What Is The Magic Number Where Money Will Finally Make You Happy?

21:55And I just don't want you to look back when you get to be in your fifties and sixties, majority of us financial mutants, we're not leaving this planet broke. What you're worried about is do you leave a deficit in the memory making you could have, but there's a balance there. Cause I don't want you to hear me say that and think that this is YOLO. No, I'm not YOLOing you. That's not 2012. Again, this is, I'm just telling you, I think there's a delicate balance there to live your best life, make the memories you can, but also to use the tool of money to build for the future, but also maximize the moment you're living in.

22:29Brian Preston:And look, I don't mind sharing. I did the whole exercise. Like I wouldn't look at, because we did a renovation of the pool and stuff and I went and put the sum of money it was going to cost. And I did, I went to moneyguy.com slash resource and I put in the wealth multiplier. And I was like, whoa, right? Like it's, it was a significant investment, but we were at the right place in the financial order of operations, had the right mechanism to be able to pay off the home equity line quickly and work through the strategy there. And even on the other side of that, even though knowing what this costs in terms of long-term dollars, I have zero regret, zero buyer's remorse on it because of exactly what you said.

23:06Brian Preston:We are building memories every single day with our kids. It's changed the way that we use our home. So when you're thinking about this renovation, this thing that you're doing, I would also go through the exercise of why are we making this decision? Why are we adding this renovation? Why are we changing this? Is it something that we're actually going to use that actually makes sense, that actually justifies the cost? Or is it something that, oh, it just is a nice to have, not a, because the gravity of that decision will affect how much you're willing to sacrifice for that. Because every financial decision we have has opportunity cost.

23:38Brian Preston:If I do this thing, it means I'm going to forego this thing over there. You want to make sure that's a favorable trade-off with whatever sort of addition or renovation you're considering. You know, a lot of times we have answers like this, a lot of variables that we say it depends on. This is why a good financial advisor, if you're at that level of success, because we don't say it depends to clients. What we do is you have option A, you have option B, you have option C. Let's show you what this does. And then y 'all get to go on an adventure. It kind of reminds me of like a home improvement show when they're saying, hey, do you want to put shiplap on this wall?

24:12Do you want to put pavers on this back patio? We actually get to walk you through the actual decision matrix of what those opportunity costs are. So you get to live your best life. Well, Beth, thank you for that question. I didn't mean to go seven minutes on it.

24:29Brian Preston:That's all right. You gave her a thorough answer. and I mean at the end of the day that's why you follow the food so that you can make these types of decisions and take what they were saying and apply it and since you asked the question a very exciting thing is that you get a Money Guy Tumblr oh it's a Tumblr day it's Tumblr day so Beth if you would like a Tumblr just email winner at moneyguy.com and we will work on sending you one it just transformed are you subscribed to our newsletter do you get the weekend Saturday newsletters I am more than subscribed. I thought it was so funny. I don't know if you saw it because you were traveling, but the newsletter this week, there was a meme of the week in there, right?

25:07Brian Preston:And they do this every week. Quack, quack, quack, quack actually made itself into the meme of the week. So if you're not subscribed, make sure you go out to the website, subscribe to the newsletter so you can see all of these things and hang out with us throughout the week. No, I do. I look at the newsletter every week. It's my favorite. Because the content team creates that independently of us. And I like to see what Easter eggs they put in there to see if we're the victim of it or if it, you know, what's in there. almost exclusively the victim every single time. That's not true. It's okay. Our marketing mutants are so tickled right now.

25:37Brian Preston:But it is a good newsletter. We wouldn't do it if we didn't have a lot of fun with it and make it valuable. All right. Next question is from Alex. Hey, Money Guy team. I am 31, and I have all my money in retirement funds, Solo 401K and Roth IRA. What is your advice if I want to retire early, like 55-ish, but won't be able to pull from those accounts yet? Thanks. Well, one of the really interesting things, you know, obviously when we think about retirement accounts, most retirement accounts, IRAs, rollover IRAs, Roth IRAs, they have this like 59 and a half age restriction on it where you can't get to the money with 59 and a half.

26:21Brian Preston:But one of the unique thing about like employer-sponsored retirement accounts, specifically 401ks, is that they actually have an earlier distribution rule. If you're going to retire at age 55, you can access the dollars inside of an employer-sponsored 401k. So that could be, I mean, obviously you're 31, so that's 24 years into the future. Public math. Did you see me slow down on that? I was nervous. A lot of things can change, but if you're going to retire at 55, I think there's a good chance that you'll be able to access some sort of your retirement assets, whether that be from a 401k that you have available and present at the time, or potentially from basis in a Roth IRA.

26:58Brian Preston:But the other thing that I want you to think about is the way that you're accumulating. I want to know what your savings rate is. How much you put in your Roth, how much you put in your solo 401k, what do those numbers look like? And it would be worth the exercise of figuring out, okay, based on that, if I project out what those amounts are going to be when I get to 55? Is that the path I want to be on? Or might this be an area, if I'm in step seven, if I'm somewhere around that area of the financial order of operations, where I do start that after tax brokerage account to specifically fund it to a certain degree to give me that bridge from 55 to 60 if I need it?

27:34Yeah, that's exactly right. I was going to say, this is definitely a step seven exercise. I would love to, as Bo laid out the groundwork, what's your savings rate? So we can see if you graduated beyond step six to squarely be in step seven. And then, you know, there's nothing wrong with you going and using some of our resources and tools to find out if you're ahead of the curve, behind the curve, right where you're supposed to be with the Know Your Number course. Do those type of exercises. But then, yeah, I think there's nothing wrong with go get the easy tax savings. You know, obviously the solo 401k is going to have some huge tax benefits for you when you do your taxes every year because you've got some self-employment income rolling through Roth IRAs.

28:13I've even detailed in Millionaire Mission my regrets on the small sum of money and what the opportunity cost was. So you're probably not going to want to leave that on the table. But there could be a portion that you say, you know what, it's time to start putting and funding that brokerage account with after tax so that I have a bridge account for when I retire early, just in case I don't meet all the variables or requirements of that 55 requirement on my 401k dollars.

28:41Brian Preston:Alex, thank you for the question. If you would like a Money Guy Tumblr, just email winner at moneyguy.com. Before we get to the next question, I just wanted to invite everyone watching in real time to get your rapid fire questions in. You can write them right in the chat. Just put RF at the front so we know it's for rapid fire. We'll be doing our It Does Not Depend rapid fire segment in a few minutes. So stick around for that.

29:09Brian Preston:When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. Study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds.

29:48Brian Preston:Get the Unreal College Deal. Everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 Premium and a year of Xbox Game Pass Ultimate with a custom color Xbox wireless controller. Learn more at windows.com slash student offer. While supplies last, ends June 30th. Terms at aka.ms slash college PC. Did you hear about what happened in the Moneyverse? I'm not going to say it. Oh, you're talking about the Moneyverse. Did you hear about what happened in the Moneyverse? I didn't realize that when we talked about, y 'all made the joke that I was on vacation.

30:18I've kind of quit going on vacation because that's where the whole discussion about Mutant Mingle came from. And then I found out once again, I was on vacation last week. By the way, I don't remember, Brian, missing that many Tuesdays. That's because I try to travel around Tuesdays when I go down to visit my favorite wizards and mouses and stuff down in Florida. Wow, the wizard's even got a call out. And what's funny is I found out that in the Moneyverse, we are creating mutant mingle through the Moneyverse without us being a part of it.

30:47Brian Preston:Unintentionally. Unintentionally. It is so crazy. So it's just a cool little heartwarming little thing. Ruby, if someone is not in the Moneyverse, how do they get in the Moneyverse? Just go to moneyguy.com slash moneyverse, and you can click on a button that will help you join our Moneyverse Discord server and to chat with all kinds of other financial mutants and the content team. We like to chat in there as much as we can too. It's basically like the YouTube chat, but anytime we want, which is awesome. Y 'all know I've often, I've daydreamed that we are eventually going to create our own Omaha moment with like Warren Buffett.

31:22You know, always every year he'd have everybody come to Omaha. I think at some point, I didn't realize it when we kind of came up with this idea of the moneyverse. This might be some of the grassroots to where we can set up our own annual Woodstock or every other year Woodstock event. No pressure. I love that. But this could be a fun little origin story.

31:45Brian Preston:Heard it here first. By the way, they're like right now going, son of a gun. I can't believe Brian just said that. I'm going to hear about that later. They never know what I'm going to say. I cherish my ability to just throw stuff out there. It wouldn't be the Money Guy live stream without it. All right, let's do another question before we get to rapid fire. This is from WhatTheWeb. It says, hey, Money Guy team, I'm getting married this weekend. Congratulations. Congratulations. That's exciting. We're the Tom board now too. Please consider it a wedding gift. From us to you. My fiance and I are discussing how to combine and manage finances.

32:25Brian Preston:We want to live off of my income and invest hers to prepare for when she'll be a stay-at-home mom. That's their plan. Any tips for this? I love that, Brian. What tips would you give them? Because you guys kind of did this a little bit when you were, like, starting your first business, right? Like, that's kind of the strategy. Yeah, for sure. First of all, I mean, because I think a lot of people, they make this whole marriage thing complicated. Look, if there's unique assets like inherited assets or family assets, it's okay to keep those things in their registration because there's some legal protections and other things.

33:00But I do really like when couples get together that y 'all go ahead and set up those joint accounts that all of your earnings while you're married come into that account, go out of that account, and you set up joint savings and investment goals. Because that's exactly right. My wife and I, she was the, because I was making a great living. But then when I started my first business, I mean, it was kind of embarrassing. I think I went from right at six figures to$17 ,000 the first year. It's a big drop. You can quickly see my wife's earnings were the majority of the earnings there in those early years.

33:33And then we knew we were going to start doing family planning. And there was a chance she wasn't going back after. So we came up with a whole plan and actually put on our 3D glasses. And if you don't know what that means when you're making big life decisions, it's okay to go ahead and pull out the spreadsheet. Because what was it? We just did a Making a Millionaire where the greatest line came out where the spouse, she said, I can't imagine a life without spreadsheets or something.

33:58Brian Preston:Something like that. We were like, we got to put this on a shirt. So we'll fine tune that a little bit. But there's nothing wrong with you creating the dream plan of the way you want your financial life to play out, the down-to-earth plan. and then don't skip out on the doo-doo plan, meaning that you run a scenario where things don't line up perfectly. And yeah, you'll have a joint account, live off those assets. So that way you also take the power out of the money so that when one spouse is staying home and helping raise the family, they don't feel like you're pulling the strings. You don't want to have a power dynamic that impacts.

34:30And I see that all the time with couples that they misplay. They don't understand how that's how you can use money as a leverage point to actually create a lot of upset and fight and disdain within the relationship.

34:41Brian Preston:And then the other thing that I want to make sure I understand is your question was, hey, we're going to live off of my income and we're going to save and invest her income in preparation for her being a stay-at-home mom. Are you suggesting that we want to stockpile that cash so that it can then subsidize our lifestyle at that point? Or are you just saying, we want to get really comfortable living off of my income? And since we're not going to spend hers, we're just going to invest that. because if that latter one is the case, then I think you can follow the financial order. Brian, will you hold the thing up?

35:12Brian Preston:Because one of the things you want to do, like while she's able and while she's eligible, if she has access to retirement plans and Roth IRAs and all of these different things to get some really good tax incentivized savings in there, that's a great thing to do if you can walk away from that. Now, if instead what you're saying is, we're going to need some of that money to be able to cover a childcare call or whatever the thing may be, well, then you might have to think about saving that in some sort of like after-tax account that you'll be able to have access to. But I think it's the latter. And if it's the latter, I love that.

35:42Brian Preston:And you're gonna set yourself up in a position to do the really, really hard work now of saving, saving, saving, saving. And then what happens is even when she leaves the workforce, even when your savings rate drops down, you take that sum of money, you put it into moneyguy.com slash resources wealth multiplier and see what it can turn into. Say, holy cow, that work that we did right when we got married, boy, was it valuable. Look at how much value that added to our future selves by making that decision. I love that. But I do think if this is something that's going to happen in the next three years, four years, there's nothing wrong with you boosting step four, which is your cash reserves.

36:20Sure. Because that's what I think I've shared with you guys. I've been very transparent about it. When we were on our own journey, I think we built up around$50 ,000 of just excess cash that we used. That was the bridge account we used for that first three years once my wife left the workforce and realized it was scary because my business was pretty new at the time. It's not like my first child was born in 2003. The podcast started in 2006, and it didn't even start generating referrals until 2008. Everybody thinks I'm a master marketer, which I was horrible. I'm not a great salesman, guys, because I didn't like going to the Kiwanis clubs.

36:59I didn't like going out there and cold calling or doing that stuff. I'm blessed that I think the heart of an educator is shown through and we get all the inbound marketing. But it is one of those things where I think it's perfectly fine to boost the cash reserves because cash is going to be really the energy source for stability in those years of so much uncertainty.

37:22Brian Preston:Well, that is great. I am prepping for rapid fire. But first, what the web, if you would like a MoneyGuy Tumblr, just email winner at moneyguy.com. We would love to send you one. All right. It is now time for our It Does Not Depend rapid-fire segment where Brian and Bo answer your questions in 60 seconds or less combined, and they cannot say the phrase or similar phrases to It Depends. Was it 60 or is it supposed to be 30? It's 60 combined. Okay, okay. Do you want to do it in 30? No, I just... No, it used to be 30, didn't it? I think it was 30. Really? It used to be 30, yeah. We found out that we were...

38:02Everyone's nodding.

38:03Brian Preston:Okay, I just, I don't know. We got so good at 60. I think they created. I thought it was 60 seconds combined. I don't, I don't know. Just forget I said anything. 30 seconds combined. Hey, you give us 60 seconds. We'll answer a few questions in there. Everyone's like, what is she saying? All right, 30 seconds combined. And then at the end, we'll do our maybe it does depend segment where if you need to, you can say anything you didn't get to say. So with that, let's put 30 seconds on the clock. And we'll get started. First question. Should you ever upgrade your primary residence to a cost over your investable assets?

38:42Brian Preston:Defend your answer.

38:46Yes. I mean, I think about myself when I was in my 20s and I bought my late 20s and first house. Without a doubt, my assets were less than what my primary residence was at that time. It was more of the housing was more about the 25%.

39:02Brian Preston:It took a long time for the portfolio to be more than the value of the home. So I think if you are doing a second home, your next home, then absolutely it's likely to be more than your portfolio. Well done. I think we answered that question right. That was the question, wasn't it? Yeah, okay. All right. Yeah, I think so. I got a yes from Justin. Okay. Any little known pitfalls to UTMAs, assuming you're in the right step of the foo? The biggest pitfall is that UTMAs legally become the child's money at the age of majority. So if they reach 18 and there's an account in their name, then when they turn 18, they can demand that money.

39:40Brian Preston:Even more so, the custodian will likely reach out and tell you you have to put it in their name and their name alone. The other thing is that when they get their first job in their 15, 16-year era, and you start priming the pump with their custodial Roth IRAs, if you're using the custodian that's also your custodial account, they'll see that account. And that's the end. Okay, next question. I was like, man, you're talking slow, brother. I was like, he started on the journey. He started looking at the trees and he started, you know what I mean? I was like, brother, it's ticking. I'm glad you went first.

40:15He was just

40:16Brian Preston:hoping I was still going to do 60 by accident. I was like, man, he is telling us, he's setting the stage for a story right now. That was awesome. All right. Next question. We used three months of emergency fund for an actual emergency, unexpectedly laid off before replenishing. Should I sell stocks from a former employer or broader portfolio to rebuild that emergency fund? I mean, obviously be tax smart about it, but yeah, there's a good chance that you'll need to replenish that cash reserves because I don't know what your updated situation is, but you need to keep cash because that's the currency of chaos.

40:56So you can survive.

40:57Brian Preston:The thing that I think is that right now market, depending on your company, is likely at a really good spot. One in the hand is worth two in the bush. I would consider selling that stock, getting that cash, having that liquidity. You don't want to be out there swimming naked. Love it. Next question. First time home buyer, 25 years old. Should I save and put 5 % to 7 % down or withdraw from brokerage to hit 20%. The first one. I would put 5 % to 7 % down so long as you're following a home buying rules, which is 3 % to 5 % down in your first house. You can live in the house for longer than 5 % to 7 % years, and your total housing costs do not exceed 25 % of your monthly gross income.

41:42Man, yeah. I want to make sure you're doing Roth IRAs and things like that. I don't want you putting that towards down payment, but if you're so loaded, maybe you have family at Legacy Assets, then you might want to put down more money.

41:55Brian Preston:Brian played hype man there. Bo went exactly 15 seconds, and then he just went, yeah. Yeah. Flavor. Well, that one should have had it depends in it. I didn't say it during the question. Next question. We are getting married next June. Should we combine finances now or wait until we get married? We are 26. We bought a home together and we have a combined net worth of 280K and 130K in retirement accounts. There's a lot going on there. I think you wait until you're contractually to become one, but I'd go ahead and start setting up steps to prepare two to become one. I also agree with waiting. A lot can happen.

42:42Brian Preston:How many times have you heard about engagements that end up getting called off? and the more intertwined you become, the more difficult it is to untwine. And so I would wait until you're officially married to do all of those things. Well said. Next question. I hit my first million at 35. That's amazing. Yo, moneyguy.com slash becomeaclient. Well, it says it's all in retirement accounts. What's next? Well, I mean, follow the financial order of operation. more unlikely when you get to step seven, which it sounds like you are in, you'll start thinking about how you're going to use that money and that will take you in different directions of maybe you want to have a brokerage account and then you can move to step eight, which is abundance goals.

43:27Brian Preston:There's a good chance that now the gravity of your decisions is bigger than it used to be. The complexity in your situation is more than it used to be and your time is likely limited. If that's true, it may be the time to consider taking the relationship to the next level. Moneyguy.com slash becomeaclient. Wow, we got a lot into that 30 seconds. I wasn't sure he was going to make it. Booyah. I know. I was like, is he going to get this feeling? Holy cow. He even got a plug into the company on that 30-second question. Incredible. Next question. Do I need an after-tax brokerage account if I don't plan to retire early?

43:59Brian Preston:Do you need it? Not necessarily, but is it a nice to have? Sure, because the dollars you pull out of it are not going to be encumbered. Now, if all you have are Roth, those dollars are going to be completely tax-free. So, so long as you retire after 60 and all you have is a buttload of Roth, that's the technical term, and a buttload of pre-tax will be okay. I like having after-tax assets because that means I can pay cash for vehicles and other life decisions. And I also like it because it opens up if you want to get into real estate investing and other things, you're going to need to have access to liquidity.

44:28Brian Preston:All right. Next question. We're getting good. I know. We're good at this. We are good at this. She's going to drop us down to 20 seconds and go 10 and 10. I know. I'm trying to go up by accident. I should go down. You should say, you're good at this. I'm out here just, I'm swimming. This must be how Bo feels in the ocean. Oh, he has to get a do. I'm giving it all I got. Yeah, as Brian said earlier. I was in the pool this past week playing with the kids, and I was like, you know what? I'm going to show Brian. Did you tread water for 10 minutes? I was like, I'm going to go start treading water. And I was like, oof.

45:04Brian Preston:Can you do it? Can you do it? No. No. But I did a thing. I did a thing. That is crazy. One of my buddies, he's like, okay, one of the ways that we can test buoyancy so that way you kind of know what happens is you take a really deep breath, hold your knees. Is this a Navy SEAL? Told you this. I told you. You take a really deep breath, you hold your knees, and you should be able to, your back should just cross. I do that. Deep breath in my lungs, hold it, hold my knees. You know what happens to my body? Just fall forward. Oh, you sink? Are you sure it's not your posture, though? Because you have to hold your head a certain way to float on your back.

45:40Brian Preston:No, no. You're supposed to do it on your stomach. You take a deep breath, hug your knees, and lay in a cannonball position, and you should be buoyant enough to float. When I do that, all the way down to the bottom. I'm not buoyant, dude. That's why swimming is so difficult for me. I don't think. That defies. Very interesting. You fill up enough oxygen in your lungs. You should float. Brian, I'll do this. Come over. Come to my house. We'll do this. We're going to bring this into our maybe - Bo's just looking for content where he can be shirtless. Now, look, it might get great engagement, but I don't know that I'm willing to sign up for that.

46:14Even if I'm in great shape, if you saw how starkly white I am under these shirts, nobody wants to see that. It looks like I have a shirt on when I have no shirt on.

46:23Brian Preston:This has gone so far off the rails. It looks like I have a shirt on with no shirt on. It's true. Okay, I'm just going to go back. We have a few more rapid-fire questions I wanted to get to. This is CPA life, guys. So we're just going to jump back on. We've fallen off. We just jump back on. It's real. The struggle's real. Okay. That's CPA life. The next finance-related question. I still have on a shirt. Oh, my goodness. The question is, is it better to pay for pet insurance or have a sinking pet emergency fund? Oh, don't ask two Southern boys this question. Oh, I'm going to. The sinking pet emergency fund, I am not a big proponent or advocate for pet insurance because it's so specialized.

47:01Brian Preston:If I have cash over here in my emergency fund and I incur some sort of medical bills, I can use the cash to do that. I don't think you do pet insurance. And then I would encourage you, if you're from my generation, you saw old yellow and where the red fern grows. Thank you. Take that into context. He said it, not me. That was not an official Money Guy endorsement right there. That was not a true answer. I'm just saying this is what shapes people in my generation. They showed us this type of stuff in grade school. So it shapes you a little bit. Oh, my goodness. I'm not saying. Look, my wife would have us spend probably a gazillion dollars on her dog.

47:42This is over the time. She's 13 years old.

47:43Brian Preston:I like how she's her dog. I can't get them back. It's their dog. It's their dog. All right, two more rapid fire. If we make too much to contribute to a Roth IRA, should we convert traditional dollars in step five so we can do backdoor Roth? I'm 35 years old with$450 ,000 in retirement. I'm confused in the fact that if you have a large income, you should be able to do both five and six together. It's not an either or. You should be able to... Did I mishear the question? They were just saying, hey, I make too much money to contribute to a Roth. Is backdoor Roth step five? I think it's probably a step six to a degree.

48:21Brian Preston:Yes. If you can do the backdoor Roths in step five, I would do the backdoor Roths. Assuming you have the right account structure, you can't have any other IRAs or then the Roth conversion would be taxable. We're going to come back to that one. Okay. Coming back to it. We said everything right. That was a trick question. But not least, did Han shoot first? Do you even know what they're talking about? He doesn't. Who's Han? Do you know who Greedo is? You know that. Do you know who Greedo is? You didn't say Hans. Han. Han. No, we're not pumping. Hans and Franz. I thought you said did Hans shoot first?

48:56Brian Preston:Pump you up. We pump you up. Where's their timer? They're already off the rails again. Did Han shoot first? Shoot who? Who shot first? Greedo. Keep going. Greedo. You don't have an answer? All right. And that concludes our It Does Not Depend rapid fire segment and more. Today's special edition. We're going to move on to our Maybe It Does Depend segment where we go back through and you can say anything you didn't get to say. I love that you're so nutted. You're such a biff. You really are. Such a biff. You can't swim. Chad, whatever we want to call you. That's why we make a great team together.

49:35Brian Preston:All right. I have a few notes. I'm guessing that the green guy and Han Solo shot each other, but they argue about who shot first. Is that the context? Am I putting together my thing here? Well, I mean, it's because Han, is he a good guy? Because he's already a smuggler. Right. So he's got this, but he's also our hero. He's kind of a rogue. Yeah, it's an interesting character development. So as someone who knows, what's the answer? Did Han shoot first? I mean, I think there's controversy. Yeah, I think he walked away. Right. That close contact. That close contact. Something didn't walk away. The person who shot first is the one that walked away from it.

50:14It was under the table.

50:16Brian Preston:All right. We had a question where I cut Brian off. He was about to go into a story. It was about the Utman. Yeah, I was just going to say, look, my daughter, it was a big shocker for me, is that you do the custodial Roth account when she's 15 years old, and then you show her, like, the Fidelity app. And then, surprise, there's her custodial account, too. And it was just a big shock. So we had to have a conversation much sooner than I wanted to about, you know, because I'm trying to prime the pump of her good behavior. And then, surprise, we get to have a conversation also about how we've been saving monthly for her.

50:51And that was just, that's a downside to custodial accounts, too. Something to consider. Because it's tied to your child's Social Security number.

50:58Brian Preston:Yeah. And then the other one, there was one where Brian really wanted to say, it depends about the first-time homebuyers either pulling from brokerage or putting 5 % to 7 % down. Was there anything you didn't get to say? Is it really true that in the remastered versions, they changed it? Like in the original one, Han shut first, but in the new ones that came out, it was a game? Everyone's nodding to me. I feel I don't actually know. I have heard things like that, though. That's wild. So you watch a movie as a kid, and one thing happens, and then they change it? I couldn't get on board with that.

51:28Brian Preston:That's what they're saying. I didn't even know. It depends on what version you watched as to who you think shop is. Well, we all know I'm old enough I saw the original. I'm sorry, you were talking about Roth conversions. Can you go back there? No, I was talking about home buying. Oh, I'm sorry. Go back to that one. Brian said it really does depend for that 25-year-old first-time home buyer. Look, what I was trying to say, if they were... Some people have so much... You never know. If you've had somebody who's been saving for their benefit or other things and you have big chunks of money sitting out there, then I hate for people to pay PMI and other things.

52:06But for most people on their journey, that 3 % to 5 % down payment is supposed to be your bridge into homeownership sooner. But it all depends upon what you have in assets. As a financial advisor, I always like to see, what do you have? And let's try to maximize this using the financial order of operations. but it is going to depend upon how big your pot of assets are.

52:30Brian Preston:I agree with you, but can I disagree with you just a smidge? Is that okay? Even if you're like a 26-year-old, let's say you've got a big old pot of assets, I'm going to have a real hard time. Assuming that you stay inside the 25%, taking a big chunk of that and paying 20 % down at such a young age. I mean, think about it. Interest rates on mortgages are over like 6.5%. I mean, if somebody had custodial accounts of like$220 ,000 and they've got a great income and they're saving, and it's not hard to turn some of those investments into liquid cash, I think there's potentially, I mean, I'd want to know what their savings habits are.

53:09You know, are they funding their Roths? Are they loading up their company 401k? There's a case to be made where maybe you take a portion. I know it's not optimized, but money is nothing more than a tool. Okay. It truly is. It depends. I would want to know also what their risk profile is, what money they have coming down the pipe, what their career trajectory is. There's a lot of variables that would really go into that decision matrix.

53:34Brian Preston:Got it. Okay. The Roth conversion one. Yep, that was the last one. Go back to the Roth conversion one. Can you just reread that question? If we make too much to contribute to Roth IRA, should we convert traditional dollars in step five so we can do a backdoor Roth? We're 35 years old with$450K in retirement. Yeah. I want you, yes, definitely go ahead and do the backdoor Roth. Structure it right. Make sure you also don't have any other rollover IRAs or anything else like that. So, yeah, you can treat the backdoor as step five. But that also puts, because your income is so high, I'm counting on you to also be doing step six.

54:13So it's both. It's an and. It's not an either or. I think you need to make sure you're doing five and six.

54:20Brian Preston:Now, the way that you read it gave me another little insight that I think is worth just notating. Let's assume that you have now crossed over the threshold where you can contribute to a Roth. Roth, if your question is, hey, I can't contribute to Roth anymore, should I start doing Roth conversions annually in order to build up my Roth dollars? Maybe not if they're not backdoor Roths. If you're just converting pre-tax assets to Roth and you're incurring taxability to turn those dollars into Roth, depending on your tax bracket, that might not make sense. So there's a very big difference in a true tax-free backdoor Roth conversion where you put a traditional IRA contribution, non-deductible, inter-traditional, and you convert it to Roth tax-free versus converting pre-tax traditionals or IRA rollovers into Roth.

55:09Brian Preston:I would likely not recommend doing that if that was the question you're asking. I'm not sure which one it was, but surely you got something to work with there. Well, great. That concludes our rapid fire segment with so much bonus content in between. So you're welcome for that. See, I will say, because y 'all probably know we're not doing as many themes, because I think y 'all made some solid points that sometimes the themes took away from. But we're so zany that we put enough weird stuff in there even without having to have a gimmick on it. You're welcome. Brian Preston brings his own theme. He does.

55:47Brian Preston:He does. All right, let's do another personal finance question before we wrap this thing up. This one's from the OCR dog. It says... Hey, what's the name of the... Do we know... Have we announced what show's coming out this Friday? Have we even said that yet? Do we know the name of the show? I mean, I could... Yeah, I do, but I don't want to get it wrong. It's a show we're super excited about. We think you should watch it. We think you should watch all of them, but this Friday was one that we're super excited about. You made me think of that. If you want to know when it comes out, make sure you subscribe right now to the channel so you get a notification when that show goes hot.

56:21Brian Preston:It'll be a surprise. Sorry, Reeves. Didn't mean to throw you off. That's all right. Do you want to hear OCR Dog's question? I want to hear about some OCR. I don't know if it's about that, but it says, does an inherited traditional IRA count towards the Roth IRA pro rata rule? I'm in step nine of the FOO, and I don't want to run afoul of the rule. And I'm trying my best to proactively plan out my accumulation. It's one of the unique little carve-outs. Inherited IRAs do not count against the prorata rule. So long as you've zeroed all of your other IRAs out except for the inherited IRA, you can still do backdoor Roth.

57:05Brian Preston:Contribute to a traditional, do not take the deduction, convert that to Roth. Yeah, the ones to watch out for is a lot of times those early small business IRAs like the SEP IRAs, simple IRAs, those things, and then of course rollover IRAs from a former job. But inherited IRAs, they're unique upon themselves. That one could have been part of the 30th second. Wow, that was like a rapid-fire question. That was a great – that one was straight. Let's do another one. Because I thought we were done with the rapid-fire segment. I do just want to throw one thing out there. If you are not aware of this, inherited IRAs have changed over the past couple of years.

57:40Brian Preston:The rules used to be one way. You could stretch. And then they changed. And then they kind of changed again. And then they came up with final ruling. Yeah. If you've inherited an IRA in the last, I'm going to say in the last seven or eight years, it's worth doing the research to make sure, am I actually in compliance? Meaning, we know that now there's this 10-year thing. If I inherit an IRA, I got to distribute all the money within 10 years. But oftentimes, you also have to take an RMD in those 10 years. You can't just wait and let it balloon all the way at the end. And the rules are a little nuanced, a little wonky.

58:13Brian Preston:So if you've inherited IRAs, make sure you're checking that so you don't run afoul. and get a gnarly letter from the IRS a couple years from now. This might be one of those things where you can try to keep your life as simple as possible, but complexity finds you. I mean, this is how many times do we have clients who all of a sudden are landlords? You know, they have RMD issues. These things, you can try to keep your life as simple as possible, but success is going to create complexity. That's right. Well, this next one I have pulled up, I feel like we have to do because the username is All I Want for Christmas is a Tumblr.

58:47Oh, wow. Oh, wow. What a good name.

58:49Brian Preston:So the OCR dog and All I Want for Christmas is a Tumblr. If you would like a Tumblr, just email winner at moneyguy.com, and it's your lucky day you get one. And with that, the question says, how do you move to a cash management plan? Do you have separate high-yield saving accounts for emergency fund and sinking funds? How much do you suggest to keep in your checking or clearing account? Oh, that's great. It's a great blocking and tackling question. Like how do you actually move out of like strict budgeting? I think it would be helpful, Brian. I think we're going to just share what we do. So like the question is, well, how do you move from a cash management plan?

59:25Brian Preston:There's budgeting, which essentially is when you start out, I have these categorically, I'm going to spend this much on here. I'm going to spend this much here. I'm going to spend this much here. I'm going to track it, make sure that I stay inside that categorically. Well, then once you kind of morph and you kind of have an idea, I know what I spend eating out. I know what I spend at the grocery store. I know what I spend in these other categories. I want to make sure my savings is right. I've got, I'm following the financial order of operations. I'm saving 25 % of my gross. Well, then I don't have to track and monitor as much how much I spend when I go to a restaurant or how much I do when I go here.

59:53Brian Preston:So that's moving to a cash management, but you make a great point. If you're not doing some sort of like zero-based tracking, you want to make sure you have an understanding of where you are, your cash levels, so that you don't get yourself into a hiccup. So, Brian, I don't mind sharing what I do, but you want to share what you do for my cash management? Kind of give context and a teachable thing. I know when I was trying to figure out back when I was in my mid-30s if I should do LASIK surgery or not, every year I'd go for my eye exam and they're like, man, your eyesight is stable. Your prescription, yeah, it's screwed up right now, but it's pretty stable.

1:00:29It just doesn't move. You could move to a different thing. Instead of wearing contacts every day, you could do LASIK because your prescription is so stable and then you wouldn't have to think about putting in contacts every day. I feel like there's a lot of correlation to going from budgeting where you think about when you first start managing money for yourself and your household, it's hard. I mean, it's because you've got money coming in, you've got money going out, and you don't feel like you're completely in control. But there will come a time where you also build muscle memory or stability where it feels like from a behavioral standpoint, the money's automatically going where it's supposed to, into your retirement accounts.

1:01:06It's being spent out. You set up automatic spending accounts. You make the good habits as easy as possible. The bad habits that much harder. So the cash flow is stable. And then I found in my own cash management plan, once I set up just setting up automatic savings plans and investments for all the different categories, I then as I got pay raises or as my income went up, I practiced what was called forced scarcity. I thought about what do I need as a household to be functional and still create happiness and not to feel like we're doing without. But then I would squeeze myself to maximize the savings element and the investment element so that I was living my best life and controlling and building my time ownership that much sooner.

1:01:47Brian Preston:Yeah, and so practically the way that looks for me is I have a high-yield savings account. Actually, I'm still buying a money market mutual fund for my emergency reserves. It is my emergency fund, but I guess you could also kind of call it a sinking fund because it's more than what my prescribed emergency fund should be, only because we like to have some dry powder available if there's an opportunity that presents itself that we might wanna move and capitalize on. So that's where I keep all of my cash. But then I have a checking account, like an everyday checking account. And for me, my personal buffer that I keep in there is about one full month of expenses.

1:02:20Brian Preston:So whatever I spend in a month, I kind of have that as an extra slush in there so that as money comes in and money goes out, I never worry about it getting too low. I'm never gonna worry about an overdraft or something like that. And that works. So one month roughly here, and then I have my emergency fund over here. And then all of my consumption I put on credit cards because I get all of the points and all the stuff. And then I pay it off once a month. So I can kind of track where my cash levels are at all times. Yeah, and if you want a cash level, Todd, if you think working within the financial order of operations, step four is like the three to six months.

1:02:53When you touch cash, step one is highest deductible cover. That's keeping from desperate decisions. Step four is three to six months. There is another level when you get down to step eight, and that's where my cash has actually gotten expanded a little bit more, and that's where I've gotten into doing real estate investing and other things. But there's a time and a place for each one of those actions. The first one is to keep your life out of the ditch and making desperate decisions. The next one is to protect you in case you lost your job or had a prolonged period. Step eight is where you're thinking about cash as an opportunity fund, and that's where I detailed that in great detail.

1:03:28And even we got some new things coming out down the road, but I would encourage you to go check out Millionaire Mission where I really lay out how I've handled cash as a wealth builder and an amplifier as well.

1:03:39Brian Preston:Love it. Great answer. Thank you for answering all the questions. There have been a few times where I was not fully paying attention today and it is because I was reading the money verse. I just want to come clean. I just want to come clean and I wanted to just invite you one more time that if you want to keep chatting with us even after the camera turns off today, go to moneyguy.com slash moneyverse and we would love to see you there and chat, personal finance, and just have a good time like we have today. So thank you so much for being here. We will be back every Tuesday at 10 a.m. Central right here on YouTube and Spotify, wherever you listen.

1:04:12Brian Preston:We'll release this later too. So yeah, we just love being here for you. Thanks so much for joining us. We did a show meeting before we came in and we were going over some of the shows we're recording in the next two weeks. Guys, it's hot. I'm pretty excited about it. I even told Will, I was like, man, what we get to do is pretty daggum fun. So I'd encourage you, please sign up, please subscribe. I don't take for granted. I mean, we were talking, we kicked off the show talking about what creates happiness and fulfillment. And I'll tell you what, I wake up every morning on Tuesdays, especially, and really do feel like we're making the world a little bit better through education.

1:04:48And I just want you to be part of that journey. So please be a financial mutant. Sign up for our content. I'm your host, Brian, joined by Mr. Bo Money Guy team. Out.

1:04:57Brian 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.

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1:06:20Thank you.