The Rules of Retirement Have Changed (Here’s How To Prepare)

22:00It's okay to be in survival mode. It's a really sweet time, the messy middle to be in survival mode. What you wanna do is the best you can. One foot in front of the other. Okay, hey, I'm not running up credit card debt. I'm not making boneheaded decisions. I'm still saving. I'm still building. I don't have it all figured out. I don't know all of the answers, but I know the next best thing. And if you can just keep from a financial perspective, just keep doing the next best thing, you'll be amazed where you start your 30s and where you end your 30s or where you start the messy middle where you in the messy middle can look very very different if you can just stay consistent one foot in front of the other i've just got a lot of emails from clients and friends and colleagues this way just like how hard life hey i wasn't really planning on this and this thing happened i blinked and i've never had credit card debt in my entire life and now i've got twenty eight thousand dollars of credit card debt just because this is this life happens yeah man

22:49Rebie:It's not ideal, but it happens. The middle is messy. That's okay. You're not alone. Keep doing the next best thing. Yes. Well said. Well said. Thank you for the question, Andy Rue, doing the foo. Next question is from TheBoss81. Hey, MoneyGuyTeam. When upgrading to our second home, we plan to buy with 5 % down, then sell our starter home and immediately recast to hit 20 % down and eliminate PMI. Is this a good strategy? Should we be pulling up some money guy home buying rules potentially too? I feel like, are they getting too cute with it? I don't know. I want to know what you have to say before I say anything.

23:26It's not the strategy because this is what we say. When it's time to buy a home, your first home, we want you to follow 3-5-25. You put 3 % down on the house. You want to make sure you can live in it for at least five years. and you don't want the total housing cost to exceed 25 % of your monthly gross pay. Now, your question said this. Bring the question back up for me, guys. You said, hey, we're leaving our first home. We're going into our second. But it sounds like what you're doing is you're going to buy the second home and then sell the other home. Well, immediately we get into a little bit of a precarious position because what if your first home doesn't sell?

24:10or what if it sells for less than you thought? If we were to like true to form, be honest, and I were to look at your finances, if I add the mortgage of your first home and the 95 % mortgage of your second home, is that gonna stay below 25 % of your monthly gross income? If not, what you're doing is you're building a real scary bridge or you're not even building a bridge. You have this chasm that you have to jump over and you're hoping it works. and you're hoping it lands, it makes me real, real nervous, especially for folks early on in their financial journey. What I would rather see, and I know it's hard in this market, but what I've heard is the real estate market's turning into more of a buyer's market right now.

24:54So perhaps you can start doing this again. Could you do a contingency offer? Hey, we're going to buy this house. We're going to pay this, but it's going to be contingent upon our current house selling. Is that something that's possible? Is that something that's real? Because there are just a lot of things that could go bad. And we've seen this happen before where, all right, I'm gonna buy this home. I can't miss out. I'm gonna put 5 % down. And then the second home doesn't sell and it sits or the first home and it sits and it sits and it sits and now I've got to carry it. And now I'm burning through my cash and now I'm getting this.

25:23So now I've got to start dropping the price. So now it's just a domino that can get really, really dangerous really, really fast. Nothing wrong with doing the contingency thing. Nothing wrong if you're selling a house and getting a bunch of equity out of it and putting it on a mortgage and recasting. But in this specific scenario, I worry, or I wonder if you're being a little too aggressive and you're putting yourself out there that if the tide goes out and things don't go exactly as planned, is it going to be, is it going to come to light that you you're swimming naked out there?

25:56Rebie:No, I don't, I, I'm more risk. I am a risk averse person naturally. So like that actually does worry me. And I don't know what the housing market looks like in your area, but I'm noticing things sitting longer on the market right now. It's not exactly a seller's market. We have some more data that we might be doing shows on when Brian's back at the desk. It's just that is not ideal, in my opinion. So I thought that was well said. I just noticed Brian's not here today. Where's he at? What's he doing? He's hanging out in Scotland. Is that right? Hanging out with the Loch Ness. He's hanging out with Nessie right now, which is pretty wild.

26:27He sent us some pictures this morning. It's pretty awesome. So he told me to tell you guys he misses you very much, and he'll be back before you know it.

26:35Rebie:I do miss him too. It's fun to be at the big desk. It's an honor, but I like when the game's all together. But we like it when the game's together. It's better. It's just the best. Oh, look at that. Look at that. That bald eagle got to hold a money guy. That's amazing. For you listening, a picture of Brian holding a bald eagle. Look at that. From his trip. That is a giant bird that could absolutely eat him if he wanted to. Like, does it not look like. It is a giant eagle. If he were to. It is a majestic creature. that's terrifying why is he so mad at brian very happy not the eagle brian brian man should people maybe subscribe to our email newsletter if they are interested in this type of thing i'm just saying because we got some there's some other pictures we'll probably share right there are some good pictures so i just have a feeling they'll make their way into our email list so you can go to moneyguy.com and sign up for that if you are interested all right that's a giant bird.

27:31Rebie:I know. And he looks so happy. Look at him. We love it. We miss you, Brian. Looking forward to having you back. All right. You ready to do another question? That's a big bird. So we've got a fun segment in a little bit too. So this next question is from a really bored man. Sorry, you're bored. Hopefully this is letting you have more fun watching the show. At what point do you determine that life insurance is no longer required, basically being self-insured. We have 1.5 million invested at 35 and 36 and one kid. We could coast fire to 60 based upon our spend rate. Oh, that's a great question. All right, so you have to remind yourself, what is life insurance there for?

28:16If there are people that depend on you that need your ability to generate income for their livelihood to be sustained, you have an insurable need, right? It's why when we're young, we want to get as much term insurance as we can for as low a cost, but it's a temporary problem. We have this gap where we need that to replace income, but as we save and as we build and as we get to a certain point, we no longer have that risk anymore as we near financial independence. In your situation, you're 35 and 36 with one kid. You could coast, and here's what coast fire means. I don't have to save any more money.

28:52I can let my million and a half grow until 60, and then I'll be able to retire at 60 and live the life I want to live on my turns. What that does not account for is the ages now from 35, 36 until 60. That's roughly what, a 25-year timeline where it is required that you have to go out and generate income to be able to survive. Coasting just means that you're not saving. You're letting your assets do that, but you're having to go earn. You're having to go work. You're having to pay the bills. if something were to happen to you, it does not sound like a million and a half dollars would be enough to provide for that one kid to get them into adulthood and to provide for the life that you wanted to be able to create for them.

29:34So given that's the case, I do not think you're at the self-insured point yet. Now let's fast forward. Let's say that you get a little bit older and your kid gets out of the house and you've got enough money built up that if something were to happen to you or happen to your spouse, You would not need the life insurance to be able to subsidize the life because you have a portfolio built up large enough to do that. That would be the place and the time when you are self-insured. I don't think right now when you're in this place, when you're planning on coasting, even though you've got age 60 covered or 60 and beyond covered, you don't exactly have 35 through 60 covered.

30:14So I would argue that you still have an insurable need. We love term life insurance. Here's a great thing to do. When I was in my mid-30s, I went and got a brand new life insurance policy because I got someone I was in my 20s and I kind of stacked them as I had kids and had business things and all that kind of stuff. Well, in my mid-30s, I was like, hey, I wonder, I should probably get some more because I want to make sure that if something happened to me, my family's taken care of and they'd have to make decisions to sell assets or businesses or anything like that. And what's wild is I was still able in my mid-30s to go get a super preferred rating.

30:48It was not crazy expensive. I was able to get a 30-year policy. So I got a 30-year term policy to take me well into my 60s, well into financial independence mode. And it was not super expensive. So one of the things you ought to look at is, even though you have that million and a half that's in place, what would it look like if you just added to it? And then what would it look like if you just went ahead and replaced it? And is there a favorable cost benefit trade off there that you ought to consider? Right.

31:14Rebie:It is true that the math behind this is interesting and being self-insured, obviously there's a place for that, but it's a, it's a low cost thing. And I think that's sometimes what I struggle with, like with some of like getting the, doing it too early. It's kind of like, is that the thing that we should be like spending all this energy on? Maybe, maybe not. This is unpopular opinion. Let's say that you have a 20 year term policy and let's say that you're in your 16, 17 and And you have discerned, hey, I'm financially independent. I don't need life insurance. A lot of times when we have clients in that situation, they bought this policy 17 years ago.

31:49They were 17 years younger. They were much healthier. The premiums are next to nothing. We say, hey, even though you are self-insured, you might as well consider paying it out to term because there's a$2 million benefit here. You're paying 600 bucks a year for it. I would hate for you to cancel that in year 17, 18, 19, and then just some fluke, the thing happens on a Tuesday that takes you out. It might've been made sense just to pay it to terms. So a lot of times we even counsel clients as they get to the end of terms, even if they're self-insured, continue paying till term, let it expire, let it lapse, and then celebrate that you survived the 20 years or 30 years or whatever it is.

32:27Rebie:And at that point, the price tag on that is just so trivial. It's exactly right. I get it. That's right. No, but it's a really good question. Really bored, man. I hope that that gave you some good things to think about. All right. Next question that we're going to do are from the wing segment. So stick around for that. Andy says, I expect to need a new to me car in the next five years. Should I drop my savings rate down to 25 % and put more towards saving to buy the car cash or keep investing into my brokerage and use 23.8? Hold on. Did he say drop his savings rate down to 25 %? He did. That's literally what it says.

33:11Rebie:I'm not good at math or English, but that would suggest that your savings rate is above 25%. It might be. I mean, we are talking to financial mutants. That does happen. So yeah, let's say you're saving 30%, 35, 40%. My bet, and look, this is my bias. So you can write this down in pencil. You don't have to write this in pen. This is not gospel. I just don't love car payments. If you can avoid having a car payment, if you can pay cash, I love the idea of having a paid for automobile. So if you're someone who's saving more than 25 % and you have the ability, okay, well, I can just back down my savings rate from 35 to 25, save that 10 % for six months, eight months, 10 months, and build up enough to go pay cash.

33:50I like the idea of paying cash. The 23-8 car buying rule, 20 % down, don't finance for more than 36 months, no more than 8 % of your monthly gross income going towards a car payment. That's really for folks or for stages and stations in life where you can't pay cash or it'd be really difficult or the opportunity cost of paying cash is just too great that it doesn't make sense. If you're not in that situation and you have the ability to save and you have the ability to stroke a check, I like paying cash for automobiles. We give you grace and we want you to be able, we are not of the opinion, oh, if you can only pay cash for a$2 ,000 car, go buy a$2 ,000 car.

34:29I don't know that that's prudent, but if you can save and pay cash for a car that makes sense for you, I like that strategy.

34:38Rebie:Yeah, that's well said. Andy, thank you for the question. Let's go to our segment for today's show called From the Wings. This is where I'm going to vote with you. Yeah. I'm going to read some headlines, some current headlines from the financial landscape and maybe more. And we are going to say, thumbs up, is this headline news or thumbs down, is this headline noise and why? Are you ready? I'm ready. First headline from realtor.com. New home prices plunge to five-year low as sales falter. We both say it's news. I say it's news. I think that home buying is one of the most difficult things, especially for first-time homebuyers right now, it's one of the most extreme things facing folks.

35:25And so when I see something that new home prices plunge now, I don't know if I've heard that plunge. I mean, that may be a little bit of an editorial language. But if I know that home prices are coming down and I'm in like the home ownership realm, my ears are up. My spidey senses are going off because maybe this is the chance. Maybe this is the opportunity. Maybe this is where I'm finally able to get into that first home, to cross over that Rubicon. So I definitely think it's newsworthy. It's something I want to pay attention to. Right. And it's something that I want to remind myself, oh, things change.

35:55Circumstances change. Economic variables change. The fact that I could not buy a home two years ago does not mean that I can't buy a home today. I think that's newsworthy. I think it's something to pay attention to.

36:04Rebie:Yeah. Things really do change year to year. I've, like I said, I am, you know, probably biased to just what I'm seeing in our area, but I've noticed a cooling, things sitting longer, prices dropping. and now I am starting to see the headlines like this that are kind of supporting that. So we're taking note. Maybe we'll do some more content on it soon. Next headline, gambling becomes America's favorite pastime as Americans spend more on sports bets than movies, arts, museums, and music combined. It's not news. I'm going to put this guy on. It's crappy. I said it is. Pardon my language. I just, that's awful.

36:44It's bad. And here's what stinks so much. You go into your app and you have like a financial app, and maybe this financial app allows you to like round up or buy shares. And you're investing, you're doing the stuff, you're following the food, you're doing all the stuff that we espouse here on this show. But then there's this little pop-up right there on the right. There's like, oh, hey, have you thought about like, you know, betting on an outcome? Have you thought about a prediction market? Have you thought about sports gambling? Have you thought? And it's right there. And it's just so easy. It's just so easy to just, oh, well, let me just play.

37:13Let me just nibble. and then playing and nibbling turns into scarfing it down and making it a full meal, and that's what this says. It's now America's favorite pastime, more than going to movies, more than going to the arts, more than museums, more than music. That's terrifying. Here's my bold prediction. Again, you can write this in pencil. We're going to see a headline in the next five years, team. Write this down. Gambling epidemic ruining young Americans, or something like that. Because I think that's the direction it's going to go because they've made it so easy. And now even young people are getting so misinformed, they think it's investing and gambling is not investing.

37:54Prediction markets are not investing. Trying to find arbitrage on those things, that's not investing. And I think that the marketing arms at these companies are telling a different story. And it's going to lead a lot of people down a really bad path, that they're going to wake up five, 10 years and I'm like, holy cow, what was I doing in my last 10 years? Why was I not building wealth the slow, steady, sure way that people have built wealth for the last 100 years?

38:19Rebie:Well, and living your life. I said this is news, not because I think it's good, but I think this angle that this publication took, which good on them, they're doing sports betting more than movies, arts, museums. Like, go see a movie with your friends. Yeah, I'm for that. Come on, people. Like, go live your life. So I think I say it's news because I knew it was more of a problem. I didn't mean to tease so much content, but the team has been talking about some content surrounding how popular gambling is, particularly with Gen Z right now. And it's not great, guys. It's definitely notable, and I don't want our folks to fall into that trap.

38:56Rebie:And I would love for you guys to be the people to show a better way to do money. Hey, quick poll. They can't see you. Do you guys support sports gamble? All right, so we got 33 % saying yes. Any over there? Production team? Okay, so we're like one out of ten. So we're 10 % at the Money Guy show of people that are like sports gambling. I'd be curious if we could do a poll on our audience. Can we do polls right now? How's the YouTube chat? If the chat's working. Maybe in Moneyverse we could at least do a poll or both. I'm just curious to know, like, are you sports betting? Are you arbitrage? I would love to know.

39:28Because, look, out of the ten people here that are like astute, sound, unbelievable financial minds, only one of them is doing it. We're at 10%. I know the way that he is doing it is like, it's not what this headline is talking about. It's the most financially responsible thing.

39:49Rebie:But not everybody is going to do it that way. But we'll talk more on that another time. Got a couple more headlines. From ABC News, credit card debt rises to$1.26 trillion, nearing an all-time high. I say it's not news. No, I think. You said you do. I do. Disagreeing. What does it say? Consumerism. We live in the, okay, not only are we gambling and sports betting and doing this stuff, we're also just racking up tons of debt. Some of that's maybe related. Some of it's not related. This is not good. I feel like this is a tale as old as time. That's why I said it's not new. Well, it is a tale as old as time.

40:29It's actually nearing all time record. Like it's getting higher. It's getting worse. It's not getting better. That's why, if you can be a contrarian, if you were a young person out there, if you're a Gen Z, who are the ones after Gen Z? Alpha. If you're a Gen Alpha, if you're a Gen Z, if you're a millennial, even if you're an Xer, and you look different than your peers, and your peers are racking up the credit card debt, and they're racking up the consumption, and doing all that stuff, and you can look different, and you're not doing that, good on you. The disparity and the discrepancy between what your financial life looks like and what their financial life looks like is only going to get wider and wider and wider and wider until they recognize that when I rack up debt, when I rack up credit cards, when I go out there, all I'm doing is I am literally robbing from my future self to please myself today.

41:17Whereas the better method is I'm going to sacrifice a little bit of my present self so that I can have a much better future self. Those two are the exact opposites. And it sounds like more and more and more Americans are falling into the wrong side of that equation. So I think this is news. I think if you're a parent out there and you have young kids, I would challenge you, what is the thing that you're doing today to make sure that your kids are not part of the statistic in the future? What conversations are you having with them so that they understand how dangerous debt and credit cards and leverage can be, and they do not need to start their financial lives on that path?

41:56Rebie:No, I agree. Maybe my emotions got the best in me because I was like, people have been struggling with credit cards forever, and it's just sad. Like, I'm always tired of hearing about it, but it is just the reality. So frustrating. Well said, and that's why we're doing this show. There's a better way to do money. We're just trying to let people know how to do it. Show of hands, who uses your credit cards here? Everybody. Everybody raises – well, not the one – a different one guy. We have one-tenth of folks here that don't use credit cards. Okay, there's no shame in not using credit cards. No, not at all.

42:26Rebie:I need to say that. He came from a different place that had a different mentality. And what I think is, but it's okay, even if you are going to use credit cards, if you're going to be a credit card person, you don't carry a balance. We're not saying no credit cards don't do that. We're saying if you're going to use them, use them responsibly. Don't rack up debt. Pay them off every single month. That's different. Credit cards are not the problem. Behavior is the problem. And that's what we've got to fix in this country. Absolutely. On a lighter note and on a more exciting note, The last headline says, Pug Ginny Liu named world's ugliest dog.

43:01Rebie:Her floppy tongue is coming to a root beer near you. We're going to show a picture of her. Here's Ginny Liu. Very famous. She is going to be featured on some limited edition root beer mugs. Is her tongue always like that? I think so. I think that's, I guess that's kind of mean. I guess that's why she's the ugliest. That didn't come from me. I didn't name her the ugliest dog.

43:26i bo it looks so perturbed he's just like nah i just i honestly i feel it like how she sleep honestly how does she eat imagine trying to eat if you had a tongue just flopping out all over

43:42Rebie:the place use the tongue right not if it's always out like that like you guys like showing us how roll that thing up um i i feel for but you know what good at her getting those marketing Listen. I wonder why root beer was the... Like, I'm trying to think about... Yeah, I don't know. The article just said she's going to be on limited edition cans of mug root beer. Of mug? She won... Oh, because she's got a bad... Like, an ugly mug. And you know what? It looks like the root beer... Like, they ran a contest and she won. Oh, so this was all... So, I'm sorry. I didn't have those details. The team pulled these, and I do see that now from the article, I think.

44:18What was the brand? Mug root beer? Mug root beer. Do they have a...

44:21Rebie:Is that accurate, team? Do they have a... No, there's no dog. No, there's a dog on that. There's a dog. Okay, that's on brand. That makes sense. So since she is the ugliest, she's going to be on a limited edition run. The dog that's on the normal mug root beer, way more attractive dog than that poor girl. Well, he's not the ugliest dog in America, Bo. That's rough. And if you're the owner, are you proud of that? Like, if you're the owner, you're like, hey, check out. Honestly, yeah. Check out this. Especially if you get a deal to be on. I guess if you get a brand of beer and a bunch of press. There you go.

44:53Rebie:Who knows what number of followers Jenny has? We don't know that. Oh, my goodness. That's rough. The team just wrote that in the notes. You guys. That came from the production team, not the writing team. We'll talk about that later. That's hilarious. That's so funny. Oh, man. All right. That has been our From the Wings segment. Thanks for having fun with us. Lots of ground covered on that segment, I have to say. I'll be honest. It made me a little sad. I know. We had some sad stuff. Look, as a young person, because I'm obviously super young still, I'm sad that there aren't young people making better decisions, more well representing themselves for the future.

45:32Because, like, my opinion, future's bright. There's a lot of stuff to be really excited about. It seems like the world as we know it, the economy as we know it, the way that we interact, the way that we do business, the way that we get answers, the way that we share information, the way that we do jobs, all of that's going to be so much different five years, 10 years, 15 years from now. There's a lot of opportunity in that, and there's a lot to be gained from being an investor in that and understanding how to adapt and how to improve your skills and that sort of thing. And I just worry if what our young people are doing is instead of like being on the rising tide of that, they're out racking up credit card debt and gambling and sports betting.

46:13Gosh, you're just you are missing it. And I want I want more. I want more young people to not miss it.

46:21Rebie:I agree completely. Ready for the next question? Yes, ma 'am. Our friend Steve Liv from the Moneyverse asks, I am debt-free except for my mortgage and saving 25 % plus of my income. Let's go. I want to save for a home renovation, specifically new floors. Does this funding fall into step eight or should I temporarily lower my step six hyper accumulation down to 15 % to fund the remodel in cash? Here's another plus 25 percenter. well uh there personal finance is fairly personal uh scratch that fairly fairly fairly that's an adverb is that an adverb an adjective it's one of those describing words that uh shouldn't have been there personal finance is personal uh i'd want to know this how much are the floors going to cost uh if it's a couple thousand dollars what i think probably more than a couple thousand how much floors cost these are expensive how much could a floor It could easily be$10 ,000.

47:23Rebie:Did you say$10? No, it's for the show. It's a funny thing. Our audience would get it. You didn't get it, but our audience would get that. I'd want to know how much the floors would cost. If it's going to be something that realistically you could save for just a few months by dropping down your savings rate and paying for it in cash, I think that's totally fine. But if it were a substantial thing, let's say that was like$100 ,000, but you're still saving 25%, you're still doing all that stuff. Yeah, there's nothing wrong if now is the time where you want to take out a home equity line or you want to get some sort of financing to go be able to do that.

47:57I don't think that's crazy. I do think with these sorts of things, the sooner you can pay cash or the sooner you can pay off the debt, the more quickly you can do that, the better off you're going to be. But if you're like, man, we're only going to be in this house for eight more years. I really want new floors. And what I don't want to do is I don't want to put new floors in year seven and I only get, I only get to enjoy them for one year. Now,

48:22Rebie:truth be told, don't put them, you know, you got to figure out why are you doing this for like home resale? Are you doing this? Cause you want to be able to enjoy the utility of it. I'm all about people improving their homes and making the places that you live, the places you want to be. Now I'm partially that way because that's what my wife does. Like that's like, that's what she wants to do. Her love language is do stuff to the house, right? And that's totally fine. And she's like, hey, I want to live in it. I want to do these things where our kids are young. I want to get to experience. I want those sort of things.

48:52Nothing wrong with that. So in your situation, if having to slow down and save up to pay for it in cash is going to meaningfully change your ability or the way you're going to be able to enjoy the timeline of what you're going to do it, to enjoy it. I think it's okay to go borrow, but if it's not going to change that, we're talking about a few months and you have the ability to save and be disciplined and pay cash. I just love paying cash. I don't think that's crazy.

49:18Rebie:So yeah, he got a quote, uh, he shared with us. It could be over$18 ,000 for these new floors. Okay. So again, I don't know your income, right? Is eight, how long will it take you to save$18 ,000 for some folks? Hey, I can really buckle down over the course of three, four, five months and do that. For some people, it's going going to take me two years to do that. So you got to kind of weigh those two things. What I love you saying is, hey, okay, pause, pause. First thing you got to do, go to moneyguy.com slash resources and play with a Know Your Number tool. Because I want to know with where you are today, are you ahead of the curve, behind the curve, or right on the curve?

49:54If you're ahead of the curve, I think you've earned your ability, earned your right to back down your savings rate, be able to do the thing, go ahead and tackle it. If you're behind the curve though, backing down your savings rate, you need to recognize that there is a sincere opportunity cost or a severe opportunity cost from backing down that savings rate to pursue present day, current day consumption in lieu of building up your financial independence bucket or pot. So go do the Know Your Number course, assess where you are on the curve. You're obviously far advanced in the FU. If you are ahead of the curve or right on the curve and backing down your savings rate is not going to like derail your curvature, then I think you can totally proceed forth with that.

50:40Rebie:Well said. Good application of the Know Your Number tool. I like that. Thanks, Reeves. Moneyguy.com slash resources if you want to play with that tool and see where you are if you're on track or not for your retirement. Next question is from our friend from the Moneyverse, Faith. It says, how much do I need to save before leaving my full-time job to go freelance full-time? Six months of expenses on top of my emergency fund or more? There are implications to this decision. So we cannot, in good faith, pun intended, cannot give you specific advice here because for different people, it means different things.

51:22I'll tell you Brian's story. when Brian decided he was going to go on his own, he was working, making a great income. His wife was working, making a great income. What they did is for an entire year, they saved 100 % of his salary and they lived off of her salary, right? What they wanted to prove was, can we make ends meet? Can we do the things we want to do just based off my wife's salary? So when I go to my own, we've got cash that we can burn from our savings. But if we burn through that, are we going to be okay? Now, in his situation, a little unique, they ended up having a baby and she ended up staying home.

51:53So it all, that timeline got compressed, but they put the time in and put the effort in to save up pretty much a year of earnings in cash, but also had this fail safe of, Hey, my wife is working, generating income to be able to pay the bills. What I don't want to tell you is, Hey, okay. Yeah. Save up six months of expenses and go freelance and do it full time. What if freelance doesn't take off the way that you thought it was, or what if you're making$1 ,000 a month freelance right now, and you need to make$5 ,000 a month, but when you ramp up, you only get to$2 ,000,$2 ,500 a month, and now all of a sudden, you've got these six months of expenses, but when those go away and those burn out, then what are you going to do?

52:34What's your contingency? So I cannot answer your question of how much do I need to save before leaving my full-time job, but I can tell you this, Faith, you ought to do the 3D plan. You ought to write down, okay, what's a dream plan? I save up, I leave the job, and I just go ball out on my freelance. What's that look like? What's the down-to-earth plan? Hey, realistically, based on what I'm doing freelance now, when I have more time to do it, realistically, I think I can do this. How long does my role need to be? What do I do? And then what's the do-do plan? What if I don't have the freelance take off?

53:08I don't generate the income. I don't make the money. How long of a runway do I need? And when it comes to how much should I save before I make this job, I would, my opinion, right pencil, I would only operate on the doo-doo plan. If this goes as bad as bad could be, how much of a runway would I need to save to be okay? And I'd save that amount. I wouldn't do the, oh, well, the dream plan said I would need one month. And the doo-doo plan said I would need 12 months. So I'm just going to average that out and I'm going to come somewhere around six or seven months. I would go, no, no, if doo-doo is 12, try to hit 12 months, try to hit eight, whatever that number is.

53:47Operate on that. If things turn out better than you expected, that's great. It's worth celebrating. I agree.

53:52Rebie:Yeah. And you can still like, if the things turn out great and you have the 12 months of cash, great. That just gives you more options, like what you can do with that cash in the future. And yeah, I think I've seen you in the money where I know, I think you're doing some of this freelancing now. Cause I think that's a crucial thing. You definitely want to know, kind of know, like have a lay of the land or be making some level of income, have some clients before you fully jump ship. I think that that's really smart or just at least a consideration. And then that'll help you make the do-do plan because you kind of know what you're already making and what a worst case scenario would be.

54:23And the only other thing I would add in there is I don't know your, uh, your main job. I don't know. You're like, you're, you're, it's worth working through the investigation. How hard is it to, to get back into that? I was talking with someone the other day and they were like a data security analyst in artificial intelligence. Right. And they're like, Hey, I'm really thinking about taking a five-year sabbatical. And then I want to go back. And I was like, Hey, that's great. We can plan for that. We can look at that, whatever. With how fast all of this is changing and how fast cybersecurity is changing.

54:55If you exit and do a five-year sabbatical and the technology keeps moving on and you have not had a finger on that technology, how easy will you be able to enter back? He's like, Oh yeah, No, that's a great point. And so you just want to make sure that even on your do-do plan, your contingency, if your contingency is, I'm going to go back to work, is that realistic? Is that down to earth? Will you be able to get back into that vocation where you exited? It's definitely something you want to think through.

55:20Rebie:There's some specificity to your field that needs to be baked into the 3D plan. Love that. I love that. All right, let's move on to Houston's question. No, that's not our Houston, right? This is a different Houston? Different Houston, I think. It's a different Houston. Our Houston just had a birthday. Happy birthday, Houston. Happy birthday. We just refied our 15-year mortgage. Should we keep the original payoff date by paying a little extra or invest the savings? We're 30 years old, just covered 200K, just over 200K income, saving 20 % before the employer match. Before the employer match. That's good.

55:58Hold on, hold on. I'm jotting down my notes. 30 years old, refi to 15.

56:07Rebie:They just did. So should they keep the original payoff date by paying a little extra or invest the savings that they now have? Just over two. How much you got saved, Houston? What's your current balance sheet look like? By doing a 15-year, and look, we don't dislike 15-year mortgages. Don't mishear me. I think as we have bigger interest rate differentials, they might be more compelling than they have been for the last decade or so. By doing a 15-year, you're already prepaying. You're already substantially prepaying your mortgage relative to the 30-year counterpart. So I'd want to know, where are you in terms of your wealth building?

56:44Because I know that for a 30-year-old, gosh, he keeps, he's so unorganized. For a 30-year-old, the wealth multiplier, I think it's 23. I'm going off memory. Check me if I'm wrong on that. For a 30-year-old, it's 23. Oh my gosh. 23.

57:01Rebie:It's like a steel trap up here. $1 turns into$23. For a 30-year-old, every dollar you save has the ability to turn into$23. That is some juice right there. Well, if you have a mortgage and you just did a 15-year, I bet your rate's going to be somewhere with a five in the front. Every dollar you prepare the mortgage is going to save you five something cents in taxes. I would argue that your dollars could likely be used better elsewhere. And, but we always say this thing, money, you get to choose your own venture. If you're saving 25%, you just told me, hey, I'm saving 20%. So you're not even really at the savings rate where we would put you in step eight.

57:41You're probably somewhere around step six, step seven, somewhere in that world as it relates to financial order of operations. So I am gonna think that prepaying the mortgage is probably not what's going to be in your best interest. A little foo-ish? Yeah, it is foo-ish. It's not the foo. And I just worry, if you get really, really excited, you're going to get to your late 30s, early 40s, you're going to have this paid off home, and you're going to be like, well, crap, now I don't have, now every dollar that used to I could have used to save and it would turn into$23. By the time I get to$40, every dollar I save could turn into$7.

58:15That's a drastic difference. and I remind my young people all the time, being debt-free is super cool. You know what else is also cool? Having the ability to write a check to be debt-free. And I even had to convince, I've got this good buddy, he's in his early fifties. He's not here today. He wanted to like prepay his mortgage, prepay his mortgage, prepay his mortgage. I convinced him, hey, you realize if instead of prepaying that, let's just take what you're going to prepay. Let's invest that low cost index. I'm willing to bet you that the size of that account will cross over the size of your outstanding mortgage balance more quickly than if you were to pay it off directly.

58:49And it was right. And we did it. And the math worked out. And so I would encourage you to even think through that way. Maybe I should jack up my savings rate, hit that 25%, start building an after-tax act. And then if I decide at some point in my 40s or whenever, I want to pay that off, I can do that. And that's totally okay. Totally my prerogative.

59:09Rebie:You heard it here first, Bo was right. Brian, if you're out there watching. That was the friend? He's not watching. He's holding a bald eagle. Gosh, look at that giant freaking bird. That bird's head. I know it's a little bit of forced perspective. That bird's head is as big as Brian's head. It looks like it. And my man's got a big head. So that's wild. That's wild. I can say that because he's not here. That was uncalled. He's only going to watch the first part of the show. He won't see that part. He'll be like, yeah, I watched you guys. It was like the first two minutes. That actually has happened.

59:42Rebie:Not to throw you under the bus, Brian. It was very funny to me. Well, speaking of Brian, he's going to be back here. As much as it was fun being here today, I look forward to him being back here soon, but not this week. In the meantime, while you're waiting for Brian's return, go to moneyguide.com slash resources because we have tons of free stuff available for you. Free PDF download loads, free calculators, including our brand new Know Your Number calculator. We used to have a whole course around it that you had to buy. we decided it needed to be more accessible and we made it a free version calculator fully souped up and now it's even honestly it's even cooler because it's like this cool calculator on our website we love it it's been really fun to hear all the feedback on it so don't miss out go check that out and find out what your number is look we're so excited uh we launched this what a week ago right and we have had tens and tens and tens and thousands of people we're hoping it's true We're going to have hundreds of thousands, even millions of people use this tool.

1:00:39So if you've not played it, if you've not used it, you've not spent some time with it, go do that. Oh, can I just gripe for a second? People are like, oh, you've got to put in your email. Guys, if you've been a –

1:00:51Rebie:Only a few people said that. We don't sell your information. We don't use it for marketing. We're not doing that. It's so that we know who our audience is. We know where our audience is. That's why we have an email on there. We're not packaging this up to go sell it. That's not our jam. That's not what we do. So we want the tool to be out there. We want to be able for you guys to use. If you've not played with it, go play with it. Go check it out. And we just so appreciate you allowing us to be part of your financial journey. We could not sit here and do the thing that we do if you guys were not out there listening, learning, applying, and growing your financial life.

1:01:26And we're just so excited. We get to be a part of that. We're so thankful that you let us be in on your journey. we're going to keep showing up for you. For Rebe and Brian and the rest of the Money Guy team, I'm your host, Beau, today, Money Guy team.

1:01:44Rebie:The Money Guy show is hosted by Brian Preston and Beau Hanson. Brian and Beau 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.

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