How Much Do You ACTUALLY Need To Retire? (Big Announcement! )

21:07Brian Preston:I heard a deep breath again. That means he's got something. I have a question. Yeah. See, for those behind the scenes here, we're working on something. And we got Ken running around. Is that a gimel? Is that what that's called? That is so fancy. I was like, have you seen? Look, you're talking about things that they can't see. That's not nice. But it's going to eventually work its way. I'm assuming this video and these pictures. And realize I'm like the squirrel. If there's something going on behind the scenes. I'm like a dog from Up where there's a squirrel. One of our amazing video team members is shooting some B-roll for all the industry people right now.

21:41Because we're going to do websites and other cool stuff. But it's fascinating for me to watch Ken walking around with this contraption. So when I watch all my Disney videos and they're in the parks, like recording live streams and so forth, is that the type of contraption they're walking around with? Probably, yeah. Yeah. That's legit. But I mean, it'd be a little weird. But, you know, if you're in a theme park with that. But it's pretty cool. Yeah. I'm sorry. Carry on. I just didn't want everybody to wonder, why is Brian's eyes? They seem to be following. Why does he seem so distracted?

22:15Brian Preston:We just assumed that. That's just normal. I was going to say, you're often distracted. It's fine. It's all fine. It's really cool. Make sure you get all the team, Ken. Because I know they love all the behind the scenes. People love being on camera. Right? They're all offended. They're like, ah! I've been trying to get cameras on the crew for years. They don't want it. I think it'd be hilarious. Okay, never mind. We'll keep going. Chels904 has a question for you. Ready for it? Yep. How would you think through buying down your interest rate? Would you base it off how long it takes to get that money back?

22:52This is a great question. I have friends ask this question because all of a sudden like, oh, I could do this thing, buy down my interest rate when I'm buying a house. What do you think about this? It's a math equation.

23:01Brian Preston:I, okay, let's see how good our production team is. Here we go. And if I'm making this up, my bad production team. I think we have a resource out on moneyguy.com slash resources about how to know when I should refinance, right? I think that's a thing that we have, a resource out there. And while this question isn't specifically around refinancing, it's the same sort of math equation. The thing you want to do is, okay, to buy down points is going to have some sort of economic cost. It's going to cost me$1 ,000,$2 ,000,$3 ,000, whatever that number is. Well, when I pay that economic cost, there's some benefit I'm going to get.

23:42Brian Preston:The monthly payment that I'm going to have will be this much less or X amount less because of the interest savings. Well, then the question becomes, how many months of that interest savings does it take for me to recoup the cost that I paid to buy those points down? well, if it seems likely that you're going to be in the house longer than that amount of time, I think buying down points makes a lot of sense. If it seems likely that you're not going to be in the house that long, or maybe it's going to take 15 years to recoup the cost, perhaps that is not something that makes sense for you to front in because you won't be in the house long enough to receive the benefit.

24:19Well, you want it to be, there's a balance there because it's not just how long you'll be in the house. You have to ask yourself, is the market going to adjust enough to where I could do like a zero cost refinance. So that's why I would love for this to be a short turnaround time. This needs to think less than three to five years. I mean, three to four. It's really a no brainer when this, I've seen opportunities where you can buy it down or do a refinance where you're like, oh, I could recoup this in less than three years. It's a much easier decision because three years will go by in a blink of an eye.

24:51If you have to get beyond five years, I'm like, man, there's a lot of things that could happen beyond five years with interest rates and so forth. So it's not as compelling. There's one other little sweetener. Now, most of us take standard deduction these days. But if you do itemize or you're close to itemizing, realize if you're buying down the rate on the purchase of the house that you're moving into, you can immediately deduct that in the year of purchase. If you're refinancing, that has to be amortized over the length of the loan. That's just another little tidbit. It doesn't really come into play as much as it used to because the standard deduction is so high for the majority of Americans now.

25:34Did we answer it? Did we cover it all?

25:35Brian Preston:I think so. I think so. Chelsea 904, thank you for the question. You want to hear a crazy thing? I do. I have not fact-checked this. So this could be totally wrong, and I'm saying it on air, out loud, but I read it in the comments, and if it's in the comments, it's got to be true. Do you know why the gimbal was invented? Oh, gosh. This is all the camera. All of my editors are like, they're the real guys that know the technology. When and why? It's because when you walk, you bounce. No, no. There was a specific thing that took place that was the origination of being invented. And I'm basing this purely off of the comments that I just read from you guys.

26:11We have a crack squad that will fact check it really quick.

26:14Brian Preston:It was invented to follow Rocky up the stairs on the running scene. No way. Ken's giving a thumbs up. Is that true? We got a thumbs up from Ken. Look at that. That's pretty cool. So did Sylvester Stallone develop this himself? No, I'm kidding. But, you know, he did. That movie, you know, if you look back on, you know, they kind of guerrilla ambush styled a lot of the live scenes. I mean, the scenes, right? They were out in the crowds and running up. Like, they didn't get permission to do all that, I don't think. Isn't that true? They did not get permission. Meanwhile, Philadelphia now gets so much.

26:49Like, when I went, I ran up the stairs. Who didn't? Raise your hand if you've run up those stairs like Rocky. And think about the city probably didn't even want them to do that, but they asked for forgiveness, not for permission on that. And I think they came out on top, honestly. How iconic. Everybody. Well done, Sla. Not that he needed my approval.

27:10Brian Preston:If people want to know if this is a live stream, oh, yeah, it's a live stream. If you want to know if we read the comments, oh, yeah, we read the comments. Anything goes here, including financial advice. There's lots of that, too. Some of that goes, too. Cody B has a question for you guys. It says, hey, Money Guy team, how does money owed to others fit into the foo? I just graduated college and took a loan from my parents to relocate to a new job. Should I prioritize the loan or focus on step four? I have no other debt. Oh, man. I'd also be curious, Cody, what interest rate did they put on this?

27:44Did y 'all even talk about that or is law of the consideration here and they're really not even counting on you to pay them back?

27:50Brian Preston:That's a great, Cody, if you can give us that information, what are the terms of the loan? That'd be helpful. I think, I think it's interesting. So often we want baby birds to launch. We think that it's great. We want you to be able to stand on your own two feet. We want you to be able to fly. We want you to be able to get out of the nest. We want you to be able to successfully do that kind of stuff. But some people, they have this desire so much to be independent that they want to be independent almost at the cost of like realistically recognizing what their circumstances are. And this is what I mean.

28:24Brian Preston:Let's assume that Cody's parents are like independently wealthy. And this was a mechanism by which they were able to help him. And hey, we're not just going to do it for you, but we're going to give you this money to help you get, you know, get on your two feet. And we want you to pay us back, but we can be super flexible in terms and all that kind of stuff. If that's the case, I think Cody would be well-served to still prioritize his other financial matters. Do I have my deductible covered? Am I getting my employer a match? Have I fully funded my emergency fund? Am I saving for the future? And am I factoring in this debt as part of the financial order of operations?

28:55Brian Preston:Now, that's one side of it. On the other side, if your parents are not in a fantastic financial situation and they really put themselves in a position that is less than ideal in order to do this, then I think the metrics are different. I think the priority has to be different. So I think a little bit is behind where are your parents in terms of how they loaned you the money and where are you in your financial circumstances to be able to prioritize those two things. I think... 0 % no terms, pay it back when I can. Okay. See, I'm just thinking, would I rather you do that instead of fund your Roth IRA, instead of have an emergency fund, instead of pay high interest debt?

29:34This is a teachable moment here. Look, I detailed in Millionaire Mission that once I got out into the adult life, I got my butt kicked a little bit. And, you know, the math wasn't mathing anymore in adulthood once he took into account car payments, rent, and everything else. And I ended up running up some credit card debt that I just got in a situation where I had to borrow several hundred dollars from my parents. I'm saying, look, several hundred dollars doesn't sound like a lot. But, you know, if you've been, I remember driving to work because I had like a 35, you know, minute commute. And you would hear on the radio station that they were paying bills or giving$1 ,000.

30:11And I was like, that literally would change my life. $1 ,000 would change my life. So that few hundred dollars that my parents gave me changed my life when I called them and had to do that hat in hand moment that I wasn't doing good. Now, I made the promise that I wasn't going to get myself in that situation. and I paid them back. Now, they told me I didn't have to pay them back, but I felt like it was a principled thing. If it's less than$1 ,000, I think you pay it back. You prioritize it because the opportunity cost on your future self is just not that big for less than$1 ,000. It's just a principled thing.

30:44Pay your parents back very quickly.

30:47Brian Preston:$1 ,000 on a wealth multiplier for a 20-year-old is$88 ,000. If it's over$1 ,000, I still want you to pay it back within 18 months. Really? I just do because I think that it's not – You have to be serious, and I want you to feel the weight when you have to ask for help. You should feel that so that you can also let them know that you recognize that something's got to change, and you're going to do it. Because, look, if you're going to stand on your own feet, stand on your own feet. Wow. And that's the way I feel about it. Shoot. And I think that it will be because that's where I consider that the inception point that I actually started living like a financial mutant when I got so down.

31:28And, you know, I just, I was like, I'm going to be different now.

31:31Brian Preston:Yeah, but bring the question back up. Again, didn't Cody say this was to help pay for school? Isn't that what the law was? It was to relocate for a new job. So he just graduated. He had to relocate. They gave him some money to relocate. So I think it's probably going to be less than$3 ,000. Yeah, yeah. I'd be curious to know that. Look, I don't fully. It's okay if we disagree on this. I don't fully disagree. Here's what's not okay, Cody. okay, I'm borrowing money from mom and pop, but then I'm still going to like go out to eat and I'm still going to casually live my life and I'm going to do all this other stuff.

32:00Brian Preston:I think you're missing the plot there. But the alternatives are I'm a young person. I'm trying to fund my emergency fund. I'm trying to build up my Roth IRA. I'm using that money for other like well-intended purposes. Oh man, I don't. But can I kind of tell you, because I've had people I've let borrow money from me and you know, and it's just, I'm just going to tell you. But this is mom and dad. I know. Human nature, though. Others is a different answer. But my damn. Human nature. If you don't want them judging your life, get the debt paid off. It's because, you know, you kind of just gave the answer to a degree, is that you have money outstanding with anybody.

32:37It doesn't even have to be your parents. If they go borrow six, seven grand, and then you find out that they're still going on Royal Caribbean cruises and doing all kinds of things, you're like, why did they borrow money from me if they can make these lifestyle decisions? It shows me they're not serious about fixing their situation. You have to show that you're a different, altered person, and I think you want to get that cloud over you, so pay it off. Somebody just commented, just talk to mom and dad. It's kind of true. What are their take on it, even if they're trying to be nice, but really you know there's going to come a point where they're going to be like, like you're saying, oh, he's spending on this.

33:15He should be paying us back. You kind of have to know your family.

33:18Brian Preston:$400 a month paying back mom and dad over a year versus$400 in a Roth. Hey, I'm going to pay you guys$50 a month. I'm going to pay you$100. If the parents didn't want it to be a loan, they just said, hey, I'll help pay for your relocation. No, but see, then that's different. That is enabling. When it's a loan, it's a 0%. But they could have said that. And they said that is kind of what they did. But is it not enabling if you never have to pay it back? I love it with Brian. Pay it back when you can. Is that not a take? I don't know. I don't know. But look, I'm very happy with my 23-year-old, how she's doing.

33:53But I think a lot of – I did make her pay half of her first car. Sure. I felt like we've had lots of conversations, especially since she was 15. You have to subject – and look, I didn't want to be – because the way I grew up is different than where my daughter grew up. And you have to – if you grow up with some form of abundance, you still need some type of scarcity in your life so you understand how money works. Otherwise, you end up with these false, weird things. How many rich kids who got just pampered, and then they get the shock and awe, and they realize their best life was with their parents?

34:27That's not good either. I don't disagree with that. You don't know how to enjoy work. You don't know how to be productive. You don't even know how hard it is to build wealth because you've had shock absorbers your whole life. See, I think that even just your$50 or$100 a month could go a long way. Yeah, that's what I'm saying. But I'm fine with that.

34:44Brian Preston:Brian's saying, oh, you've got to pay this off in 12 months. Well, I don't know how much. I wish he'd have told us how much because if it's$1 ,500, then I would tell you to prioritize it because the opportunity cost is just, it's big. I know if you put, especially if he's 88 times over, but also if it changes your behavior, there's going to be more of a multiplier effect from the change behavior versus just the paying back. I just think if you have favorable loan terms, there's nothing wrong with - Okay, you heard it from Bo. Taking advantage. Don't lend your kids money. Take them predatory shark rates so you get your money back faster.

35:21Otherwise, just give it to them as a gift. Hmm. Let us know what you think in the comments. That was a spicy one. Agree, disagree, want to fight? Maybe we fought a little bit. Fun. I like it. Look, as the only one that has an adult child, I think I get a little more leeway.

35:38Brian Preston:Oh, my goodness. I so hope that she needs to borrow money at some point. And she's like, hey, pop, I need to borrow some money. Okay, baby, here you go. and they say, hey, Pop, I just worked this year. I really want to fund my Roth, but I think I'm going to pay you back instead. You'd be like, oh, yeah, yeah, yeah. Pay up. No, put the money in that Roth. Zach, look at him. He knows I'm right. No, no, no, no, anything. So yeah, there's some nuance here because it is true. Funding your Roth and going out to eat a bunch is totally different. Very, yeah, it all depends on the behavior. It all depends on it.

36:09Brian Preston:Yeah, put a pole up. Thinking as a young person, you don't want that hanging over your head though. That's where I'm like maybe I'm empathizing with Brian a little bit. But anyway. If you chew your kids' food, it makes it easier to digest. I'm thinking of a person. I'm just telling you. Who was unbelievably talented. He's a person from our past. But he was always so unwilling. Because his parents were successful, he always felt like he had to do it on his own. And he was unwilling to like take us. Like he was unwilling to like, I'm going to say take advantage of. That's the wrong word to use. that he was unwilling to accept the fact that he had an opportunity not available to others.

36:43Brian Preston:And that's what I'm saying here. No, the mistake in that situation, and this is why you got to have conversations with your kids when they're in the house. Don't wait until they're adults. We also know other successful families. If you don't start having financial conversations with your kids, they don't know how money works. Agreed. I agree with you on that. This person didn't. There's two people. I don't, because you and I have two people that we've had people share things with us. The first one, he should have used the family wealth to help him take his business to the next level. But he was so just in the shadow of the success of the family that he was like, I'm going to do everything on my own to a detriment.

37:22Look, I never had those opportunities, so I was a little jealous that he could have amplified and it hurt the business. The other one, we know he didn't have good conversations with his children and he sheltered them and pampered them. And then as they got to be adults, now they're flopping in the wind on how the world works. And he's like, if I'd have just had more conversations, I wouldn't be having this difficulty that I'm having right now. Because when you get spouses involved, when your kids get old and they get married, it gets even more complicated. So you better go ahead and start planting those seeds so that they can sprout and your kids actually know how money works.

38:00Brian Preston:I do agree with that. Communication to the kids. Don't chew your kids' food. Let them learn to eat and digest the food themselves. And even maybe hunt and find the food or gather the food. You know, my daughter's not there yet, but I'm not even just planning on her paying for half. I'm going third to third. I'm going to make her have a car payment. I'm going third to third to third. Yeah, I told you this. I've told you this. This is a car payment. I think he has said that before. Yeah. I don't think it's crazy. If you want your keys this month, you better go babysit or go to your job. Whatever your thing is, you better be making money.

38:31Brian Preston:You got to make that car payment. I'm 100 % doing that. I can't wait to watch. Y 'all go ahead and notate this date. But him saying that is the same as you being like, they better be paying back that loan. That's literally the same. I know. I'm consistent at least. No, you're not. You just said the opposite. You're saying you don't like Bo's payment plan idea. That's why I like the idea of having the car pay. Am I wrong? No, I'm just saying we'll see if Bo does this. He's also, but look, I will say his girls share a room, which I love that. My girls are still in the same bed. They're really just roughing it.

39:02Brian Preston:Not out of necessity, out of like, that's what me and mom wanted to do. We better move on. Everybody's going to be like, is this really a seven minute question? Hey, it was a good conversation. I liked it. It was interesting. But with that, we are going to move on to our It Does Not Depend Rapid Fire segment, Moneyverse style. All of the rapid fire questions have been pulled from our Moneyverse Discord server. So thank you for joining the server, for being active, answering a question. Cody screwed things up there. Yeah, he did. No more questions from Cody. Thanks, Cody. Remember, during this rapid fire segment, you cannot say the words.

39:38It depends. And you only have a combined 30 seconds to give your answer. At the end, we'll revisit anything you feel really needed more explanation. But for now, we'll jump right into rapid fire with 30 seconds on the clock. First question. At what income or net worth do permanent insurance tax strategies become viable? If they do at all.

40:02Brian Preston:it's net worths above the estate tax limit. So it's going to be well above$30 million for a household and only in the circumstance where liquidity does not exist. Meaning it's a closely held business, closely held real estate, and you need the insurance for liquidity for estate taxes. Yeah. I mean, it's going to be a small subsect of the population, probably less than 0.1%. And I would argue that really good planning can even replace the need for permanent insurance if you plan well early at those wealth levels. Next up, can you roll over the Roth portion of a Roth 401k into a Roth IRA and the traditional portion employer match into a solo 401k to avoid pro rata rules?

40:46Yeah, I mean, you can do all those things. As a matter of fact, a solo 401k is a great workaround, assuming you have the income source that is independent so that you can start doing backdoor Roth conversions.

40:57Brian Preston:That's a great way to get around losing the ability to do backdoors. And you just want to make sure when you call your custodian to those rollovers, you're very explicit about, hey, I want the traditional to go into this account and the Roth to go in this account. Because if you screw it up and it all goes in the Roth account, you're going to get a really ugly 1099 at the end of the year and a really nasty tax. And don't sleep on it if it gets over 250 ,000. You got to follow 5 ,500. That was close. Next question. For saving for children, Trump account, 529, UTMA, or parents brokerage with it earmarked for children.

41:29Which one would you choose? Well, I mean, I think, look, they all have different purposes, and I'm going to do this really quick. If you, I don't care what your politics are, if you've got a baby in the house and you're not doing a Trump account, even if you've got a little kid because of what Michael Dell and some of the other wealthy people have added, these things are incredible.

41:46Brian Preston:Trump for the free money. If you're saving for college, 529. Any other purpose? I think UTMAs are a great solution for kids so they can be unconstrained. First car, first time home, all that kind of stuff. I would go in that order. That's what we call an alley-oop. I like that you got that in the 30 seconds. Nicely done. How do you know when your savings habits are moving into financial miser territory and how do you walk yourself back from that? Is there a point where you're doing too much? Yes. It's when you're having an adverse effect on the ones that you love. When you and your spouse, you and your kid, you and other people are at odds because of finances and it's not because of scarcity, it's because of behavior and because of decisions.

42:29Brian Preston:So one of the things you ought to go back to is what's the why? Is it a big pile of money or is it to use my money as a tool? Yeah, go use moneyguy.com slash resources. We have the know your number calculator now that you can actually see if you're ahead of the curve, behind the curve. Use the analytics from that and then also maximize the family memories so you don't have regrets in the future. Fantastic. Next question. When checking if our balances are healthy against MoneyGuy age milestones, for example, 40 needs three times your income, can we include the pension's net present value?

43:07He's thinking about this one. He wants to say it. Man, I want to say the D word. He wants to say it. Oh, man. Pass.

43:18Brian Preston:Personal finance is personal. If you have a really easy way and you get a statement that says, this is what the value is worth, if you were to take the lump sum today, potentially you can use that. I think in most circumstances, though, you would not use the pension, and you'd have to do a personal analysis to determine where you are. Put an asterisk on that one. Making a note that Brian passed on that question. All right. Next rapid-fire question. At the risk of sounding foo-ish, uh-oh, would it make sense to fund a 529 before hitting 25 % retirement savings if there is a significant tax benefit?

43:52For example, in Indiana, a 20 % tax credit on contributions up to$7 ,500.

43:57Brian Preston:You need to go to moneyguide.com slash resources and do our know your number tool to see if you are ahead of the curve, behind the curve, or right on the curve. Because if you're behind the curve, I would argue that getting the foo out of order is foolish because no matter how good that tax benefit is. It doesn't matter if you don't have enough money for retirement. You know what happens if you do the foo out of order? It just doesn't work. So definitely take Bo up on the offer. Go play with the know your number calculator and you'll know right where you are. Moneyguy.com slash resources to get the calculator.

44:31Next question. Who is more stressed? Treading water Bo or rapid fire Brian?

44:38I think they're probably pretty balanced. It's just that the only difference is I screw this up. There's no peril on my life. Whereas Bo, he's giving it all he's got. So I would say that because what was the descriptor that they put in there?

44:52Brian Preston:Who is more stressed? Brian is more stressed. But here's why. He's got 30 seconds to answer these rapid fire questions. When I tread water, I tread water for 13 minutes and 6 seconds. So I'm just living life. Well said. Alright, back to something first. So there's the bow swimming picture. Somebody turned it into, was it spaghetti or pasta that they had him swimming in? Macaroni and cheese, I think. Mashed potatoes. Mashed potatoes. That's what it was. I am going to take another picture in the pool that's going to be me just like sunglasses on, hanging out to resend you guys so we get a new picture and set it out.

45:26By the way, my wife and I did the treading water challenge. I did 50 minutes. She did an hour.

45:33Brian Preston:An hour of treading water? My wife did an hour. I think she could have done more. That's... impressive. Wild. I stopped at 13 minutes and 6 seconds. I had more in the tank. I stopped there. Y 'all see that picture? Does that look like you guys got more in the tank? You can't say that if you only went That looks like a guy. This is where his muscles By the way, just the comment section we know Bo has muscles and they don't float. That's the whole comedy here. He's got his big beautiful muscles that make him look like a weight in the water. Okay, we're still in the rapid fire segment. I just remembered.

46:04We got a couple more. 30 seconds back on the clock. I am ahead of the curve and in the messy middle. What are some reasonable bedazzling ideas in this phase of life? Because, Ryan, you always say bedazzle your basic life in the messy middle. Don't wait to make memories.

46:19Brian Preston:We've done the thing where we went to Disney and spent like a gazillion dollars. We've also done the thing where we went to a local state park here in Tennessee. Super inexpensive to say. Beautiful. Tons of trails. Tons of stuff. The kids absolutely love that. So there are things in your states you can do that are easy. Yeah, I would look at, like, look. national parks, they're a lot of fun. I think some of the roadshow museums that you can drive within a few hours of your house to go see things, because the road trip can be just as much fun as the actual place you're going to. Love it. Last but not least, when does arbitrage not make sense?

46:54Like a 0 % APR for 60 months is such a good deal for a new car rather than getting the same car that is two years old that is cheaper, but percentage rates are so expensive and it makes less sense from a warranty and powertrain perspective.

47:13Brian Preston:Get the 0 % for 60 months and just pay it off in 36, right? Like that's the answer I would give. Just because you have the opportunity to finance a low interest rate and that's available, if that's the better deal for the car, do it, but just pay it off in 36 months. The interest rate's just one of the elements of this big calculation here. The big thing is making sure you're not buying a car bigger than what you can afford based on your income and payoff period. That's what the 36 months keeps you honest in that aspect. 20 % down also. Did we answer that? Was that the right question we were answering?

47:46Brian Preston:We answered that question, right? You can hit the asterisk on that and we can look at it. Yeah. First up, though, we are now going to go into our maybe it does depend segment where we get to say the nuance. You did on the one that you passed on. We're going to read that one again. It says, when checking if our balances are healthy against money age milestones, like needing three times your income at 40, can we include pensions, our pensions net present value? And you wanted to say it depends so bad. Well, I like Bo's answer in the fact that you could, because a lot of sites do let you see if it has a rollover provision, then yeah, you can count that money as it.

48:23What I worry is when it's just a promise for the future, you can get yourself into some problems there. And that's where the It Depends comes into. Is this something that the Pension Benefit Guarantee Corporation is also going to ensure? Because really the way retirement comes when you get closer to retirement is what's the actual living expenses that I'm trying to replace. It's just when you're younger, you're using income as a threshold just because you're so many decades from retirement that the numbers can just get wild from a planning perspective.

48:56Brian Preston:Let me share like a math crime that's real easy for people to do. Say you're employed and you work with a pension. It's like, hey, I get 2 % of my highest three years for every year that I work. So if I work for 30 years and I assume that my income is this, my pension benefit is going to be X dollars. Well, if I take that pension benefited X dollar starting at age 55 or 65, and I calculate the net present value of that income stream based on my life expectancy all the way out until today, I have overstated what I've actually accumulated up to this point. Because one of the things that was dependent upon that is I got to work for 30 years.

49:32Brian Preston:I got to have my income increased. I got to do all these things. That is not an accurate representation of where you are today. So if you're using net present value based on some future working, future earnings record, I'd argue you're doing that wrong. We see people screw this up with Social Security all the time. You go out and pull your Social Security statement, and that's the number it's giving you is it assumes that you work until full retirement age. If you're someone who's going to leave at 50, 52, 55, you better account for in Social Security, you're going to have goose eggs on all those years.

50:01Brian Preston:Your benefit will not be the same. Don't miss out on that. All right. Do you feel like you've said what you need to say on that one? Yeah. Wonderful. The last one about the arbitrage. We talked about the car specifically. The question, I kind of felt like, and team, you can tell me if I'm wrong, there was more like, is this a general rule on when arbitrage makes sense? Because you could do this on other things besides cars. It says, when does arbitrage not make sense? Like a 0 % APR for 60 months is such a good deal for a new car rather than getting the same car that is two years old, that is cheaper, but the percentage rates are so expensive and makes less sense from a warranty and powertrain perspective.

50:45But you could run the math both ways. Tell me the difference in the purchase price.

50:49Brian Preston:Knowing nothing and not knowing how much depreciation happened in those two years, the brand new car at 0 % sounds way better. Yeah, you just paid off in three years. You just paid off in three years. Like that sounds... But you still got to come up with the 20%. All the rules are designed. Look, when we set rules, it's to try to give you some boundaries so that you don't just spend like every other American in the world does. It's just that they buy these ego purchases with the vehicle and that we try to create boundaries so that you're not just left with nothing. It's the same reason for housing because we do these things so hopefully you can still save and invest for the future and not have regrets.

51:28So your 50-year-old version of yourself looks at you and goes, well done, 20-something. well done 30 something that that's because there's so many distractions and cars are a big one most kids when they graduate college i mean i think about all my friends that have paid for cars and then they immediately get their first paycheck like you know what let's go let's go upgrade this this whip so that we can impress people who really don't care i'm always amazed and we've done tons

51:53Brian Preston:of content on this oftentimes even though the conventional wisdom has always been buy use buy use buy use buy use a lot of time it makes sense to buy new a lot of time it is more economic economically viable, especially depending on the way that you utilize automobiles, to buy new over buying used. And so every time you go to buy, I would never default to one answer. Oh, I'm only going to buy a three-year-old car. I'm only going to do this. I'm only going to do this. I'm only going to do this. Or I'm only going to buy new. I'm only going to, you have to do the assessment every time. But if all you're saying is that the two-year-old car is cheaper, not knowing what that delta is, or only being cheaper is not reason enough to make you lean towards buying used.

52:29I think even that depends. Because I look at my own life, I didn't really get to buy a new car until I think I was right at 30. Everything else was secondhand cars for me and my wife. And I think those were good decisions. So I think you have to do the math. This is definitely not a rapid fire. It definitely depends on your personal financial situation. The biggest thing is keep your ego in check. Because cars are one of those things where a lot of people now... Because look, we have seen situations, Toyota and Honda specifically, To where, yes, you go look at it and you say, hey, a used Honda seems like it's only like$2 ,000,$3 ,000 less than what I can, as a good negotiator, can go buy a new one.

53:10Get a brand new one for it. Then, yeah, then take that into account. But don't use this to say, this is why I have to go load up and get my family a brand new Suburban versus maybe a used vehicle would be much, much better than that.

53:25Brian Preston:Yeah, and those big SUVs like that, oftentimes buying used, you can get a much better deal because appreciation is so good. It definitely depends. There are unique circumstances. Depends. You heard it here first. Thank you for expounding. That concludes our Rapid Fire segment. Thanks, everybody, for playing. It was fun. All right, we are going to do another question from Tom. Remember that time we got in a fight over a question way back when we started that one? That happened a couple times today. why is this thing it's like i have an invisible ink okay let's go ahead and hit us up with tom okay i got it working again he says i look forward to this every week so thanks for that first of all awesome how does one approach a backdoor roth ira when their income increases and how does that work with pre-existing roth ira funds i pre-ordered the book last week i love it hey you like sandwich two compliments sandwiches question it's a compliment sandwich obviously work because Here we are talking to Tom.

54:21But what do you have to say to Tom?

54:22Brian Preston:Well, let me answer your question in segments. How does the backdoor Roth affect your current Roth dollars? It doesn't, which is a great thing. There's no, what you have going on currently Rothrise has no bearing or impact on what goes on if you're going to do the backdoor Roth. What you have to be worried about the backdoor Roth is any of the other IRAs that you have outside of a Roth IRA and outside of an inherited IRA. Those are the two that don't matter. The SEP IRAs, the simple IRAs. The rollover IRAs, rollover IRAs, any of those, those are the ones that factor in. And if you have those type of accounts and you try to do a backdoor Roth, you're going to recognize that when you go through the form 8606, it actually becomes a taxable conversion based on the pro rata rule.

55:04Brian Preston:So you have to do some account movement, account manipulation. You got to get all of those IRA assets into some sort of a risk of qualified plan, a 401k, 403b, 457, some type of account that you can roll that into so that you have zero dollars in outside IRA assets. And once you do that, now you have the right account structure to be able to start doing the backdoor Roth. Do we have, goodness gracious, let's see how good our team is. I think we have a resource flow chart about the backdoor Roth. Do we have that? That's probably, I think you're getting that confused. Is that with the, do we have a backdoor flow chart or is that just on what to do with an hour of, you know, a 401k at your old employer.

55:46Brian Preston:We do have the, what do you do with a 401k? Yeah, we definitely have a downloadable what to do with your 401k. I'm not sure about the Backdoor Roth. It may have been in a show. It may have been a slide. It may have been an illustration in a show. I think it was in a show a while ago, to be honest. But, man. You are really, you're on the deep cuts today. Right? You're like, remember that one thing we did seven years ago? I feel like this is Bo's way of getting back at the team because they keep showing the the HEM swimming pitcher. So he's like, let's see how deep they can go on these resources.

56:16We found it. It's Bo swimming. There's your flow chart. That's what they said. Oh yeah.

56:21Brian Preston:Flow this, Bo. There you go, Bo. There's your flow chart. Take that.

56:27All right. I don't know if we're going to be able to find that one, but I think it's in a show. So maybe if you search Backdoor Roth on our website, it might point you in the right directions. All of us, if you're wondering, if there's ever any little tension under the surface, We have a great time coming to work. But a few weeks ago, we had hilarious videos. And our editors, I felt like, broke the, is it the fourth wall, fifth wall?

56:48Brian Preston:Yeah. Because we were like, hey, they're going to cut that out. And then you saw it did not. They did a hilarious thing with Donkey. Look at the flow chart. Oh, that's a mega backdoor. The team is like, hold my koozie. I like that. Hold my koozie. Our team is so legit. Yeah. So should you use? I think it's the right thing. Okay. It's close. It's close. It's close. We wouldn't give you three points like if we were playing horseshoes. This is definitely, we'd have to measure the horseshoes. Should you use a mega backdoor Roth? Yeah. We're measuring. It's not even a leaner. We're measuring right now.

57:25Brian Preston:You had the right words. There were some good words in there that were the same. But no, this was not it. This is a good flow chart, though. Well, if you wondered when you should use a mega backdoor Roth, you can pause and look at that chart. But one of the things that's great, and this is worth noting. It's just added value. Out on our website, if you go to moneyguy.com, our search function has gotten so good that if you do have questions about Backdoor Roth, you can literally type that into the search, and all the Backdoor Roth stuff will just come rushing up to you. So you can kind of go do your own investigation.

57:56Brian Preston:How many hours, days, weeks, months did you and our team, Ruby, spend making sure it works that way? A lot. A lot. There's a lot of content to go through. So we're always iterating and trying to make it more findable for you on moneyguy.com. So always use it as a resource because we are actively making it better for you for this reason. As the old guy on the panel here, I notice in our comment section, like whenever we have reacts, everybody tries to figure out the age of the editors because they're like, oh, that was. So, Kim, what generation are you? We're one Z. Haley, what are you? One millennial.

58:35Millennial, okay. Josh, what are you? Do you have two editing on them? Or is it because the others? Millennial.

58:41Brian Preston:Okay. Three millennials and a Z. Is that right? Okay. All right. Now everybody knows. Z, you're all better for it. Now you know. I love Brian. He's like, I'm going to spill all the tea. Well, I like it because the comments are so good when people, because they know, they give the proper credit. I mean, because the team, the editors do make, sometimes I wonder how would they go do with that? They typically create some pretty awesomeness. They're wild. We make it very fun. Even if we're the butt of the joke. Sometimes. We just keep it fun. Remember I said self-deprecation is a good thing. I was literally about to call back.

59:16You said you wanted that. So we're doing it here at The Money Guy.

59:20Brian Preston:I don't remember the exact quote. What was the exact quote? If you're not self-deprecating, you're not a good time or something like that. Yeah, something like that. Well, you heard it here first. Michael Scott. Thank you to everybody who asked a question today, both in the YouTube chat and in the Moneyverse Discord channel. We really, really appreciate hearing from you. And you are really part of the show. You are making this content with us when you ask these questions. So thank you so much for doing that. We will be back next Tuesday at 10 a.m. Central, live streaming, answering your questions some more.

59:48And until then, make sure you check out that moneyguy.com that we are constantly iterating on. Moneyguy.com slash resources is particularly exciting today because we have a brand new know your number tool. go check out your retirement calculator, your retirement number rather. And remember, instead of continuing to make this a paid course and profiting off of it, we made it free because we're just crazy like that. And we want you to have access to it. So go check it out, moneyguy.com slash resources. I felt like we just loaded it up. Free stuff everywhere. Make sure you get in there, get that newsletter as well.

1:00:25Cause I love watching that hit the inbox every week on Saturday morning. I'm your host, Brian, joined by Mr. Bo Reby and the rest of the content team. The Money Guy Show, out. 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.

1:00:57The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss.