do a couple more questions, and then we are going to try a brand new segment of the show today. So be sure to stick around for that. But in the meantime, get your questions in the chat because we're still going to be answering several more throughout the duration of the episode. All right. Next one is from BentCan14. It says, are sinking funds included in the savings rate?

21:55Brian Preston:I have 401ks, Roth IRA, and sinking funds, but it feels like I'm doing something wrong if I include them in my savings rate just to spend those dollars later. What say you? You know, this is because we ran into this without making a millionaire episode is that somebody was telling me that their burn rate was like$10 ,000 a month. And I was like, wait a minute, four grand of that is going into sinking funds. You're not really spending that. So your burn rate is not$10 ,000 a month. So I don't – it depends on the end. If it's for an expense that will happen this year, then, yeah, that's not a savings rate.

22:33If it's for something like a house down payment, I mean, or something like that, it's in the gray zone. But really when we say savings rate, can I be – let me give you the clarifying thing. The 25 percent, the 20 to 25 percent, depending upon how old you are, is really for retirement dollars or money for your army of dollar bills that's going to work for you in the future. for retirement. So if these sinking funds are going to be used in the next three to five years, they're never going to get invested to be part of your army of dollar bills for retirement, then no, I don't think you can count it.

23:03Brian Preston:Yeah, I would say that a pretty hard line. I do not count sinking funds in my savings rate. Even if I'm doing something like saving up for the down payment on a mortgage, that's incredibly noble. But what I can't say is I'm saving 25 % and it's going into my down payment for my mortgage. I think what you're doing is you're saving some number less for financial independence. Maybe it's 5%, 10%, 15%. The rest of the money is going for this prepaid expense that you have coming. But when it comes to 25%, we want that to be for future financial independence. Sinking funds is more paying for intermediate-term goals or short-term goals.

23:41Brian Preston:It does not count. Now, don't mishears. That doesn't mean that they're bad. It doesn't mean that they're wrong. It doesn't even mean that you shouldn't do them. It means you should do them with the understanding of, okay, this is causing me, if it drops me below a 25 % savings rate for the future, I'm now living in that gray zone where I'm under saving for what I should be saving for financial independence. I want to get the sinking fund funded. I want to save the dollars. I want to have them there. And I want to get back to 25 % going to my future self as quickly as possible. And that's totally okay.

24:10Brian Preston:That happens. That's part of the journey. But I want to give the corrective advice that we see people all the time that they use because sinking funds are just a component of helping you be disciplined to build the margin in your life so you live on less than you make. But a lot of times they get that good habit and the good feeling you get from doing that good habit. It kind of gets too good, too big. And it overwhelms your step four emergency reserve. So we find out that people have not only six months of emergency funds, but they have these huge accounts with these sinking funds. You're like, well, wait a minute, isn't that part of your emergency fund?

24:45And they're like, oh yeah, well, I guess I'm double counting. And we're like, Well, yeah, you've taken a good thing and turned it into foolish behavior and the fact that you built up this emergency cash way too big. And the corrective action is then we say, okay, why don't we take some of those sinking funds that should be part of just your emergency fund and let's actually deploy them into the financial order of operations, like into your Roth IRA or other things. There is a way to correct this that actually does create army of dollars and wealth for the future. but you got to go through the effort of figuring out how much of this is supposed to be just emergency funds.

25:21Brian Preston:A lot of people are asking, well, hold on, wait, wait. So shouldn't the emergency fund count towards the 25 %? Isn't that a thing you have to, don't be serious. Well, here's what we're saying. If you don't have a fully funded emergency fund in your past, step one, two, three, it should be all hands on deck to fund them. It's not like, okay, well, I'm going to save 25 % towards my emergency fund and then I'm going to go spend all the rest until I get that. No, you should aggressively save as much as you can, as fast as you can, as hard as you can to get the emergency fund built up. And then once you've done that, that's where the 25 % starts.

25:54Brian Preston:Okay. Now, and I'm working towards 25%. I've got the emergency fund built. Now I'm going to look at Roth IRA for me, Roth IRA for my spouse, HSA, 401k contributions, after-tax brokerage account. Those are where the 25 % happened. Your emergency fund is something that should be like, go, uh-oh, I got to get that in place, 25 % doesn't factor in. That's as much as you can possibly save to get there as quickly as you possibly can, assuming you're past one, two, three. Very thorough and good answer, guys. You acted like you just did a – you got squeezed on the – I know. At the end, he was like, let me just throw this in there real fast.

26:33Brian Preston:This is not rapid fire. Well, BentCan14, thank you for the question. Appreciate you being here. next one i am interested to see what you say uh it's a 23 8 car question from james l i need to buy a box truck for my next job should this follow 23 8 do i make the eight part follow my current income or projected income with the new job thank you i think it's more of a 3d glasses situation than it is 23 8 because this is a business asset yep and business assets are completely different 23-8 is designed for your personal car. And really, we're trying to just keep your ego in check with what you can actually afford.

27:15A business is a completely different thing because you have to make decisions that are right for the business, but you have to make sure you can truly fund it. And that's why when I say put on my 3D glasses or your 3D glasses, it's do the dream plan. Essentially do a five - to seven-year spreadsheet with the dream plan of what you think all the cash flows are going to look like. Like do the down-to-earth plan and then don't forget to do the doo-doo plan of how bad and then put this in there and see if it works and see if this actually makes you more efficient and more profitable and it's good for the business.

27:47That's why I think you're using the wrong metric on this.

27:50Brian Preston:And when it comes to business expenses and spending, businesses and personal finance are different. But oftentimes, the principles that we apply to our personal finances, if they were also applied to business, would likely pan out pretty good for you, right? When you analyze this, think about it. I'd love if you're going to buy a box truck and depending on the size of the business and what you have, paying cash is wonderful. Like if you can pay cash and buy that equipment outright, it's a fantastic thing to be able to do. But if that's not possible, then one of the things you have to figure out is, okay, if I have to take on debt to go satisfy this, what's the appropriate amount of debt to take on and how does that cash flow affect future business operations?

28:33Brian Preston:It's a little bit different than just, okay, what am I doing for my personal finances? Because I don't know how long this box truck may last. If box trucks for you last 10 years, then that's a great thing. If you have to replace these because they're used super hard every three years, well, then it's a different metric you're going to use to figure out what's the appropriate way to fund that expense. So you can apply personal finance principles to business, but business finances work a little bit different. I think you make a good point is you don't want to – because here's what I think business people get themselves in trouble sometimes.

29:04You're going to be able to take accelerated depreciation and get a huge deduction in the year that you buy this box truck. You just need to make sure that your financing aligns to the life expectancy reasonably well, because what you don't want to do is what Bo is saying, is that you finance this thing over six or seven years, but yet you ride it so hard that it's basically worthless in three years. You realize what you've just created is a bunch of negative equity that hurts you. So it is your friend. Nothing wrong with using a little leverage, but make sure that it matches up nicely. I prefer the shorter the use of leverage, the better in the health of the business in the long term.

29:45Brian Preston:Well, great. Thank you so much for the question, James. I hope that helps you think through it, not just as a vehicle decision, but also as a business decision. So thanks for the answer. Guys, can I throw one other thing in there? I'm sorry. Sure. These things are just hitting me. Great. far too often I see people who have like this unbelievable metric when it comes to their personal finances like I'm going to be very responsible and do this and it's almost like they lose that on the business side because there's this guise of oh it's deductible it's the huge I was thinking the exact same thing because I've got some business owner friends who their personal balance sheet looks fine but when I look at their business I'm like holy cow why do you why do you have all these lines of credit why do you have all this debt why it's interesting how it's disconnected yeah there's like a justification around it But what's funny is I'll watch somebody who's cheap with their personal life, but then they'll say, but I can spend$110 ,000 on this piece of equipment because that's deductible to the business.

30:37And I'm like, yeah, but you realize that's only saving you. Essentially, if you say the taxes are 30%, you're still having to come up with these 70 cents on the dollar. So if you overspend$50 ,000 and you multiply 50 ,000 times 70%, you can say you still pulled$35 ,000 out of your future back pocket. That's right. And not even taking into account the carry costs and all the other things that go into it. So don't let the – just like we say, don't let the tax tail wag the dog. Don't let the deductibility of something make you make bad decisions. You realize every dollar should be viewed as a dollar bill in your army of dollars.

31:18And I think you'll just, if you have that visual, you'll think about things differently. That's right. Good point.

31:22Brian Preston:That was a great add-on. Thanks, Raves. No, it is a good one because I see people lose their minds. It's nuts, man. It's so nuts. I mean, I've had friends and neighbors say, I'm going to go buy an airplane. Oh, because I can rent it back to a flight school and I can take all this accelerated depreciation. It'll practically be free. And I'm like, I bet there's more to it than that. So many business owners or so many people that want to be, they like, they view deductions as like the main course. Oh, let me go get some deductions. Being able to deduct expenses is, it's like, it's a feature. It's not the main thing.

31:57Brian Preston:Like it's, it's a thing that you can do for realistic expenses, but some people just lose their minds. Oh, I can deduct. I can. And they get themselves in a world of hurt with very little liquidity and a whole lot of debt. And that's just not where you want to be. Well, also, I always think in the long term is that if I'm going to be successful for the long term, there's going to be probably two years out of every decade that it's just going to feel scary. And you should, especially as a small business owner, you should be naturally double scared, is that I've got to position myself in a way that when the bad times happen, I haven't been so willy-nilly with my decisions that I put myself in a really desperate bad moment in time.

32:38Brian Preston:That's right. Because that's where failure occurs. That's exactly right. That's where you get yourself out of in a hole you can't get out of. Yep. Very good stuff. Thanks, y 'all. Okay, it is time to introduce our newest segment to add the Ask the Money Guy show. It is called From the Wings. The content team from the Wings has put together a list of current or recent headlines for Brian and Bo to react to and respond to. By the way, they did not share any of these with us, so I have no idea. what they're going to say. You know, current events is not my strong suit. Oh, yeah. Well, you'll see. Anyway.

33:17They probably took that into account that you're barely literate. I'm just kidding. By the way, Pose is CFA. He's actually very literate. He's very literate. Let's not have to start rumors.

33:26Brian Preston:He can neither read nor swim. Oh, my God. No, you definitely can read. No, I never take away from your IQ. You're extremely – you just don't choose to read for pleasure. By the way, Bo's leaving for the beach soon. Literally, yep. And I asked him, I said, what book are you taking on your trip? What was your answer? And he says, I just sit there and watch the ocean go in and out. And I can't wait. For hours. I'm just going to listen to it. No books. No reading. It's going to be wonderful. Raw dog on the beach. You know what? Maybe I'll take a copy of Millionaire Mission with me. Maybe I'll take that and read it.

33:58You've read that book.

33:59Brian Preston:I have read that book. You've read that book. You've edited that book. I did. I did. All right. Well, let's dive into some headlines. So you tell us, first of all, is this news or is it noise and we shouldn't pay attention? And then give us your take if you have any reactions to it. No timer, just like our thoughts. We're trying a new segment. Got it. More relaxed segment. We'll see how it goes. Beau, you can go first. Okay. The first headline says, and I'm very curious to see what you say about this. SEC approves plan to remove day trading limit for small investors. um sec approves plan to remove day trading well that just sounds bad right uh one i am not a huge fan of day trading i don't think there's a lot of success in it i think oftentimes it can be more like gambling and when i read this headline it says sec proves plan to remove the limit for small investors meaning if you're a small investor uh we're gonna raise how much you can trade on a daily basis if I'm understanding what the headline is saying.

35:02Now, I want to be curious.

35:03Brian Preston:News or noise? Oh, is that what I'm supposed to be doing? First. That's the first thing. And then your thoughts were great too, though. That was correct. It depends. For our purposes, noise. I was trying to explain it. No, you're right. I like your thoughts too. What I imagine is when it says small investors, it's probably not talking about retail investors. It's probably talking about small institutions. It would be my guess in terms of that. But either way, I think it's noise to our audience. I mean, I think it's noise because if you're day trading, you've lost the plot. So I would not do it.

35:36Now, look, I don't know the merits of this. I haven't read this article. But it sounds like, hey, there were some protections out there to keep people from themselves. But I'm going to tell you, a financial mutant is not day trading. By the way, not only is it a fool's errand, but also you'll create a big burden for yourself when you do taxes. and it's just, I just don't, I don't think it's, that momentum play is not as effective as people think it is. And if you know, it's kind of like you sit down at the poker table, if you don't know who the fish is at the table, then you're the, you're the fish.

36:10It's the same way with trading. There's a reason that a lot of these, when you go with these brokerage companies, you know, the Robin Hoods and elsewhere, you realize a lot of the big fish are paying for access to those investors because they can, they can play on the other side of it and make more money.

36:25Brian Preston:All right. Next one. Is this news or noise? Stock market notches one of its fastest turnarounds in years from Yahoo Finance. I got a thought. I mean, these are all noise. I saw this one as it came across. And it's because, you know, with all the geopolitical stuff going on, it's like, it's like a kaboosh, kaboosh, kaboosh, kaboosh, you know, depending on, you know, what's going on with the straight. And if it's open, is it closed? You know, what did the president say it's all noise just you know know where you are in the financial order of operations and i think you will be a okay it's okay to pay attention to this stuff um just because like i said when the market's down 20 i want you to know hey what do i do to maximize this moment and when we go through these periods where we hit all-time highs that's also it's good to know what's going on in this moment but this is still noise to me news are we want and want to fight territory let's hear what you say uh i think this is news i think you should pay attention to this uh because it is a reminder to us how quickly the market can turn how quickly something can shift and all of a sudden things are scary scary scary scary and there's a rapid turnaround i think you should pay attention to that so what that should tell you is oh man if i'm one of those people who gets real nervous in the downturn and i'm thinking oh you know what i'm just gonna i'm gonna sit in the sidelines and i'm gonna wait for things to feel better and then I'll get back in when things feel a little more comfortable.

37:49Brian Preston:It doesn't often happen that way. It often happens in a V shape. It hits the bottom and it bounces right back up. I think you should pay attention to this, that two, three weeks ago, the headlines were terrible and scary and horrifying. And now they're, oh, turnaround, things are great. You want to be careful being on the sidelines when that happens. So I'd say pay attention, remind yourself when things are bad, they could just as quickly become good as they became bad. And ABB, always be buying, baby. There it is. Boom. All right, good takes. You kind of did two sides at the same point there.

38:25Brian Preston:I'm not even mad at him. I liked it. It's fine. I think he said that just to be controversial. Which I appreciate. He's about to go on vacation, so I figured he'd bite into me a little bit. All right, next one says, tell me, is it news or noise? Why adjustable rate mortgages are making a comeback? I think you could use that as news. Newsworthy. Because a lot of times, look, Americans, we always lock ourselves in to 15-year, primarily 30-year mortgages. But a lot of times people, we found out in our most recent housing show, people flip houses every 12 years. That's considered the long term. But a lot of people, if you know you work for a company that's going to relocate you every five years, you ought to probably make sure you understand what those financial products, because you might be paying a premium for something that you're not even getting the benefit out of.

39:17So paying attention to what's going on in the cycle with interest rates is important.

39:21Brian Preston:There was a long time, I mean, probably a decade or so, where adjustable rate mortgages just didn't make a whole lot of sense. Fixed rates on 15 and 30s were so low. If you were getting adjustable, you were kind of just being foolish by not locking that in. That's a good point. Now that rates have come high and adjustable rates are somewhat attractive, assuming that you're in the right position, right circumstance, you kind of go through the 3D glasses, you understand what you're doing. An adjustable rate mortgage could indeed likely make sense for you, but you have to know what the risk is. With an adjustable rate mortgage, whatever that period is, if it's 5-1, 7-1, 10-1, whatever that is, whenever that ends, you better have a plan for that.

40:04Brian Preston:You know what you're going to do and when you're going to do it and how you're going to do it or what you're going to do before you get to that place. But we always want to know about what products are available and what tools we might be able to use in our tool belt so that we can determine if it makes sense to use those or not. And if you are going to use an adjustable rate, go ahead and do the work of reading the fine print to see what is your exposure when the rate adjusts at the end. Because sometimes it's not as bad as you would think. and you're like, okay, if I get stuck and I'm in this area longer than I thought, that it can only go up this much.

40:35Brian Preston:Yeah, like a 2 % increase. Yeah, it's not as big of a risk. But then other times you're like, holy cow, that's a risk that I probably, I better either make sure I'm not here any longer or be very cautious about using this product. Go ahead and read the fine print on that so you know what's happening at the end of this term just in case you get stuck. Good discussion. All right. Overall newsworthy. All right. This last one. I don't think you're ready. I need to know, is this news or is it noise? The world's oldest octopus fossil isn't an octopus after all, scientists say. What? Who put this in there?

41:19I want to know. Afterwards, we're going to find out which team member put this in there so we can take corrective action.

41:24Brian Preston:This was from the wings. I want to know what is it. Is this Ken? I'm on the edge of my seat if it's not an octopus. Here's a quote from the article. It says, this has too many teeth, so it can't be an octopus. And that's how we realize that the world's oldest octopus is actually a fossil nautilus. I get this news because now when you go to your weekend dinner party or you're hanging out with your relatives or your buddies, you can be like, you know what? That oldest octopus fossil, did you hear? It's kind of like Pluto. It's not a planet anymore. No, that's bad. Yeah, in Pluto back, it came back, right?

41:59I mean, these are things you should know if you want to be the most intriguing person at your dinner party.

42:04Brian Preston:Octopi have teeth? I didn't actually know that they had teeth. Are they teeth? Not that, not as many as this fossil had, apparently. Now you know. Now you know. You can't say you left this live stream and didn't learn something today, because I bet you that was not on anybody's being good. It was not on anybody's radar. Put it in the comments if you already knew that, or if that came across your news feed, because you're in the right place. This has been From the Wings. If you have a headline article, something happening that's related to personal finance that you would like Brian and Bo to react to in this segment in the future, drop it in the comments of this episode or post it in the Moneyverse, and we will check it out.

42:43I think I like this segment because, look, there are sometimes, I would encourage, because we have so much volatility going on, not that I'm trying to influence our team, but y 'all should. Sometimes, like Yahoo, they give me notifications, like the sky's falling and I'm like, are you freaking kidding me? The market's not even down like a half a percent, but they have this crazy, scary headline. I think those would be useful to kind of, because every now and then I tweet, if I'm not being lazy, I'll tweet that out and say, look, this is why you have to be careful with you letting your head.

43:11Brian Preston:When was the last time you tweeted? I mean, it's probably been a year or two, you know. This is what happens. We've been doing this over 20 years. You know, it all runs together. Do you know that octopuses don't actually have teeth? they have beaks. They have what? Beaks. Like a duck, like a bird. Our chat said it. I Googled it. It's a thing. They actually have beaks. I was this many minutes old when I learned that. So here's what I'm sitting here thinking. Like, I eat calamari, which is squid, right? But then octopus, I eat its tentacles. Because if you go to fancy restaurants, they actually serve you like an octopus tentacle.

43:50I just think it's interesting because this is all still part of the food supply.

43:55Brian Preston:That is interesting. Interesting. By the way, we're probably... Jake in the chat did say, quote, doesn't matter because I'm not going in the ocean. Bo, probably. That's true. That's true. What I think is wild is I was at soccer practice. Because this is silly, right? This is fun stuff. I was at soccer practice, and my phone started buzzing, and I was getting notifications from the Moneyverse. And this was like 7 p.m. at night. It wasn't like a lot. And people were just like asking some questions. And I was like, you know what? I'm going to dive right in. And it was wild. Even at 7 p.m. on a Wednesday night, this was last week, we still get to hang out with you guys.

44:34Brian Preston:So if you've not checked out the Moneyverse, moneyguy.com slash moneyverse, it is like a 24-7 live stream where not only do you get to interact with us, and yes, Brian is in there. There's a whole thread about you. I've been nervous. But here's the thing. I'm kind of playing the part of just, I've been nervous to post. Why? I don't know. It's new. I'm old. Do you know what's wild? A lot of people think that you're lurking and they're making guesses of who, like they think you're posting under a pseudonym. Well, they can't see me. People don't post it anymore all the time. Listen to me. I'm telling you this.

45:08Brian Preston:You got to listen. A lot of people think that you are someone else in the moneyverse. So like there's some folks in there like Penguin or Mr. Sky or Panda or all these folks. They think that you are that person pretending not to be you. And I had to tell them it's not. There's a lot of conspiracies going around. I've been lurking. Well, there you go. You've heard it here first. If you've not checked the Moneyverse, it's a great place. One, you can interact. You can talk. You can goof off. There's also unbelievable celebrating milestones. That's the one I was going to say I've lurked the most in in the celebrations.

45:38I think it's really cool. It's awesome. I just feel weird about jumping in on some of that stuff. Interesting. Y 'all need to educate me.

45:47Brian Preston:You never know. Maybe hold my hand as we do it. Noted. Well, you want to answer some more personal finance questions right now? I have a few more queued up. Let's do it. All right. I will say, can I say one more thing about the money verse? Of course. So my daughter, she brought her boyfriend to dinner with us like two weeks ago or something like that. It's a big deal. And he heard that we had like this Reddit thread. I guess with the youngsters, this Reddit stuff is legit. And I showed him how big the way the money verse was, and it was like, whoa. Do you mean Discord? Are you talking about Reddit or Discord?

46:22Discord. I'm sorry. Discord, yeah. See, come on.

46:24Brian Preston:No, but our Reddit thread is also incredibly active. Whatever. Moneyverse is on Discord. That's right. Yep. I showed them. Because I'm a lurker, so I have the app. So I showed them the thing. And their mind was like, pfft. It's literally like, so for the youngsters, we're doing something right. And what's great is there's always people out there. Like, you've got a question. You want to get somebody's thoughts. You want to celebrate something. You just want to say, hey, I just paid off my car. I can't tell my family and friends because it seemed like I was bragging. You can come tell the Moneyverse, and we love to celebrate with you.

46:55Brian Preston:We love to be excited for you. It's a cool thing. So if you've not checked it out, go check out the Moneyverse. It's awesome. Moneyguy.com slash Moneyverse. No, I loved it. There was some bench press content in there this past week, which was awesome. Some deadlifting stuff in there. It's great. This stuff just surrounds Bo. We did record a Making a Millionaire, and the question after the cameras went off, Bo, what's your bench press, Max? These type of questions. I love it. Always. All right. Speaking of questions, Brandon S. has one for you. It says, my company matches 6 % and offers both 401k and Roth 401k.

47:32Brian Preston:I'm currently doing 12 % in the 401k and 3 % in Roth 401k. Is there a guideline on what I should contribute to more? Should it be a 50-50 split? Brandon, we need to know a little bit more information. Can you let us know your household income? because oftentimes when it's trying, one, I love hearing that you're getting the full match. It says my company matches six. And so I'm assuming that if you're putting in 15 % total, you're probably getting that full six. So step number one, Brian, will you hold that thing up for me? You are hitting step number two. You're getting the full employer match.

48:08Brian Preston:You're getting all that 6%. Well, the next question you have to figure is, okay, if I'm going to put more of my 401k, should I do Roth or should I do pre-tax? And in our opinion, it probably most likely depends on what your tax situation looks like. Yeah, but this is one majority of the time. I don't want to say always. This isn't bad, but it's not maximization. Because typically once we figure out that you've crossed the threshold that you're a high-income, high-tax situation, you would do 100 % into traditional. If you're one of these people that's young and you're in a low-tax situation and you want to maximize the tax-free growth of the Roth accounts, you'd be 100 % on the Roth side of things.

48:49So that's why if you go deeper into our content, you'll see we're typically, instead of dabbling and having feet in both sides of this, you need to squarely do the exercise to figure out where you are with the tax system and where you are with the savings and compounding growth and make the decision, are you Roth, where you get tax-free growth over the long term, or are you traditional, where you take the tax deduction now, but you get tax deferred growth. But then when you pull it out in the future, you pay ordinary income tax rates on it and you have to figure out, am I going to have a tax arbitrage situation in retirement?

49:25Because maybe when I'm no longer have my earned income in my total income, my income goes way down into the basement. And I'm once again, back in a low tax rate and I can do an arbitrage in the future to take advantage of the lower tax rate in retirement.

49:41Brian Preston:Well, Brandon S., thank you for the question. Appreciate you being here. Next one's from Sherry. It says, I'm on track for Coastify. Should I put continued savings in a brokerage account or in a Roth IRA? Because I can always access my contributions if I need the money. What do you think? This is a good question. I mean, I'm going to give off the cuff. By the way, my favorite child, when you're looking at the three-bucket strategy of Roth accounts, which are tax-free growth, tax-deferred, which, you know, you get a deduction now, but they grow tax-deferred, and then you pay ordinary income tax, or after tax, Roth is always my favorite child because they have a huge legacy component to them.

50:21I love that you get to stick it to the man and potentially grow a seven-figure tax-free account. There's just a lot of benefit. And once again, she is exactly right. You can pull the basis out. You can pull the whole account out after enough time.

50:34Brian Preston:Yeah. If you're on track for Coast Fies, so the idea of Coast Fies, I'm going to save, save, save, save, I'm going to build up a pot of money and I'm going to just let that pot of money coast until I get to full financial independence, then the pot of money will have grown to be enough. Well, I'm going to argue if you're already in that position and you're already on track for that, you've probably been saving really, really aggressively anyways. So if what you're asking is, okay, while I'm in the coast phase, I just can't help myself. I still got to save more. I agree, Brian. I love the idea of putting money in the Roth, not because you can get access to your contributions tax-free and penalty-free before 59 and a half, but for the reason that it grows tax-free and tax-free growth is really, really awesome.

51:16Brian Preston:Now, if you're in a position, Sherry, where you know you're going to exit the workforce early and it's going to be pre-55 and you're going to have to have access to dollars, while yes, you can access the Roth dollars, I don't know that that's the best choice because now, again, if you're pulling out of your Roth at age 52, 53, 54, you are shortchanging those dollars, 10, 20, maybe 30 years of tax-free growth. What I'd rather see you do is put money in the Roth, let that grow, let that be the money that you pull out much later in life after it's grown a ton, and also fund that after-tax account so that when you're at 52, 53, 55, whatever your number is, you can then begin to pull dollars out of that after-tax account so it's a best of both worlds.

52:02Brian Preston:And this one, I don't think it's, it's not either or. I'd love for you to do both. That's exactly, I was about to say, this is not an or question. This is an and question. It's because we know for anybody who's in the fire slash fine movement, next endeavor, this is just the coast version of fire, is that most people to be successful in the fire movement, you have to have a savings rate beyond 30%. And because people have savings rates, sometimes 30%, 40%, you're going to blow through what you can put into Roth accounts. You're going to blow through what you can put into a 401k account. And that's why it's a perfect setup for people.

52:36That's why it's always step seven when you're really thinking about these things. Load up that after-tax account because that's going to be your bridge account for anybody who's retiring between 50 to 55. You're going to love that you have those after-tax assets because that's going to be the easy money to pull out of without you kind of losing sleep on the fact of, yeah, I could get access to my Roth basis. But man, oh man, is that an incredible legacy building thing to let those Roth assets. That's why you love this child so much, this Roth account. You're going to hate using that money. This is typically the account you're going to fund first and then try to die with it so you can leave it to your heirs.

53:13That's right.

53:13Brian Preston:That's exactly right. They like that question. Good question and great answer. Thanks so much for asking it, Sherry. All right. Next question is from Top Notch M-U-S-A, I think. It says. Can we just give a plug? No, I don't think so. This is just a bunch of letters I was trying to make sense of as a username. But, okay, the question is, we're 30 with a newborn. I have a bit over one times saved. My wife has 20K under one times. On Foo Step 5, should we focus on catching her up or continue equal percent investing? I make about 30K more than her in salary. This is, I already see the problem. Well, so it sounds like what you're trying to do is hit some of our milestones.

54:05Brian Preston:One of the milestones, if you're not familiar with this, you haven't heard this before, we think that by the time you get to age 30, we want you to have one time your annual household income saved in investments, not net worth, but in your liquid investments saved up. Well, if you're at one time on your end and she's at almost one time on her end, And what that means collectively is that y 'all are at almost one time as a household. My opinion is, and I only say opinion because I don't want to like project my bias onto you, but when it comes to being married and it comes to hitting these milestones, I think rather than thinking about, okay, you need to hit one time and then I'm going to hit one time.

54:44Brian Preston:And then I'm going to get to three times by 40, then you're going to get three times. If we can think about it as a household and think about total household income, then what we're able to do is when we approach the financial order of operations, we can save in the most efficient and effective manner possible. Because let's assume that you have access to a 401k and she doesn't have access to a 401k. Well, does that mean that you should just not put a ton in your 401k and she should just start doing after tax? Maybe not. That's going to get the financial order of operations out of whack. So if you can think about it as a household, lay out all the income in front of you, then lay out all the accounts and vehicles you have at your disposal, then pick and choose, okay, which ones make the most sense for both of us collectively and the household to achieve those goals?

55:31Look, when I have a couple come to me, and a lot of times like older marriages and other things, they're going to have complications, whether they're going to have children from previous marriages, they're going to have assets that were built up because earlier in life, or maybe they inherited some assets, There's complications out there that because of the legal protections and then just because of the legacy of what you've built already in the earlier parts of your life, separate assets makes complete sense. And we protect that. We do a good job of helping our clients with that. However, I do think when two become one through marriage, all of your money, set up a joint account, and the money coming into the household should be going into that account, and then you all should be making collaborative joint decisions.

56:13Because, by the way, you just had the key point in there. you make$30 ,000 to$40 ,000 more than your spouse, that already is going to create a strange power dynamic. And here you are running a metric saying, well, I'm doing what I'm supposed to be doing. But yet she's underfunding what she should be doing. And by the way, I make$30 ,000 more a year than she does. Do you see the double whammy of the power structure you just created there? Is that healthy? And I don't think so. I mean, I know that, look, in my household, we get in fights. You never talk about divorce. You also, in fights, we never talk about who makes what money because the power has to come out of who makes what in a relationship.

56:59Otherwise, this is just going to get worse and weird, and I get it. I mean, we've had guests on, and I have bias. I don't even try to hide it, is that I think two should become one, not just for the marriage bed, but also for your checking account.

57:15Brian Preston:Love that. Well, really good questions today, everyone. Thank you for joining in. How we're going to end it? Wow. I felt like, boom. Where's that mic drop emoji? I lit the fuse and we just threw that bad boy out there and now I'm hiding over here. I'm not even hiding. I'm just going to blow off my face. You said it so confident. I was like, end with that. I love it. All right. That's where we'll go with it. Let's wrap this thing up. Boom shakalaka. Boom shakalaka. But truly, let us know what we should include in our next From the Wings segment. Thank you so much for getting all of your questions in the live stream, even though we turn off the cameras here.

57:53Brian Preston:Moneyguy.com slash resources is full of free stuff just for you, all about personal finance. And you can continue to have discussions and ask questions in the moneyverse at moneyguy.com slash moneyverse. Guys, thanks for putting up with my very white voice today. Hopefully, I don't even know how this is going to come off. I might go check out this episode so I can hear how this sounds. It sounds amazing. See how it modulates. See if that bass is as good as I'm hoping. But we'll play it out. Not only can you get entertained from what's going on with our voices, but also with what our knowledge is on personal finance.

58:28I'm your host, Brian. Joined by Mr. Bo Reby and the rest of the Money Guy crew. Money Guy, out.

58:33Brian 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.

59:05Brian Preston:All investments involve a degree of risk, including the risk of loss.