We Changed The 4% Rule!?

22:43You're going to see that. You're not going to have to be at 25 % yet to do that. So that's the context I'm laying out. Because I can already see you shaking your head.

22:52Brian Preston:my big dog, I also do not like car payments. I just don't. 23-8 exists and it's a thing and I support it, but I don't like car payments. However, if you have this car payment and you are already inside the confines of 23-8, I mean, when you bought the car, you put 20 % down, you're paying it off in less than three years or 36 months, and the payment does not represent more than 8 % of your gross income. You've already made the financial mutant decision. I'm going to argue every dollar that prepays that loan, it might not be the best utilization of that dollar because I'm going to argue, I think, that you can make better than 5.7 % if you're out there investing and growing.

23:38Brian Preston:Now, it's a little bit talking to both sides of our mouth because we say all the time, if you can pay cash, you should pay cash. If you can pay cash, you should pay cash. But if you're going to have to decrease your savings rate and you're going to have to stop saving and accumulating the pace you are in order to do this, I'm going to argue, I think that you would be better served, continue to max out the Roth IRA, continue to max out the HSA, put money in the employer-sponsored account, fund the after-tax brokerage account, and that car payment will be gone soon enough if you're inside a 23.8.

24:11Brian Preston:I love the idea of seeing those dollars work for you. Agree? disagree, want to fight. Look, I do agree with you to a degree. Look, first, I want you to run it through some decision matrices. And the fact that, first of all, are you within 23-8? If you're not within 23-8, we've got a problem. Well, then you've got to fix it. We've got to fix that. But you've got to go ahead and triage the situation. But assuming you are in 23-8, like Bo said, I would love for you to – you've got to get the Roth IRA. I agree with Beau in the fact that I would be very sad if you didn't fund your Roth IRA because you were trying to pay off this loan sooner.

24:53But after you get past the Roth IRA and the health savings accounts, that tax-free opportunities, I do want you going and looking at that percentage savings and assuming that maybe you're doing greater than 15%, you're 25 years of age, and that thing is just gnawing on you at night. You're sitting there going, like, why do I have this debt? I'm not going to be mad if you paid it off earlier. Maybe come up with it. It doesn't have to be an all or nothing. Maybe it's one of those things where you're splitting it with Uncle Bo and funding an automatic for the people, you know, always be buying, you know, setting up a dollar cost averaging where you're funding into either your 401k or additional after tax or some other things, and then you're throwing a little bit extra on that car payment each month.

25:37It doesn't have to be extremes. There's a lot of common ground in between that you feel good, get it paid off earlier, but you still maximize that wealth multiplier. Because that's the big thing. Bo saw you at 25 years of age. Your spouse is 26. It's like that in the old cartoons where your tongue falls out and your eyes get big. It's just when you see what the wealth multiplier is on somebody your age, you get really excited, and that's why he just wants to help you grow that. That's right.

26:06Brian Preston:So, would you fight too much? Do you feel like you got to a good answer? We both agree. I know where he's coming from. Either way, realistically, this is like brass tacks, probably going to be okay. If you pay it off, you're probably going to be okay. If you don't pay it off and you invest, you're probably going to be okay. One is, I would argue one is a maximization, optimization, mathematical, but we know that 80 % of personal finance is behavioral. And so if behaviorally getting that gone is something that's really, really important, I'm not going to fight you on that. I will tell you, well, the thing that I've, cause we both come from pretty, from humble beginnings.

26:40Brian Preston:are you about to sneeze i just get emotional thinking about car payments and i have thought you know when you get to your first million dollars of investable assets you're going to look back and go where did it come from you know you're trying to figure out which dollars routed now it's easier if they're all in one account like you know if you if you have a 401k that hits seven figure before everybody else and you have a huge employer contribution it's like oh hey, if I put in five and my employer puts in 10, that automatic 15 probably drove it. But for a lot of you, you're not going to be able to see which incremental decision.

27:13It is going to be stacking up a lot of small wins. And paying down a 5.7 is not necessarily going to hurt you, but it might, and that's what I think Bo is showing. Your training slows you down a little bit on maybe reaching that first seven figure goal.

27:30Brian Preston:There you go. Big dog 1313. Great question, honestly. We got a little disagreement, a little nuance. It's D-A-W-G. That's right. Just note, just, you know, some feedback on the username. All right. Just a reminder, we're going to be doing rapid fire very soon. So this is your last chance to get your RF rapid fire questions in the YouTube chat. That sneeze, it just is like hanging up all around you. You know, it's okay if you want to let it go. I know. Just make sure you dab it up when you do it. Dab it up. I'm fighting it. All right. The next question is from PJ Dad Life. This guy again. Did you ever confirm?

28:09Brian Preston:Confirm what? You don't remember? I remember several things. Which thing are you talking about? So, all right. PJ Dad Life. We were so curious. About what the PJ stood for. Pajamas or private jet? Because those are two very different types of fathers. This has been a whole conversation, PJ Dad Life. PJ, we've talked about you a good bit in our show meetings. Well, the question. First of all, thanks for listening to our collaborations. I bet his name is PJ. I know. Paul Jeffries. Like Patrick Johnson. Well, maybe we'll find out. PJ, if you're out there, let us know. He says, on the Rich Habits podcast two weeks ago, which you guys guessed it on the show, Bo picked career switching as a key wealth building lever.

28:52Brian Preston:When is a career switch worth the risk versus staying put and building skills? So, Bo, I kind of know the backstory here. I know that this was a draft-style pick of different investment types, and this was, to be transparent, spoiler, the last one. That's right. And you were left with it. I did not pick it. It was like, which one of these piles of poo do you want the most? But let's talk about it. Why do you feel like that? When is career switching good? Also, Beau is the worst person to answer this question. I think this is a great question. Because how many jobs have you since you graduated college?

29:22Brian Preston:One. Uno. One job. Single job. You're looking at it. Job switching was not the thing that I did. Now, there are a lot of people, and we have a lot of clients, especially those that work in high tech, that that is the way that you move up. You've got to, like, bounce around, and you've got to go. The only way to move vertical is to change employers. But I don't know that that is what's necessary for everyone. I think a lot of us, I had this conversation with a prospect yesterday. I think a lot of us fall into the place of thinking, man, the grass is going to be greener, the grass is going to be greener, the grass is going to be greener, when oftentimes where we are, things are pretty good.

29:54Brian Preston:If I'm in a really good career, at a really good place that I love, working with people that I love, and I see opportunity and trajectory, there's nothing wrong with working my way up at that place. And I think a lot of young people are told, oh, well, the only way to progress, the only way to move, the only way to improve your lot is to jump around and bounce around. I don't know that that is absolutely true. So I ended up picking that in this draft, and it was a super fun little exercise because it can be a thing if you find yourself in a place where maybe the culture does not fit what you're looking for, or you don't love the work that you're doing, or the people that you're surrounding yourself with are not the kind of people you want to be around.

30:37Brian Preston:And all of those things might be reasons to change. That is different from saying the only way that you improve, the only way that you move up is by bouncing around. I refuse to believe that that is a must for people in their career. Look, I don't mind. I jumped. I had my third job was when I started my company. Yeah. You know, I'm not counting all the careers or jobs, not careers. They were jobs all through the bus driving, the plumbing, the working on the ramp for Delta. All those were jobs I did all through college. You said you got scars on your back from the J-hugs, right? I put that love out there for the comment person that says, you guys have never, obviously, you've never worked a real job.

31:22I'm like, you might be surprised. But I say career jobs. I came out in public accounting. the CPA firm I worked at. Love, love, loved the culture of that place. Loved my bosses. But I looked around and I was like, man, I don't see the career trajectory that I need to see to do what I want to do. So that's why I wrote down when you start a job, I want you to ask yourself, what is the opportunity here? You should be able to figure out very quickly, look ahead of you and say, hey, how did the people get what they do? Is the way they're living their life the way I want to live my life is because more than likely you're on the track of somebody that you're working with.

32:05So ask yourself, what's the opportunity here? And I had found myself at this public accounting firm is that I was kind of in no man's land is that we just started a financial planning division at this company. When they hired somebody ahead of me that worked for Merrill Lynch, I was like, man, they do not know what to do with me. They don't know how they're going to get business. I was like, this doesn't seem like there's a lot of opportunity here. So that's when I knew I needed to leave. And by the way, I reconnected with my old boss back in 2024. And Bob was like, look, we didn't know what to do.

32:38He was honest. We didn't have it all figured out. And I love that we got to connect on that. So I think my read was right is they didn't have it all figured out at the time. But then I went to my second job, and they had the business figured out. I mean, this place was a well-oiled machine. Corporate. but I looked around, I was like, man, culturally, I just don't know if I love this place. I mean, it just didn't fit into me. And I think I shared with you guys, when my dad passed away, I only got to take like a day off work. I mean, it's just, they just, their connection with family was different than my connection with how I process the world.

33:12So you need to also ask yourself, what is the culture of this place? Do I fit in here with this? And if you ask yourself that, That's why I tell you, do the homework, is because so much content I see out there is you have to career switch to know if you're going to move up in the system. If Bo would have done that, there's no other opportunity you could have come to that would have done what has happened. Now, Bo's brilliance is because Bo is so good, he's so smart, and he's so likable. I was like, this guy needs to own a part of my business with me. So we became business partners. So, I mean, I think that we all played off of each other very well.

33:49but I hate when people give blanket advice that you have to change two jobs to create. But I think you have to look around and make sure you feel like there's opportunity. Because one of my dear friends, he was just doing door-to-door sales and then he moved out to San Francisco and worked in the tech industry for a while. And he's like, man, I would have never become who I am unless I took this. But I think it ties into everything I just shared is because you need to be honest. Look at your job. Because we were talking to somebody. I just assumed everybody got 3 % to 5 % pay raises at least. At least, yeah.

34:22If not even because most pay raises I got as I was coming up through my career were 10 % to 20 % every year. And I found out there's people who have been working jobs for seven years and they've gotten zero pay raises. And I'm like, no, that doesn't work. So be honest, go through a mental or financial triage of your life and say, what's the opportunity? Be honest with yourself. And if it stinks, go advocate for yourself. Go find another job. But if you're at a place that's great opportunity, there's people ahead of you, you love where you work, don't just change jobs for the sake because you read an article or saw a blog post or watched a YouTube video.

34:59You have to make personal finance personal and really make sure you're doing this for the right purpose.

35:05Brian Preston:Can I give just a quick, brief PSA for young people out there? When you accept a job or when you're looking for a job, I would also encourage you, begin with the end in mind, thinking through opportunity. I'm thinking about, Brian, way, way, way back when we were going to hire our very first employee. Like it was literally me and you and administrator were going to hire our very first associate. And the person we were interviewing, she actually turned down the job because she got a different job. Oh, because she got$5 ,000 more? It was$2 ,000. The starting salary we offered was$2 ,000 less than the starting salary from this.

35:38Brian Preston:that would have been like employee number three at this enterprise. And I just felt like it was very short-sighted to not recognize the opportunity that was there for that. So if you find a really great opportunity, what that may mean in your circumstances, yeah, I might not be commanding top dollar, top tier, best salary, but if it creates a trajectory that's going to allow me to move along the course of life that I want to move along, that's okay. And I think a lot of young people are, no, you got to get as much as you can, as soon as you can, as much as you can, as soon as you can. And you can definitely do that, but it's going to be a fight.

36:15Brian Preston:Whereas I think if you can find really great opportunities where you can actually build some longevity and put the time in and actually develop some expertise, I think those opportunities are out there too. And I just hate seeing young people miss out on that. Well, and sometimes bigger, more established companies can give you better starting salaries almost to trap you in a way. Because that's why you do need to think about what is, that's why ask yourself, what does the opportunity look like three years? What does it look like five years? And if you really love the place, what does it look like 10 years?

36:47And does it fit into what you're trying to build for your life? And then if it does, you don't have to, you don't have to necessarily go create change to make yourself better. Yep.

36:57Brian Preston:There you go. I knew you had something to say, and we had a few questions about that. It's Patrick. Thank you, PJ Dad Life, a.k.a. Patrick. We just heard not pajamas, not private jet. These are the things we talk about. That's been a two-week conversation here at The Money Guy Show. I was really hoping for PJ or private jet. I don't know if you guys know this, but, well, you do know this, because Brian told you he still reads every single book review that comes in. on Millionaire Mission. Like, we read the YouTube comments. We're out in the Discord. We read the... Like, we try to stay plugged in.

37:35So, we pay attention.

37:36Brian Preston:It's impossible to see everything, but we do see some things. We do see some things. You also can tell when I'm on vacation because I respond to a lot more comments and then get in a lot of trouble with the content team. Like, what are y 'all doing? What are you doing? I'm like, oh, I couldn't help myself. You haven't seen all the ones I didn't respond. I wrote, and I was like, Brian, don't write. Don't hit that publish. You ought to see the ones I didn't. That's the math my wife does when she goes shopping. You should see all the stuff I didn't put in my cart. You should see all the stuff that I didn't buy.

38:06Brian Preston:We made a ton of money today. Oh, man. No, where my wife gets us on that is like, she'll go return$200 worth of stuff. And then because she only spent$220, she'll be like, I can't believe I got all this stuff for$20. That's amazing. You did not get all that for$20. You got all that for$220. It feels like you did, though. We're about to go. We're going to the beach next week, and Jenna was like, hey, just so you know, you're going to see a bunch of charges come through. But I didn't know what size me and the girl needed, so I ordered like three or four different sizes. And so just so you know, all that's going to be like, if it goes back.

38:44Brian Preston:So long as it goes back and it doesn't turn into exactly what you said, reabsorbed into the spend. Don't even get me started shopping online. She watches all the shows. She doesn't watch any of these shows. That's why you know you're safe. She's super involved in the live chat.

39:02Brian Preston:I hope one day she is. By the way, I do want to give a shout out and a PSA. You know, I mentioned a few weeks ago that I had something cut off my face. No, seriously. It came back that it was pre-cancerous. You know, because it was one of those things that look, it's fine. It got it on the early stages. But I want to give a shout out to my PA. she really did a great job of making sure and she said make sure you put on sunscreen and I found out she watched the live stream so I wanted to make sure I corrected after you know making some of the jokes I'd previously made that makes it sound like you were just off the rails oh man you guys are fun okay speaking of fun it's time to do our it does not depend rapid fire segment Brian are you ready

39:51yeah i was going through what i just said making sure do i need to apologize now or later because in three months i have to go see her again oh man it does not depend rapid fire

40:03Brian Preston:segment is where beau and brian have a combined 30 seconds to answer your financial question but remember uh they cannot say the phrase it depends you know we've had some people calling out you are getting creative and how you are saying basically it depends. So I'm going to have my antenna up today. The rule is you can't say it depends and we don't say that. Okay. Okay. Okay. We'll see. And remember at the end, we will have a segment where they can say all the things that they didn't get to if there's some nuance that needs to be clarified. So with that, let's get 30 seconds on the clock and dive in to question number one.

40:38Okay.

40:40Brian Preston:Is it better to pay for a used car in cash and drain my emergency fund or get low interest financing and make extra payments. I know mathematically lump sum wins, but I am wary of no emergency fund. I don't like people riding with no emergency fund. So if you must borrow, then that's okay. Try to get as favorable as a raise you can either through the dealer you're buying from or maybe through a local credit union. We don't love debt. We'd rather you pay for it, but that's why 23.8 exists so you don't get yourself in a predicament. You can't blow through all your emergency reserves. I'd rather you, if you have the ability, drive whatever clunker you're currently driving for another few months so that you can keep reserves and pay cash.

41:20Otherwise, that's what 23.8 is for.

41:23Brian Preston:Not too shabby, Brian and Bo. Next question. You're up. It says, I feel like I cannot get out of step two of the foo. My employer does a 25 cent match to every dollar without a cap. At what point do I move on to the next steps? I mean a good start is go to our website moneyguy.com slash resources how much should I save and you can that well at least that way if you're in your early 20s maybe it's 10-15 percent and then you can move on to get into Roth and other things but you're probably going to want to come back pretty quickly yeah I'm not gonna do the public math on this but 25 percent match up to every dollar that you put in there that means that if you were to max it out at 24 or 5 there's There's tons of free money that's going to come your way.

42:07Brian Preston:I think you've got to get as much of it as you can because that's what's on the table. Maybe we'll come back to it. But that was a pretty good answer, I will say. What if they got credit card debt? Next question. It's 25. We'll come back to it. We might have something that broke the system. All right. Next question. What if they're paying 26 % on that credit card? Should your dream or luxury home upgrade ever cost more than your total investable assets? And why? Has a dream upgrade... Should your dream or luxury home upgrade ever cost more than your totable investable assets? I'm going to err on the side of no, I think.

42:47Brian Preston:It's like home renovation, home improvement, or buying the next home. It says an upgrade, so renovation. I'm going to think home renovation, home improvement, no. That's my answer. No, because, I mean, I want to talk about this with a little more detail, but I would feel weird if you have a$2 million portfolio and you buy a$3 million house is because toys got more cost than toys. All right. I just... We'll come back to it. Next question. Next question. This is rapid fire. It does not depend. I'm making a note on that one. What is the best way to celebrate financial independence? You're up. I would immediately plan a trip or do something that gives you tremendous joy and excitement and take some time in the planning stages to think about the journey you've been on.

43:35Brian Preston:I think travel, a big trip, is a great way to celebrate financial independence. But doing something you've never done before. So don't like, oh, we're going to just go to the beach again. Go somewhere you've never gone before to have an experience you never had before. So that way it really is like a monumental, momentous celebration. Big family dinner, too. Yep. It's a good one. Love that. Do I prioritize saving for a master's degree or investing in Roth IRA? Is it me or you? $75. Both. Roth IRA. Yeah, you got to do the Roth. You got to do the Roth. You got to do the Roth. It depends on your ID.

44:18Brian Preston:It does not depend. Staggum said it. You are disqualified and we will come back to it. Oh my gosh. I hope you're taking notes because we have a long segment of depending. Next question. I'm a state government employee. Should I use the Roth IRA my employer offers or go through Vanguard Fidelity, etc.? Is there a match? When they say Roth IRA, I wonder if they mean Roth IRA or if they actually mean like a Roth 457 or something like a Roth retirement account. Either way, one of the things we love is when you get to pick your own custodian, your Vanguard, your Fidelity, your Schwab. You don't have to pay fees for that.

44:53Brian Preston:You get to choose the investments, low cost, easy to access, and portable. Make sure, though, if there's employer matches, you get in step two, though. Free money from your employer is very, very powerful. All right, next question. How much weight should we give an employer's 401k match and HSA contributions when evaluating a job offer versus a higher base salary? Is there a rule of thumb? I mean, I think that definitely base salary is more important than benefits, but you're crazy if you don't take into account free money when you're doing your full analysis. It's toppings to me. The salary and the trajectory and the opportunity, that's the main course.

45:34Brian Preston:Then the benefits, employer match, HSA contributions, those sorts of things are the toppings. Now, if it's RSUs and options and part of your comp, that's different. But if it's just employer-free money, toppings. That's the frothy part. That's the frothy part. There it is. Just for the bingo cards. Next question. Is it okay to prepay our mortgage with a refi or recast if one spouse is stepping away from work and we will lose a lot of income? You need to determine where you are in your financial journey so that you know if prepaying the mortgage is going to inhibit you from reaching your other long-term financial goals.

46:16Brian Preston:Was it prepaying mortgage or are you taking a loan? They want to prepay our mortgage with a refi or recast.

46:27I'm just going to say depends, but essentially blow it up because there's so many variables I need on that one. I can't give a good answer.

46:34Brian Preston:With a spouse walking away, it's not going to make sense. I don't want you having more debt. Over time, maybe we'll come back to it. No, they're talking about prepay. They're talking about doing less debt. Next question. Since someone said the forbidden phrase, we're moving on to the next question. I spiked the football to basically get more time. for two hours today for us to go through all these. It depends. Oh, we'll get through it. Is it better to take a pension as an annuity monthly payment or as a lump sum one-time payment? Katie, there's no way you can answer that one without going through.

47:05Let's get creative, Brian.

47:06Brian Preston:You're a creative guy. Look, I'll pass. Lump sum makes the most sense when you've done the calculation to determine the net present value of the future cash flows in today's lump sum. You do the calculation, you determine which one has a higher net present value. you make the decision based on that. Don't y 'all feel like Charlie Brown? Because we couldn't, we can't give the details in 30 seconds on that. Brian, you got to get back up again. You just said it depends one time. By the way, they are now gaming us. These are all systems that should say these are depend questions. There are a couple that I'm like, that was a good one.

47:42Brian Preston:They got them. You don't have to say depend. You just walk through A, B, and C. You know, you say all the things. That's right. Okay, last question. Best midlife crisis purchase, a convertible sports car or a vacation home, if it doesn't break the phone.

48:02Oh, how much money you got in the bank?

48:06Brian Preston:If you're a friend of mine, I'm going to go vacation home because I will get more utility out of that midlife crisis of yours than I will out of your sports car. Good answer, good answer. the car the car is going to have a limited burn rate on you whereas vacation homes you might find there's a lot more costs associated so I need to know how deep your pockets are that was a good answer too yeah but that was a depend it's more unlikely for the car to break that was a depend you did it correctly though you did great I did it properly but it was a depend you satisfied the rule you're saying the quiet part that's the fun of it Brian I'm cool with how you answered it I thought it was great alright that concludes are, it does not depend.

48:45Brian Preston:You tripped one time and then you were like, you were done. Okay, let me, I can hit a few of these. We have a few. Okay. I think the, like the vacation car, vacation home versus car. Should we go in order, you think? Okay. Okay. Okay, we can do that. I'm sure I'll forget the point. I knew Bo would want to go in order. He was like, yeah, go in order, go in order. You said I'll forget the point. Make this show go much faster. We had one where somebody could knock it out of step two because they have a 25-cent match on every dollar without cap. And there was a lot unsaid. So what else do you want to say does depend for that person?

49:21All-knowing, Bo, what if their credit card's at 26 %?

49:27Brian Preston:Yes. If I put in a dollar, that means my employer puts in 25%. It's also going to probably have a vesting schedule to it. So there's issues with that too. Yeah. Whereas the credit card companies are going to hit you at 26 % no matter what. Right away. Okay, so now as I'm having time to think through this, I want you to not have credit card debt, and I also want you to have an emergency fund because I am thinking through it. It would be pretty negligent to not have an emergency fund. But if my employer were just like, hey, I can't wait to dole on you free money, I'm doing everything in my power to live as small as I can.

50:03Brian Preston:And I mean like some really creative stuff to be able to like do step two, raise through step three, raise through step four, so that then I can go back and load up that step to the full extent. Because if the employer just wants to like give you money, man, I want you to be able to capitalize on that. Well, that's why the realistic is that if you're in your 20s, you're probably going to do the employer match first 15 % of your pay. And then that way you can pay off the credit card, get the emergency reserves, then even potentially do your Roth. But if you have a Roth 401k, you might go back to the 401k after you get the emergency reserves just because you could do the Roth 401k and get that free 25%.

50:50So it is going to modify. That's a very generous benefit that you'd need to plan accordingly. That's right.

50:58Brian Preston:Hey, did you see Erin dropped in? I was just chatting with her. And she made a joke about a midlife crisis. girl you ain't midlife yet you can't have a midlife crisis if you're not midlife yet fair she's not there yet i feel like you can say that to aaron because y 'all are y 'all are in a similar stages of life i'm not there yet but aaron you know she's got some things she's feeling it she's feeling a little bit she's got some good upgrades in her life and things going on so i i think she probably and she said she bought a unicycle she's look at her midlife crisis that she bought a unicycle sounds dangerous aaron don't hurt yourself but also the body it It takes a little longer to heal the older we all get.

51:34Brian Preston:Don't hurt yourself, but also make sure you film that and put that up. All right. Bo had a note on should your dream or luxury home upgrade ever cost more than your investable assets. I want to be intellectually honest here because I agree with you. If you've got a$2 million portfolio, you should be wary of going to buy a$3 million house. But what if you're upgrading and you've got like a$500 ,000 portfolio? but I'm thinking like around here trying to buy a home in middle Tennessee, like the way that home prices have increased any second home, certainly in an area, you know, like, like where we have the, the costs have just risen so much.

52:17Brian Preston:I think a lot of people may find themselves in a million dollar home before they get to a million dollar. That's a great qualifier. And that's a great depend in the fact that if you're like under 40 and you're like in the messy middle with kids, I could see how there's a point where, yes, the cost of your house might exceed where your investment assets are. And you could still do that following money guy home buying rules. Absolutely. You could do$3 ,500. But if you're – so I'm willing to qualify that for somebody who's in their 30s in the messy middle stage. You're trying to buy the house that you go raise the kids.

52:49There is an asterisk that I will say. But what I – I still hold true. I don't know how old this person was that was asking the question. If you're in your 40s, though, and now you're doing it because maybe on paper for qualifying for underwriting, you look like you're upgrading for the sake of upgrading. And I see a lot of people in our area do that. And it drives me crazy. When I ride through the – I go do the tour of homes every year. I do too. I love it so much. It's wild. And I think about – I'm like, who is buying these? Because I could afford these homes. Have you gone look at these homes?

53:19I could afford these homes that we go look at in these tour homes. But then I always ask myself, and this is why I end up doing commercial real estate. It's because I'm like, wait a minute, I could buy this house for$6 million. But then I think about, do you realize the opportunity costs that I'm giving up? Those assets, my army of dollar bills, living in a$6 to$7 million home versus letting that money continue to build. It just blows up in my mind how that, that's why I don't like the idea of buying the trophy piece. That's true.

53:49Brian Preston:And this is saying luxury or dream home upgrade. So$3 ,500,$25 ,000 doesn't even come into play. There's no money guy home buying rules that apply. Yeah, like if you're buying your dream home, you need to be far enough along in your financial journey that the dream home is not an impediment to you being able to achieve your financial goals. Because like upgrading to have a house large enough to raise a family isn't necessarily a luxury home. You know, I don't know. There's a nuance here. The diminishing return on what luxury is gets so small. Unless you got an incredible view now. You put the ocean out there.

54:23you put a mountain scape over here. That's where millions, you know, I get why people pay for that stuff, but you're going to find a diminishing return. Once you can buy the water pumps that give you instant hot water, that's not as expensive as you think. And you can have tankless water heaters where you have unlimited hot water. You're going to find out that there's just, there's not much more that you're getting out of. It's just like, you think about footage. Like when you upgrade your phone, there got to a point that you just weren't getting The speed, they could tell you how much faster your phone was processing and you just didn't feel it anymore.

54:57I'm telling you, it happens that way with upgrades. So that's why be honest with yourself on what you're really getting out of this luxury home because it might be the opportunity cost is too much.

55:09Brian Preston:Yeah. So I don't know if there's a perfect answer there, but definitely be cautious is what I'm saying. Well, I just want people because I think a lot of you, you're like we are. We come from humble beginnings. You start having some success and you're trying to feed. Nobody tells you how to be wealthy. You're trying to figure out where's the balance from living your best life but also squandering this money. You know some of the influencers I've talked to in our influence that we're buying massive houses. I said, if you're raising kids, pay attention to that too because if you want your kids having that traditional, I'm going to go down the street and play with my neighbors and play in the woods and do all the stuff that is considered more in the past.

55:50It's harder doing it. If you live in a super nice neighborhood where everybody's 60 plus and all living on two acre, three acre, four acre tracks, you're probably not going to get the same neighborhood experience that maybe you want to repress or push down the lifestyle out of choice so that your kids get the better raising experience. Because you can mess your kids up by giving them too much and living in a weird experience too.

56:14Brian Preston:Right. Well, Brian, there were two questions where you said it depends and didn't really end up answering. Do you want a shot to go back? One was, do I prioritize saving for master's degree or investing in Roth IRA? Well, I think this goes back to in the beginning of your journey, your career choice is one of the most important decisions you can do. So don't go back to school. We've told you, education, I love education, but I'm mad at the institutions for how much more expensive education costs have gotten over just even inflation. So they don't have your best interest. So it's on to you, buyer beware.

56:49is the degree actually going to generate additional income for your family? Don't go off the brochure anymore. Unfortunately, they want your money. So pay attention. If it will really truly increase your earning potential over a lifetime, then that is very valuable to do. I mean, without a doubt, I wouldn't be who I am if I had not gotten the accounting degree. But you ain't got no master's degree. I don't have a master's degree. But now I would have to. I would have to. I told Jonah. Yeah, yeah, yeah. I told Jonah would have been a year further in his career, but he was already, and I said, go back and get the master so you can sit for the CPA exam.

57:27And I think it was good advice.

57:28Brian Preston:It was great advice. I don't disagree with anything you're saying, but I would do everything in my power to fund Roth IRAs as early and as often as I can. Yeah, I love that. If it's between like, oh, man, I got to write a check for this master's degree for$7 ,500 or I got to put 7 ,500 in my Roth, I'm going to figure out how I drive Uber. I do Uber Eats. I'm going to go figure out what I can do to be able to pay for that master's degree without sacrificing getting money in that Roth. Because I just, especially if you're young, if you're around the age that most people go pursue a master's degree, go to moneyguy.com slash resources, put 7 ,500 in the Wealth Multiply at Your Age and see what every single Roth contribution can turn into for you, man, I would love for you to not miss out on that if you didn't have to.

58:21Brian Preston:All right, Bo, did you have any other notes? I know we talked about an annuity, taking a pension or a lump sum and prepaying a mortgage. I can say one quick statement. Every pension plan has different assumptions. When they design a pension, they have to put in what is their guaranteed rate of return that's built into it. There's also how well funded the pension is. These are all variables. And a lot of times you'll find out is that they, when they come up with these early retire options, sometimes they goose them, meaning that they give you really good incentives because they're trying to offload the liability.

58:56Then you should probably in those situations take the lump sum because if they front end loaded this by giving you a lump sum that's really over the top. But in other situations we've seen where they made too good of a promise, and they have a tremendous amount of assets in the bank, so this thing's not going to blow up. They're not going to the Pension Benefit Guarantee Corporation and getting out of the obligation. Then you should take the annuitized benefit. That's why it really does depend. This is our bread and butter. Don't just make assumptions. Do the math. And sometimes people don't have the ability to do the math.

59:29That's where we come in and we help clients take it to a relationship to the next level.

59:33Brian Preston:Yeah, it's really interesting. We've had clients, same age, same size portfolio, relatively same pension offering, different companies. One client, it made sense for them to take the lump sum. The other made sense to annuitize just because the pension are different. Now, check this out. We've had clients for the same company, but they retired on different timelines. One retired five years before the other because of the way their pension plan worked. For one of them, the lump sum made the most sense and for the other, the annuitized. It is not something that stays constant in time. So what we tell people is when you're like four or five years out, do the math and then do the math again, three to two years out, then do the math again one year out, and then do the math up until the day you have to make the decision on the pension because it can change which one is most advantageous.

1:00:15And there's also, look, the math gets really complicated because when you die with a pension, once it's annuitized, your beneficiaries don't get anything. So you have to take into account the higher withdrawal rate because essentially it's a higher, you're burning through the assets. Taking it to zero. Because you're dying with zero on those assets. And there's a legacy factor that we can build that into our analysis to figure out so you can make sure you measure twice, cut once, and you know all facets of this complicated decision.

1:00:45Brian Preston:And the last one that he wanted to start with was the thing about the mortgage. All I wrote was mort. I don't know what the question was. It was middle-life crisis. Should you buy a car versus a house? No, no, no, not that one. It was should you refinance to pay down the mortgage if your spouse is stepping away. Yes. Well, I want you to be as debt-free as possible. Reread the question. Is it okay to prepay our mortgage with a refi recast if one spouse is stepping away from work and will lose a lot of income? My spouse is stepping away. We're going down. So we're going to try to prepay a bunch of money on the mortgage to get our payment down is the question you're asking.

1:01:24Brian Preston:Here's the problem. If you do that, you lose access to that money. So if life throws any curveballs with you and the house is not completely paid off, it's a riskier endeavor. Sometimes it's better to have money in the bank and then that way, yes, you still have your existing mortgage payment, but you also have access to capital that you can pay down, whereas the banks are very unforgiving if you did anything wrong. And I don't want to pick a fight here, but in the comments all the time, I know we're going long. Sorry, Ruby. I know we get this coming all the time. Oh, gosh, you always, I've never heard anybody say, oh, I'm so sad I have that paid for house.

1:02:05Brian Preston:That's not true. We actually, you have an experience of someone that you had a conversation with who said that very thing. Yeah, she came to me. Y 'all have heard me tell this story before. I had a widow who unfortunately her husband passed away, and I think she was in her 40s when this happened. And she came into some life insurance proceeds, and a lot of people had come to her and said, just pay off your mortgage. And so she just paid off her mortgage because she got advice, somebody saying, hey, just be completely debt-free. Which is a noble idea. And she said, you know, especially in our neck of the woods.

1:02:34And then, and she came to me and she goes, Brian, it was a disaster. She goes, because nobody told me how expensive it was to raise these kids without my husband's income being here. And I just got in a situation and she didn't have enough emergency reserves. She didn't have, there's a process before you write that check to the mortgage company that you go through is because the banks don't give you, when you're in a desperate situation, they don't get excited for you. they lick their chops because they know that, hey, a house with a lot of equity potentially is going to become ours again. Be careful with that.

1:03:04Sometimes you need to – that's why we have an order of operations is because I don't want you to run yourself so thin on the capital of liquidity, of having cash reserves and so forth, that you can't even pay the bills. And so this poor woman was in a situation – yeah, she was debt-free now, but she didn't have the money coming in to pay for her kids, to pay for the other stuff. that money would have probably she needed a period of time probably where she would have had this lump sum of money several hundred thousand dollars to help her figure out how life is going to work while she was making the monthly mortgage payments and then yeah down the road after she figured out how much is appropriate in cash reserves how much she needed to live off of then yeah maybe you throw a little money at the mortgage to pay it down even quicker but there was a lot of steps skipped just because it was easy to give advice of just pay off the mortgage That's right.

1:03:52Wow.

1:03:53Brian Preston:You really covered a lot of bases. And Financial Mutants, you really stumped them in the rapid fire today. Thank you. I don't know that I'm going to say I stumped them. A lot of stuff really did depend. Just to close the circuit for me, it's easier on the midlife crisis or whatever to buy a car, expensive car, because, yes, that was versus a house. Because there's just a lot more ongoing expenses to buying a vacation property. that's why you'll find a lot of people buy vacation properties and they realize oh my god this is a headache i just went down to ours last week and immediately i have somebody who helps me out and comes and does stuff when i'm not there i was like the landscaper stinks so we you know i started trading tax pool pump needed something um there's a mouse in there that i felt like wile e coyote and and the road runners because i was baiting traps and the thing for some reason wasn't taking There's a mouse in the pool, not there's mouse in the house.

1:04:47Brian Preston:No, mouse in the house. So, I mean, all these things, when you do vacation properties, just know that there's going to be curveballs. It takes your time. Even if you have somebody who helps you with this stuff, whereas a car, if you're going to go do a splurge, the car is going to be the easier of the two. It's going to be the less risky likely. Yeah. I didn't really want a house, but I looked at how our life was being used, and I was like, okay, and it was a good purchase. And even with all the headaches of a second house, it fits my life very nicely. Yeah. All right. Really good thoughts. Thank you for all of the questions submitted today.

1:05:22Brian Preston:Thank you for joining us for the live stream. And we'll be back every Tuesday at 10 a.m. Central Time. And until then, be sure to check out moneyguy.com slash resources, where we load you up with free calculators and downloads about tons of the stuff that we've talked about on the show and more. So be sure to go check that out. Moneyguy.com slash resources. I mean, I don't know if anybody's left because we've gone over, but everybody's probably have to get back to their day job. But hopefully you can tell from the way honesty and transparency we flow through on the show. We come from humble beginnings, but we try to tell you the way money really is.

1:05:56I don't think there's a lot of people that are out there doing that. And that's our promise to you guys. That's why we've created the Financial Order of Operations. We want you to be able to use money, this tool of money, and do it that much better. and that's why we get really excited about creating this type of content. I'm your host, Brian, joined by Mr. Bo, Reby and the rest of the content crew. Money Guy, out. Happy birthday, Jake.

1:06:18Brian Preston:The Money Guy Show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities, laws, and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through The Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice.

1:06:50Brian Preston:All investments involve a degree of risk, including the risk of loss.