BIG Changes Are Coming To Your 401(k) - What You Need To Know

23:18Brian Preston:Agree, disagree, want to fight. It's built into kind of our deliverables on the site, but that's why I can tell that Matthew is a true financial mutant because he's already picked up on that when he transitions into his 30s, though, there's a step down on that interest rate. It goes from 6 % down to 5%. So I do think that, Matthew, you're spot on in the fact that, look, you've already got some pressure building in the background also and the fact that these things will come due, you know, what did he say, 32? 32, yep. So, I mean, you might be at the intersection where when you cross into your 30s that you're already going to have the pressure because you know that you've only got two years, plus now the fact that we'd probably classify this as high interest debt.

24:00I think I would probably get very serious as you cross into your 30s. Hopefully you have enough career traction that you're going to have the cash flow flowing in that you're like, this is, yeah, this is the time to get serious and let's start tackling this. Love it.

24:16Brian Preston:Awesome. Matthew T., thank you for being here, and thank you for asking the question. One thing, can I just tell Matthew T. to go do one more thing? Of course. He's already done this, obviously. But you should go to moneyguy.com slash resources, play with some of our calculators. You can look at the compound interest calculator, or what I want you to play with specifically is the wealth multiplier calculator. Because what I want you to see is that money from age 27 to 29, I just want you to go look at what those wealth multipliers are at those ages. and yeah, while you could go satisfy this 5.375 % interest, if you took those dollars and you applied that wealth multiplier to them to let them grow from now until 65, it gets really, really, really, really exciting for the dollars that you can save in these next three years.

25:02Brian Preston:Yeah, well said. Moneyguy.com slash resources. Click on our wealth multiplier calculator. Wasting sticky notes. This one was still good. I got more meat on this one. it's almost like they make technology to where you can write notes you know i wasn't gonna call that out you're so right it's so funny because i don't i don't know if you guys have checked this out uh we do this show on uh every other monday called making a millionaire where you can go watch us do a deep dive with folks that are either millionaires or millionaires in the making it's a lot of fun both of us use remarkables in the show i never bring it over to this set and i but it's because uh i got a computer here and i feel like i'd have i'd have too many things going on are you thinking you'll look obnoxious with a computer a remarkable an iphone and a laptop it'd be something it'd be something so that's why i stick with the old uh sticky notes for my notes interesting you just need a bigger desk maybe that's it All right.

26:01Brian Preston:Sneed has a question for you. I have a 25K capital loss on a property and I'm just below the 15 % gains or 22 % tax bracket. Would you hold on to the losses for later pay raises or take 3K deductions even at a low tax bracket? Fancy tax question for you. Just below the 15%, 22 % bracket. Would you hold on to losses for later? This is one of those things, look, I like being tax smart, but it's also when you're doing year-end planning, if you have the ability to rebalance and reallocate because it's just also the better thing to do for your portfolio, this is a tool that you, I don't know that I'm holding on to losses because of my tax rates.

26:55It comes into play. Don't get me wrong. But I'm thinking more of you got the intersection of portfolio management plus tax policy. I think the portfolio management is a bigger determining factor than transitioning from 15 to 22 percent.

27:12Brian Preston:Yeah, I think I want to think also capital gains. I mean, because that 22 percent is a marginal rate. 15 percent is you're you're you're going where I was going. you said okay I've got these losses and generally speaking the way that capital losses work is you can use capital losses to offset capital gains so they can net to zero in any given year well if you're below the 15 percent capital gains bracket you're in the zero percent capital gains you're thinking okay well if I just take capital gains I'm going to pay zero percent on that so it's not really valuable for me to then use losses and offset money that wouldn't be taxed anyways And I tend to agree with that.

27:50Brian Preston:However, there is also this idea that if you have all of your capital losses and they offset all of your capital gains and you have even more than the capital gains you generated, you can actually then use up to$3 ,000 to offset your ordinary income. Well, now we're talking about, okay, now it's a meaningful tax savings. If I'm in the 22 % marginal tax bracket federally, and I can use$3 ,000 of those losses to offset that, well, then there is some value in doing that. So it's difficult to give you specific guidance, not knowing what the rest of your tax return looks like. But it is one of those things you want to think about because a lot of folks get so caught up in, I want to pay as little tax today as I can.

28:34Brian Preston:I want to get today's taxes as low, as low, as low, as low, as low, as low. What we think about makes a lot more sense, and this is what we want Financial Mutants focusing on, is we want you to think about how much am I going to pay in taxes over my lifetime? Like, what's my lifetime tax bill going to be? because so often we will see people capitalize on strategies today to drive their taxes as low as possible. And then what happens, we get in the future and all that planning they did is unwound because they didn't think two or three steps ahead. Here's a really easy example of someone who does this.

29:06Brian Preston:A lot of Fortune 100 companies will offer what's called deferred compensation plans where you can say, hey, instead of paying me my salary, I want to defer my income into the future. And so you think, oh, that's great. I'm going to really drop my income. I'm going to defer. I'm not going to get taxed on it today. I'm going to put it in this deferred account plan. It'll pay out later. Well, what they don't recognize is, man, if I do that, but I'm not strategic and thinking about how big I build that pot or how I'm going to distribute that from the time I retire until I deplete that pot, all you may have done is sacrificed paying, you know, 35%, 32 % today in exchange for paying 37 % in the future.

29:42Brian Preston:You didn't actually save yourself anything, even though you thought you were going to. So thinking through it two or three steps ahead is likely going to be a valuable exercise. Also, what do you think about the fact, and it's okay if you disagree with me, and I'm just going to make up numbers because we don't know, is if he's got a$25 ,000 capital loss, and let's just say that this was an initial investment that he put$125 ,000 in. Now it's worth market value of$100 ,000,$25 ,000 loss. Do you take into account the portfolio management side of it? Because how many people do we see that come to us that they have these investments that you're like, there's just zero chance that that thing is recovering.

30:21What it is worth now is where it's going to probably be 18, 24, 36 months from now. And the opportunity cost of correcting a wrong and getting to fresh green shoots always comes into play, too.

30:35Brian Preston:Yeah, no, 100 percent it does. I use this analogy all the time when I'm talking to clients. If you were, say you were riding a bicycle, right? And you're riding a bicycle down a valley. And so for those of you at the podcast, you know, you kind of come to the bottom of the valley and then you come back up to the top to the peak. If you were riding a bicycle and your tire got flat at the bottom of the valley, you're not going to think to yourself, you know what? I'm going to wait till I get back up to the top and then I'm going to change this tire. No, you're going to say, man, okay, I'm at the bottom.

31:03Brian Preston:I'm down here. I've had this thing happen. And perhaps if I put a new tire on this bicycle, I might be able to get back to where I was much more quickly, much more efficiently, with much less pain. Investing is no different. We see people all the time. They'll buy this stock, and oh, this is the next big stock. And all of a sudden, it tanks, and it's down 15%, 20%, 30%. Like, oh, man, I'm never going to sell it. I got to wait until it comes back. Got to wait until it comes back. There is opportunity cost in waiting until something comes back. So you want to make sure you think through that. So I think absolutely portfolio allocation and capital usage certainly comes into play.

31:39And how many times have we heard people say, I haven't lost anything until I sell it?

31:43Brian Preston:Yeah. And we're like, well, you know, you have to still handicap if this thing's ever coming back. If you own Blockbuster stock, you know, it's probably not coming back. What's that? Because it's a funny skit. Man, we did a React video. By the way, if you're not subscribed, every other Monday when we're not doing Making a Millionaire, we release these React videos. We actually just had one that came out yesterday. Brooklyn 99. Brooklyn 99. Did you just call it Brooklyn? Did y 'all hear me call it Brooklyn 99? Let's put a period between those nines. 99. Brooklyn 99. Oh, 99. I got 99 Brooklyns. Yeah, so anyways, we did a react to some very popular, there were some Office, some Schitt's Creek, some Brooklyn 99, and that was one of them.

32:29Brian Preston:They had blockbuster stock certificates that were not as valuable as they once were. Yep. Brooklyn 99. Brooklyn 99. Bigger rotation in the Preston household. That's hilarious. All right. Ready for the next question? It's from Andrew. He says, how should someone prepare for a six-month unpaid sabbatical? What would you do? What would you tell them to do? This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales, using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business.

33:18Brian Preston:The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify.

33:55Brian Preston:Well, I'm assuming the question you're asking is, hey, for six months, I'm going to have income go away. I'm going on a sabbatical. I'm not going to have income coming in. And you've got to think about, okay, well, what's my income actually do? It allows me to pay for the expenses that I incur in life. So it pays for rent and mortgage and utilities and groceries and all the things necessary. So if I'm not going to have income coming in to pay my bills, the natural place that my head immediately goes, anytime I'm planning for some sort of period without income, I think that cash is probably your friend and you want to build up an emergency fund above and beyond.

34:37Brian Preston:And I wouldn't even call it an emergency fund. I'd call this like a sabbatical fund to make sure that you can cover that six months of living expenses, plus maybe even a few more if it's not guaranteed you'll be able to come back to work yeah i mean look this is all about preparation and planning is that you plan accordingly if you take advantage of this sabbatical um is that you you make sure you've measured twice cut once that you have enough cash to to pay all the bills and do the things and then the second thing is more philosophical if you're going to do this six month let's let's make it purposeful because that's what when you do these type of things it's supposed to kind of be a regenerative, that you come out even better on the other side of it.

35:19So let's be purposeful with how you spend that six months. And that's going to require planning and preparation as well. So I look at this as both looking at the financial side, but as well as hitting the ground running on what you're hoping to get out of the sabbatical.

35:34Brian Preston:And then the other thing that I would do going into this, and we say this whenever you make any significant life change or large type purchase or investment, we want you to put on your 3D glasses. As you prepare and move into this, I want you to think, okay, if I take the sabbatical, what's the dream? What's the thing that's going to happen during the sabbatical? And what's the thing that's going to happen when I return from sabbatical? Then what's the down to earth likelihood? What's the most probable outcome? I'm going to do this. I'm going to leave. And then what really, really matters is the third one, the do-do plan.

36:04Brian Preston:Because, and we've seen this happen. What happens if you think, you know what, I'm burnt out. I've been just grinding, grinding, grinding, grinding. I just need a break. And maybe I'm in the technologies field or I'm in some like sector that's just been very, very stressful the past couple of years. And I decide I'm going to take the sabbatical. I'm going to bow out for six months. And then, you know, I'll get right back into it. Well, all of a sudden month five, five and a half rolls around and you start making those phone calls to try to make sure that you have placement back into the workforce.

36:33Brian Preston:And it turns out, oh man, it's a little bit harder to enter back in at the same place that I exited. And if that's the case, and if that's something that could happen for you, how are you going to plan for that? How are you going to navigate that? Not saying that you shouldn't do the sabbatical, but you should definitely think through if that's a likely outcome, what would you do and how will you navigate that? Yeah, I guess this is a big consideration because when I see sabbaticals, I know a lot of employers after you work for a number of years, they'll give you a period. But I've never seen six months.

37:04So that probably is more of a self-chosen, I'm going to take six months off. And I think that's probably a very valid concern. I would definitely put on my 3D glasses.

37:15Brian Preston:Good stuff, Andrew. Thank you for asking the question. I hope that helps you think through this decision and how you might prepare. Next question is from Jake. He says, it's our friend Jake, the Jake. We still got that bottle of bourbon waiting for you, Jake. Jake brought gifts to Austin, and we're still waiting to partake. So now he's got to come to fight. I know, he has to come visit. Anytime, Jake. Let us know. All right, he says, my company just announced that they are stopping the 401k match. Lame. That is lame. Is this a red flag to start looking? What's your insight or your take on this?

37:53Well, I'd want to know why.

37:55Brian Preston:Yeah. Yeah. Yep. I mean, is this because they're going to beef up the profit sharing? It might be. Well, no, there's multiple reasons. It could be, look, when companies are in trouble, they financially, sometimes this is one of the areas where you see it. But it also, let's go to the other side of the coin is, sometimes plans will restructure because they, you know, like a match is a guaranteed 3%, 6%, whatever it is. And they might say, well, you know what? This is getting to be very expensive. we'd probably be better served doing a profit sharing or something that puts a little more golden handcuffs or discretion on it too because a lot of times if you're doing safe harbors they're 100 vested on the day they're funded whereas at these chunks of money the employer might want to make it more of a incentive for you to stay longer so i'd want to know the why and then what is the alternative they're offering because if they if they offer a more lucrative profit sharing then okay maybe this is okay especially if you've been there for a number of years and you're fully vested in everything i'll be like okay they're just basically restructuring how these things are but if they're just shutting it all down i'd be like what's going on here and sometimes now look if they were recently purchased you know and maybe it was like a private equity company bought your your firm and all of a sudden they're trying to come up with cost cutting measures yeah i mean then that that's that's just probably the the new trend of your employer is going to be lean because they're trying to restructure it in the next three to five years to get a higher multiple.

39:27Brian Preston:Yes. Sometimes it can be as innocent as restructuring. Another one that we've seen often is someone will have a small company, small workforce, and they'll want to be really generous with their employees. They'll say, hey, we're going to do a dollar for dollar match up to 5 % or a dollar for dollar match up to 10%. But then as the company grows and has more success, that becomes very, very expensive. And they say, you know what, instead of doing a match, it would be less expensive for us to take away the match. And we're just going to do like a safe harbor, non-elective 3%. So move away from the match.

40:00Brian Preston:And it's just going to be like some sort of minimum contribution for the overall workforce that could be happening. It's not a match taking place, but there's still employer dollars flowing into the plan. Uh, but I agree with you. I'd ask the question. Well, if you can, you know, Maybe don't just barge into the CEO's office and say, hey, what's going on here? But if you could ask, hey, just curious what the thought process is here, and then be discerning. It's never a bad idea to make sure that you just kind of understand what's going on in the environment around you and make sure that you prepare and protect yourself for that.

40:35Brian Preston:Yeah, that's good thoughts. So maybe not time to walk out the door, but definitely figure out why. But also, Franklin's wonderful this time of year and every time of year. Start looking. It's a little humid right now, though. Bro's like, love it here. Brian's like, mm. No, I do love it here. You'll know. I think this is a beautiful place to live and raise a family, but it is quite humid right now. But I think a lot of America is humid right now. Lots of humidity. All right. Next question is from IJP1208. It says, I have about$10 ,000 left in credit card debt. It's high interest. I've cut it down from 30K, which is great.

41:19Brian Preston:Should I do a 10K loan or get a 0 % APR credit card? Or is there something else he should consider? Yeah, I mean, I would like to know the time frame that they went from 30 to 10. Yeah. Because it sounds like they're already on the path of like, just take no prisoners, make it happen. And I'd rather you go down that path because it just seems like the relief valve of going and getting more debt or one of those 0 % APR trap cards. Because, I mean, look, it works if everything lines up. But if you, man, if anything goes wrong, those things can be a mess. And usually there's some fees when you transfer to a degree, too.

42:02So I would rather you just take no prisoners and go ahead and finish the drill on that 10 ,000. We don't have enough context to know how hard that's going to be from the variables that have been provided.

42:13Brian Preston:Yeah, I do not love option number one, going to take a loan out to pay it off. Because what I'm thinking when I hear that is, oh, that's like a home equity line. That's a 401k loan. It's something like that. I don't love just replacing one debt with another debt. You're not really solving any problems. You're just kind of exacerbating an issue. And I'll also say this, and this may be a hot take amongst our financial mutant community, but I'm going to go and throw it out there. I'm not a fan of like the 0 % APR transfer game like I recognize there are there's a mathematic substantiation to doing that I've got this high interest I'm going to transfer it to a zero interest card I'm going to pay it off but I there's just there are trip wires and there are things that can go wrong and there are things that can go bad to make that not a good thing I agree with you IJP you've already shown that you have the propensity to knock out credit card debt from$30 ,000 to$10 ,000.

43:05Brian Preston:What I'd love to see you do is just buckle down and finish the drill, whatever that means. Get as lean as possible. Cut your expenses down as much as possible. Throw the kitchen sink at that. I would rather see you go sell stuff like, oh, you know, I've got old stuff in my garage or I've got clothes I don't wear anymore. I'm going to do consignment, whatever that thing is. I'm going to go figure out a way to get super, super creative to knock this out. And then once I get that$10 ,000 balance to zero, I'm going to count all that interest that I accrued as sort of an education tax that I paid to learn what to not ever do again.

43:44Brian Preston:I'm going to get it down to zero. And as much as I can control it, I'm never, ever, ever, ever, ever going to run up credit card debt again. I'm going to start following the financial order of operations. I'm going to start building up my emergency fund. I'm going to have a fully funded emergency fund so that I have that thing that will prevent me from finding myself in this position again. I think a lot of Americans, they see debt, specifically consumer debt and credit card debt as the bridge to solve a big problem they have is that you can go get the things you want now, even though you truly can't afford it.

44:16And then you'll catch back up. And that's, we know that's a trap. It's a bridge to nowhere. You've obviously been on that bridge. You've realized what a trap it is. Now you're on the way back of building yourself and clawing yourself out of this hole that you've had. But what I worry is that we're redoing it with the wrong thing if you go take on more debt or these 0 % credit cards because they're going to give you relief valves of, oh, I can take the pressure off of myself and maybe I can relax. Maybe I can now reward myself because I paid off$20 ,000 worth of credit card. No, let's finish the drill.

44:50Because it's just you haven't finished the project and I just don't want these things to be a distraction from the ultimate celebration is when you're completely out of high interest debt and now you get to start you're on day one of your future financial you know success love it

45:07Brian Preston:your future financial future your future financial future come on now i'm good at math and at podcasting as long as you have an understanding of the english language that It lets you fill in the gaps. There you go. That's it. That's it. It's working for us. IJP1208, thank you for the question. Next question is from James K. It says, we have two paid off rental or real estate properties with tenants and we're living in our third property with money owed being$350 ,000 and at a 7.25 % rate. my question is should i sell one of the properties and be debt free i mean there's way too many things i need a spreadsheet first to make a spreadsheet guys i'm so sorry that i keep plugging but i i just can't help it because it's so it's so uh on point we have a making a millionaire episode coming out in the next month we just recently recorded it and it and it was almost this very thing hey we've got this rental property, but we have this other problem that we're trying to solve.

46:18Brian Preston:And how do we figure that out? What are the options? And we're able to walk through, okay, here are a number of different options available to you. The answer to your question, James, unfortunately is it depends. It depends on a number of factors in your unique personal situation to where, yeah, sometimes if you have a paid off property and maybe you look at, all right, I've done the math and I know that I could sell this property for X dollars. And I know that right now I'm bringing in Y dollars of rent. And when I think about, okay, Y dollars of rent relative to X dollars of home value is not a great yield.

46:56Brian Preston:Like I'm not making a ton of this money. So I have all this capital tied up and maybe it's in a house that like really ran up in 2021, 2022, 2023, but there's not a lot of juice left in there to squeeze. So it might just grow at the pace of inflation. Yeah, it could potentially make sense to sell one of those properties and then use that to satisfy debt or build towards other financial goals. Or if they're already paid for and they're already cash flowing and they're creating an income for you and they're a diversified source of revenue for you, it might make sense to keep it. It's not like absolute one way or the other.

47:34Well, also, you know, because there's so much that we don't know. What if you have a great tenant? We all hear the brochure is you get this tenant that's been in there for 10, 15 years. They're basically helping you buy this house. They give no trouble. They even make improvements. I don't know your situation because if you have one of those tenants and then you go sell this, I mean, there's a lot of questions I would have, but I also think Bo makes a great point. That's why I made the joke that I need a spreadsheet is because there's just too much. I don't know what your opportunity costs because everything you do financially is an incremental decision.

48:07This path will take you here. This path will take you there. And I think our jobs as financial advisors is that we help you go down those paths without officially going down those paths. We actually get to kind of spot check, do some stress testing, do some assessments of each one of those scenarios. And then you come out on the other side feeling like, yes, this is the ideal path to check all the boxes and do this well, because you've got a great opportunity here. I mean, you have two paid for homes. you've got tenants that sound like they're paying their rent and not causing a lot of trouble but yeah now you have a mortgage that is is pretty high so you know over seven percent that's the other thing is that you know it doesn't mean you're gonna be stuck at seven percent forever

48:49Brian Preston:there we go i was so often i feel like we see people do this they they come up with a permanent solution to a temporary problem right like selling that rental property and satisfying that debt would be a permanent solution to no longer have that rental property when in reality what if rates drop well what if you're able to refinance that seven and was it i don't know if it's seven and a quarter seven and three quarters but that like seven percent rate down to like five and a half and i've got because we know nothing so i love just coming up with nerdy little scenarios team do not clip that right there he said we know nothing but it's just it's i could add john snow to the end of that but it's um if you think about the fact of like the making a millionaire that you're referencing they lived in each one of these homes what if this individual what if james lived in this house two years ago and it had a huge one of the second rental property had a huge see that would be a cool thing too because what if you had a five hundred thousand dollar tax-free gain that was sitting out there that would probably push the needle a certain way we just don't know james we there's a lot like i said this is the beauty of being a financial advisor is that people like hey you do index funds what do you guys do for clients since you use index i'm like do you not realize how much financial planning a good financial planner actually does on scenario planning and figuring out how you come out on the other end of the best way?

50:07I mean, I get excited thinking of all the different things, but at the end of the day, James, this is one of those situations where it depends and it's the personal and personal finance.

50:17Brian Preston:And this might be a great place where it makes sense to take the relation to the next level. A lot of times when you're navigating these things, and I just don't know what I don't know. And I recognize that the decision I make can have huge implications and a very long tail. You've likely only had to make this decision one time. But if you partner with an advisory team who's helped hundreds of people make that decision and navigated and seen a number of different sides, it can be an incredibly valuable thing just to give you peace of mind and help you think about the parts of the equation maybe you had not thought about.

50:52Brian Preston:Yeah, it's good stuff. If that sounds like you, go to moneyguy.com, Click on become a client because then you can just learn more and see if that is actually something that is going to move the needle for you and be a level up for you in this time. And we'll leave the porch light on for you. Absolutely. Dylan M is up next. He says, hey, Money Guy team. Hey. Currently, I'm 25, living at home after graduating college at step seven. But if I were to move out, my savings rate would go below 25%. Should I wait to move until I can keep at that 25 % investing rate? What do you think Dylan should do? Should he move out?

51:33Beau, this is life coach Beau moment.

51:36Brian Preston:Well, here's the thing, Dylan. It's hard to answer your question definitively because both could make sense. Maybe you and mom and dad have a really good thing worked out and like, hey, I'm living with you guys and there's a benefit. I'm cutting the grass and I do the laundry or whatever. Maybe I'm paying your rent or I'm helping offset utilities and that's great and I have a high savings rate. Or you can move out and spread your wings and branch out and go live on your own and do your own thing. We've seen both of these scenarios make sense in different situations. We've seen situations where we've said, no, no, no, the kid's got to get out of the house.

52:13Brian Preston:You can't be in the house. You've got to get out. You've got to go start. You've got to be on your own. and we've seen other where it's like hey this is a great opportunity for you to really stack cash right now while you don't have to be out on your own your parents aren't providing economic out patient care they're providing a very real opportunity for you to get a leg up that might not be available to other people who don't have a similar situation you have to figure out in your circumstance considering that there are two parties involved there's the parental party and And then there is the child, not child, you're a grown man, but there's the, what's another word for child that's not child?

52:50Brian Preston:That's like an adult child. Adult child. There's a parental thing. And then there's the adult child. Because you're still the children of somebody, but you're an adult. Yeah, yeah. I just didn't want to keep calling him a kid. You're an adult child. You want to make sure that the decision to stay or to go does not adversely affect one or the other. meaning you don't want to stay in there if it's going to be detrimental to your parents' long-term financial viability because they're subsidizing your lifestyle. But also, if you going out on your own is going to cause your savings rate to drop, that's okay.

53:23Brian Preston:Most 25-year-olds aren't able to have a 25 % savings rate. That's okay. 25 should be the thing that you're working towards. You may not be able to start right there, and I think that's okay. First of all, Dylan, kudos to you because you sound like you're gainfully employed. you're investing this money if you since you said you you spot checked it at step seven that means you're loading up not only the roth ira but you're also loading up and maxing out your 401k at the employer that's well done i mean that's that's that's probably your parents are very proud of that as well but i will say i i was i was out with multiple couples and one of them was talking about their adult child they were trying to figure out if they're going to put a bike lock on the fridge so you you have to ask you know i would ask you to triage your personal situation to see our mom and dad is excited about my 25 percent as as you are and maybe they are and that's still your best scenario to be there but there's also another thing that i i think about and i don't know if this is you can call me an old old old soul for saying this i lived with roommates until I got married.

54:30I mean, because when I was in Atlanta, I had two roommates in college. I had multiple roommates. It's amazing what you can afford if you can have other people's money to bolster what you have. You know, so I would look into that as an opportunity to nothing wrong with taking on roommates and just but you have to ask yourself, what is my best version of myself in my 20s best version of myself in my 30s, 40s, 50s and beyond. And there's going to be an answer that It kind of like is a shiny stone sitting in the sand that if you do the exercise, it's going to be just you can't avoid it, and you'll know that that's the path you should take.

55:08What?

55:08Brian Preston:I'm just saying, Donald's like, nah, man, I got roommates, and they're great. They clean the house, and they buy the groceries. It's awesome. Now, look, y 'all know, as I've gotten in my 50s, I'm super sentimental. I have this conflict that I want my oldest daughter, as she graduates college, to go be super successful, live on her own. but there's another part of you like man i kind of like if you need to live at home around i mean so you might be in a great i mean i think that that's sometimes us americans we live in tennessee now and you know we're from georgia i'm jealous of people who live really close to all their relatives because there is something about and a lot of other cultures get this right with the extended families and so forth americans sometimes we we we miss on that so is the sentimental 50 something i'm like yeah i mean it'd be kind of nice being around um the the kids and the parents so but everybody's situation is different but i just want to make sure you're living your best life and not stunning yourself by staying there too long as well some good life advice there guys thank you dylan m for asking the question and i hope that helps next one is from ending I like the question mark on that name.

56:20Was there a question at the end?

56:21Brian Preston:I was debating how I was going to pronounce it as I was pronouncing it. So I'm going to go with Endin. Endin. The question says, can you apply the FU, the Financial Order of Operations, towards a business? I feel like we may be running a little bit too fat on cash, but we're hesitant to take extra distributions with several more years remaining of our business loan. What do you think? You are foo and business guys. What would you say to Endin? The foo is really a personal finance thing. I think that you are, Endin, you are running this as a CEO. You have to risk, look, risk assess the situation.

57:02I've often said entrepreneurs have this fear. I mean, I don't think it goes away ever completely.

57:09Brian Preston:Has it gone away yet? I mean, no, because y 'all, y 'all, even when I paid off my mortgage, I was like, don't worry, I still have plenty of debt out there. You know, it's one of those things where I think as a business owner, and then you think about all the employees, you think about payroll. I'm always a little nervous. It's a different mindset as a business owner than it is just for standard financial order of operations is because you not only have to think about your personal finance situation, but you have to think about the viability of the business. And you have to think about the viability for your employees.

57:38And there's just a lot of responsibilities sitting on the shoulders for business owners then I think it does make sense to have extra cash. That's not necessarily a foo thing. It's more of a, hey, as a business, I might need to keep a little more additional liquidity so that the viability of this thing can handle no matter what comes my way. Yeah, my answer would be - I guess four can be modified because we say that even for retirees, it goes to 18 to 24 months. I'm sorry.

58:07Brian Preston:No, no, no, we're on the same page. What I would say is the foo does not apply but the principles surrounding the Foo apply. Brian, will you hold the thing up for me? You guys have probably noticed the Foo, it's these nine steps, but they're sort of like, it's like three steps and three steps and three steps. And I think you can approach your business stuff kind of the same way because at the top level, at the very first, you're like really focusing on like risk management. Like, am I making sure that I don't have things working against me? So like, if you have super high interest debt and credit card debt inside your business, you got to like knock that out.

58:39Brian Preston:You got to get rid of that. You got to make sure that you're not carrying that. And then you move on to emergency reserves. Okay, well, yeah, I do want to make sure that I keep enough in my business so that I can either pay for my outstanding business loan as that note comes due, or I can satisfy payroll, or I can invest in it, those sort of things. And then once you've answered those, then it becomes, okay, what's the best use of capital? The best use of capital may be, indeed, to leave money in my business, to be reinvested in my business. It's historically why Warren Buffett says he doesn't like to pay out dividends.

59:12Brian Preston:Rather than me giving you the money to invest, I'm going to leave money in the entity so that we can reinvest. And I think that we can reinvest better than you can invest as a shareholder on your own. Well, you as a business owner are making that same decision when you decide, okay, do I leave money in the business to invest in the business or do I distribute it out to me? Or if you arrive at the conclusion, okay, I've done that and the business is great and there's still excess capital. Okay, perhaps I do need to distribute it out to me. And that would be like that bottom tranche of the financial order of operation.

59:40Brian Preston:We're thinking, okay, how do I optimize? And how do I think about that second and third level of thinking? So I think the FOO does apply in terms of concept and philosophy, but the steps are a little bit different because businesses are very, very unique and very, very different in how they operate. When I wrote Millionaire Mission, because it's really kind of the origin story of the FOO, but also at the end, the very last chapter, I talk about what I do with my own money. And one of the things I talk about in one of the closing chapters is how cash is an unbelievable wealth builder in the long term, but it's more of a step eight of the financial order of operations.

1:00:19And I think for a business owner, that kind of applies to you as well. So it ties into exactly what Bo was talking about, is that you might need to keep a little extra powder money for opportunities as well as for being nimble in your sector or whatever your business navigates. But that's why it's a step eight. You know, you don't do this until you've mastered steps one through seven. That's right.

1:00:43Brian Preston:That's great. Well, hey, thank you. And hey, how would you say it? You want to say his name, Bo? I do not. Go ahead. I don't. I dare you. You just didn't. I thought it was N-Dean. N-Dean. You just didn't put the question mark on the end. And Dean or Endin, whoever you are, thank you for the question. And I hope that that helps you think about your business and the Foo in a helpful way. You know, if you have more questions, we have moneyguy.com slash resources out there for you all the time. It's all free resources. So be sure to go take advantage of those. We made those for you because we want it to be super accessible.

1:01:17Brian Preston:Our show is super accessible. That's why we try to be everywhere you might like to watch or listen. and that's why we show up every Tuesday at 10 a.m. Central right here on YouTube answering your questions. So be sure to check out moneyguy.com slash resources and we'll see you next Tuesday. I thought, I'll say I have one closing thing is that, you know, we went on Ice Coffee Hour. The episode dropped on Sunday. Wowzer. Yeah. I mean, holy cow. I mean, I didn't think that many people were interested in what we had to say, but they are. We got to talk about a lot of stuff that we don't get to talk about here, what I thought was super fun and super interesting.

1:01:52So I just got a text right before I went on recording from a childhood friend who drives, you know, works for UPS. And he was like, I about drove off the side of the road when I heard y 'all's voices on a podcast I'd put on. So that's what, so go check it out. I know he's talking about iced coffee hour and I'm like, shame on him that he's not listening to our stuff every week anyway. But I think it's, I love getting shout outs from, you know, childhood friends and others who might've come across the show. and you guys have been, I'm assuming you watching our live stream have also been the ones writing all the positive comments on the show.

1:02:25Thank you. I mean, it's really cool to kind of see the visit actually turn out as well as it did. And we appreciate that Graham and Jack gave us the opportunity. They reached out to us and said, hey, do y 'all want to come on the show? Yeah, we'd love to have access to your 1.3 million subscribers to show what we do here with the Financial Order of Operations. So thanks Thanks for all the positive comments and thanks for just always supporting us. Because I think you guys can tell where our heart is, is that we really are trying to, with the financial order of operations, with the abundance cycle, is we want people to be successful with their money.

1:03:01There really is a better way to do money as Bo even started the show today. So use our system. Take advantage of all of our free stuff. Go to moneyguy.com slash resources. Lean into the free stuff. Maximize yourself. and then that, of course, creates the graduation point of the abundance cycle of becoming a client. We'll leave the porch light on. I'm your host, Brian Preston, Mr. Bo Hanson. For Rebe and the rest of the content team, Money Guy, out.

1:03:25Brian 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. A Bound 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.

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