Why $250k is Halfway to $1 Million

23:48Rebie:Yep, it's a balance. If Brian was here, he would tell you to at least bedazzle your basic life. That's right. Just make the memories now because, like Bo said, you will not always have this moment. I mean. This is my bad. That's my dude. That's so cute. Well, Josh, that was a great question. Thank you for asking it, and we hope that helps you think through your question and how you're spending your money and your time with your family. If you would like a Money Guy Tumblr, just email winner at moneyguy.com and we will hook you up. All right. You guys are very fun. These guesses of who is coming to collab with us next week were great.

24:24Rebie:Some of my favorites were Warren Buffett and Chapel Roan. What? Those two seem different. I like the contrast. Someone said Dolly Parton. Brian would love that one. We would flip. I would love that one. Let's just put that out there. Since he's not here, I'm going to go and speak this into the ether. If you, one, Dolly, if you're a fan, we love you so much. We love you, Dolly. But if you're someone who's connected, we would love to have her come on and do some collaboration. So if you happen to be the inroad to Dolly, we'd love to be a resource. I'll have to say, it is not one of those three that I mentioned.

25:00Rebie:So drumroll, please. But just as amazing as all three of those. For sure. Those were just the ones that kind of made me chuckle. but we are super excited to have Humphrey Yang on the show next week. We are recording some fun content behind the scenes, but since he's going to be here on a Tuesday, we were like, Humphrey, you've got to come on live with us. It's going to be so fun. We're going to do it live, and you guys know the way the live show works. You get to ask us questions, and we get to answer. So that means that next week, Humphrey's also going to be answering questions live with us. Absolutely.

25:36So go ahead and start thinking about and be specific thinking to be like hey this question is for humphrey to stump him because i'm not going to stop brian and bo i'm kidding uh but it's going to be super no we have really enjoyed humphrey's

25:47Rebie:content we got to meet him in person at a conference and have interacted with him so we're really excited to officially be joining forces and making some hopefully really awesome content for you guys super hype so be here next tuesday 10 a.m central humphrey yang will be here It'll be awesome. All right. We're going to go to a question from Got a Tumblr. And shout out to you because after we answer this question, you will have a Tumblr. You will have a Tumblr. It says, hey, money guy, should emergency funds always be in high yield savings accounts? With interest rates reducing, is there a balance of where to keep between high yield and a money market?

26:32Rebie:Okay, yeah. So I think we're talking less versus more risk and also less versus more rate of return. What would you say? So we've done a show on this in the past when rates first started trickling up before they hit the peak, kind of walking through the different ways that you can hold a cash. So I'm going to answer your question this way. should your emergency fund always be in a readily available liquid cash or cash equivalent? The answer to that would be yes. What a lot of people don't realize is there are a number of different things that satisfy that, right? You can have a savings account at a brick and mortar.

27:13You can have a high yield savings account that can be at a brick and mortar or even like an online institution. You can have a money market account at one of those institutions, or you can have like a money market mutual fund that you hold inside a brokerage account. And what's really interesting is which one of those that pays the highest rate will not always be the same. There were times in the not too distant past where the absolute best rate you can go out there again was in a high yield savings account. You go open up an account at a, I'm not going to give them free endorsements, but they're the names you've heard of.

27:47They would have like really attractive high yield accounts. You could go to bankrate.com and you could kind of sort by, you know, yield and all this kind of stuff. And so a high yield account made tons of sense. But then we got into this rate environment where rates went higher and higher and higher. And all of a sudden money market mutual funds became a lot more attractive. So if you wanted to go have the highest yield, you'd go buy like a money market mutual fund. As rates begin to drop, money market mutual funds will probably drop more quickly than high yield savings account. So we fully anticipate it will happen again.

28:19So high yield savings account will probably be the one you want to hold in or a money market account will probably be the one you want to hold your cash in. What I would encourage you to do, and this is why doing a net worth statement every single year is such a great, it's like annual physicals. You know what I mean? Like you go to your annual physical and like checkup, You think like things are good, but you go to the annual physical and they're like, hey, you should check on this and this and this. You're like, man, I wouldn't have been thinking about that. I'm glad that it's like top of mind, front and center.

28:51That's what your annual net worth statement can do. And if you want a free resource that you can use this year in 2025, you can go to moneyguide.com slash resources and download our free template. Or if you want to use the exact same template that I use, that Brian uses, that Rebeat uses, that the vast majority of our team here uses, you can go to learn.moneyguy.com and download our net worth tool, which has a whole dashboard there. I'm off on a tangent here. Sorry, Brian.

29:22Rebie:That's Brian's thing. What are you doing? Where I'm going with this is that one of the things you do is when you put that on there every year, I always mentally ask myself, okay, this is not much I have in cash. I've got it in this high-yield money market fund or in my high-cost account. Is that still the best payer? Or is that something I should revisit? Okay, what's Ally Paying? What's Capital One Paying? And I don't want to move them all the time, but at least annually I want to check to make sure that I'm at least getting a nearly competitive rate with whatever the going rate is out there.

29:53So to answer your question at Tumblr, it does not have to always be in one specific type of account. You can change where it's at, but I'd be cautious of a few things. I would not change a ton because it's super annoying to have to open a bunch of accounts and move them all over. It really is, yeah. There's also tax reporting required on these accounts. So it's going to be super annoying if you open this account six months ago, but then you moved it somewhere else, but then you forgot about that account. You get this tax reporting form and you forget to put on your tax return and you get a letter from the IRS.

30:23You're like, oh, I forgot about that. That's a super annoying thing. And be careful when you're shopping rates for bait and switch type tactics. This happened to me because I'm super competitive and I wanted to beat Brian. So this is like 15 years ago.

30:41Rebie:Let that be a lesson. Yeah, right. Pride cometh before the fall. he went and got a high yield account back when high yield was paying the best with like a well-known name everyone's heard of and I went to bankrate.com and there was this other one that was just right above it for not a well-known name that a lot of people had heard of and I was like I'm going to do that one so that I can beat him and I did it and literally three months later they dropped the rate it was an intro teaser rate, absolutely ridiculous so be aware that rates can move quickly you don't want to do it a ton but you do want to make sure that you're an advocate for every dollar in your army dollar bills Yeah.

31:15Rebie:No, good stuff. Got a Tumblr. Thank you for the question. And we would love to make your username a reality. Just email winner at moneyguy.com and we will send you a Money Guy Tumblr. Love it. Chronic migraine is 15 or more headache days a month, each lasting four hours or more. Botox, onabotulinum toxin A, prevents headaches in adults with chronic migraine before they start. It's not for those with 14 or fewer headache days a month. It prevents on average eight to nine headache days a month versus six to seven for placebo. Prescription Botox is injected by your doctor. Effects of Botox may spread hours to weeks after injection causing serious symptoms.

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32:21Rebie:Why wait? Ask your doctor, visit BotoxChronicMigraine.com, or call 1-800-44-BOTOX to learn more. This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners, sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com. All right, Kyle S.

32:59Rebie:is up next. He says, hey, money guys, I'd like your thoughts on Coast Fi. My wife and I, age 27 and 29, have about 180K in retirement accounts total and a target of 5 million at retirement. So doing some really great things. Can you please define Coast Fi as well for those of us who are new to, I guess I'm not new to the concept, but just thinking of people who may be. And then answer Kyle's question. So most people, they start out in their working career and they begin saving. And their idea is for the average person, you graduate from college around 22, 23, or maybe you don't go to college. You get out of high school like 18.

33:42You start saving and you save for your entire working career until you get out to like age 65. And then you retire. And hopefully what you've done is you've built up a pot of assets that's large enough that your money can provide for your needs for the rest of your life, right? It can work harder than you can with your brain, your back, and your hands. That's like the traditional financial independence journey story. Well, there are some people that say, hey, you know what I want to do? Early on in my career, I want to really like jack up my savings because I've got this high income, I'm in this unique vocation, and I'm going to save really, really aggressively early on so that I can build my assets to a certain level.

34:26That if all I do is let those assets sit, and I'm going to make up a number, from age 35, and I just let those assets I saved up until 35 grow from 35 to 60, 65, I can let them just coast all the way to retirement. And so long as I can provide for my living expenses, I can make less money in my working years. I don't have to save as much. I can be a little bit more conservative, right? It's the idea I'm going to save up how much I need. I'm going to let it coast into retirement and I can just cover my living expenses. And that's fine. A lot, a lot of people do that. A lot of people like think, think through that.

35:03Um, so your question, Kyle is, Hey, um, 2729, I've got$180 ,000 saved up. Uh, what are our thoughts on Coastify. Here is my thought. This will seem shameless, but it's not. What I want you to do, Kyle, is I want you to subscribe right now to the channel. I want you to just click on the button to subscribe right now because we recorded last week, two weeks ago. It all blends together. We just recorded an episode of Making a Millionaire, and this was the exact problem. I say problem. It wasn't a problem. This was the exact planning opportunity that we navigated through. We had this couple and their desire was coastifying.

35:49Hey, we have this plan and we've been working really, really, really hard and we are five years away and we just want to kind of test. And it was great. And they had done, I'm not going to give away what they did. They had done one thing really, really well, right? There was an obstacle that they had to overcome and it was the obstacle getting to the first little clip, they had solved that problem. What they had forgotten though, was that there's another obstacle at the end of the plan. And that obstacle goes from 60 all the way to the rest of your life, or whenever you're going to actually truly retire all the way to the rest of your life.

36:27And they were so focused on the short-term goal that they had lost sight of the long-term goal. So when it comes to Coast Fly, I think it's great. I love it. I think it's a fine idea if that's something you want to pursue. But the further out your timeline is, the more impact even small variables can have. So like a little change that you're not aware of. And this is what I know at my age. For 27 and 29, one, to have$180 ,000 saved is insane. Like you're crushing it. We say that by 30, you ought to have one times your annual salary saved up. I don't know what you guys make, but$180 ,000 is pretty stinking good.

37:07So you're in a great spot. But there's a lot of life that's going to happen in your 30s. Amen? Amen to that. Amen. There's some life. Can't confirm. So whenever you plan for Coast Fire, you have these long-dated things, you better make sure that your assumptions are sound. And in my opinion, you better make sure that your assumptions are pretty conservative. Like when we think about Coast Fire or Fire or Fine, we talk about these like 3Ds. we really do not spend a ton of time on the dream. The dream is great if it happens where we spend the majority of our time. And this is what we do for our clients.

37:42We spend a lot of time somewhere between doo-doo and down to earth, right? Like, cause if that's the risk that exists, we want to make sure that we cover the risks. And then if things turn out better than we anticipate, then that's great. It gives us more options, more flexibility, more choices down the road. But far too often people go into these scenarios only thinking about the dream, only thinking about, okay, I'm going to do this. It's going to be awesome. If one thing changes, Oh, I thought we're going to have two kids ended up with three kids or thought we were going to live in this part of the country, but had to move to this part of the country or thought this job was going to get us to the first benchmark, but all that job change, whatever that thing may be, you just have to make sure that your assumptions are really, really tight in order to be able to execute.

38:31So we love coastify, it does require a little bit more forethought, a little bit more planning, a little more strategy than a normal retiree. Just, Hey, if I can just save 25 % of my gross, I don't have to think about a whole lot else. I can just put that to work. And if I do it early enough, odds are I'm going to get to write my ticket.

38:49Rebie:Yeah, no, that was good stuff. Kyle, thank you for your question. If you would like a money guy Tumblr, we'd love to send you one. Just email winner at money guy.com to cash in on that. Oh, right. We've got it. You got, something? Well, somebody just said, I mean, this is a question. Hey, when does the survey result being released? Really soon. Honestly, I'm not going to say the date just because I forget off the top of my head, but it's coming. So be sure you're subscribed. And I mean that because you will see it when it comes out. And also if you took the survey, we're going to be emailing you like a special announcement email, like, Hey, this thing that you helped us make is out in the world.

39:25Rebie:So that's coming this month. I don't want to, I don't want to oversell it. Uh, you know, that's not, that's not normally what I do. Um, mind blowing. Like when we actually got to see the results and look at the results, like, I don't even know. There's a part of me that's like, was it surprising? But like, it kind of was, it was like, okay, yeah. You know, when your kid, I keep talking, man, I'm talking a lot about my kids today. You know, when your kid does something awesome and you just like, you're just like well up with pride and you're like, Oh, look at that. Look at that. That's the way I felt with the financial mutant survey.

39:57I was like, Oh, they're doing it it was awesome and so we can't wait to share that with you

40:03Rebie:oh so our production team is awesome and they they reminded me when it's coming out it's well don't tell them no no no i think you should subscribe don't tell them you gotta subscribe uh that was very kind of you though caleb but i'm gonna be like that okay um we do have some more questions. This next one is from Sparonator. It says, we are at the halfway to financial independence stage, a net worth just under 900K and contributing around 80K a year. Y 'all often say the first 100K and 250K are the hardest. What are the most common mistakes people make between 500k and 2 million that slow compounding momentum so it's true they've got a lot of the hard part or what we often talk about as the hard part down is there could they screw it up now what would they what do they need to be thinking of now at this stage i love it i've got i've got three things you ready for this i'm ready i'm writing myself notes so don't forget the three things.

41:17That's great.

41:18Rebie:That'd be sad if you got to number three and said, I don't know. Blanked. Yeah. So one, to be at the point where you have a$900 ,000 net worth and you're saving$80 ,000 a year, that's fantastic. Like for all intents and purposes, I don't think you said your age, killing it halfway to financial independence. That's awesome. And so you've done a lot of things really, really right. But what goes wrong? Where do we see people often fall off here? the first one I would say is they forget that I've done a lot of things right. People all of a sudden, once you cross over that two comma mark, you start thinking, oh yeah, yeah, yeah.

41:55Well, I need to do something more complicated. I need to do something more sophisticated. Do something more sexy, something more risky, something more, not recognizing that the very thing that got you from zero to 900 ,000 with the right savings rate in enough time can be the same thing to get you from 900 ,000 to 9 million, right? Like you don't have to necessarily change behaviors. And far too often we see people once they get into like the millionaire status, they want to start doing things like, okay, well now I'm going to go buy all the real estate, or now I'm going to get into the private equity deal, or now I'm going to start investing in the startups, or now I'm going to start.

42:30And they start doing things that are different than the behavior that got them to where they are. Now, don't mishear me. I'm not suggesting that there are things wrong with investing in real estate, or participating in private equity, but there is a season and a reason for doing it. And if you're not in the season or don't have the reason, it's not something that you should necessarily do. And so far too many people like fall into that. So that's number one. Number two is life starts getting a little bit easier. Life starts getting a little bit kusher. I'm saving, I'm saving$80 ,000 a year. I could probably afford that nicer car.

43:11True. I could probably afford to upgrade the house. Maybe true. You know what? We could probably go on the nicer vacations. And you know what would be great if we had the same house we could go to every year for vacation. Maybe I should get that second home. Maybe I should get that vacation home. And then all of a sudden you begin making these decisions because you have had a level of success that your lifestyle starts to get bigger and bigger and bigger and bigger and bigger. And what you recognize is, man, I used to be able to live in such a way that I was able to go from zero to 900 ,000 and crush it.

43:47But then I had some success. My income went up, my assets went up, but then all of a sudden I let my lifestyle expand and man, okay, I saved 80 ,000 last year, but man, remember we did that one big trip. So maybe it's 70 ,000 this year. And no, Oh, we got to do the private school because we moved into the neighborhood and we got, ah, and so maybe I'm only going to say 50. And then it's this thing where lifestyle creep is a real thing. And what begins to happen is your lifestyle creeps up and the type of behavior and type of person you were that got you to the level of success begins to shrink because it gets crowded out by other stuff.

44:23So be mindful. Again, don't mishear me, lifestyle creep is not bad. It's not inherently a bad thing. As our life expands, as our income increases, as our net worth increases, it's okay to enjoy that. It's okay to be living better today than you were last year or better this year than you were five years ago. So long as your savings behavior follows. So long as your lifestyle does not outpace your savings behavior. So lifestyle creep is a second place we see people falter. And then here's the third one. You've heard us say this a number of times. In our opinion, with all the books, podcasts, blogs, articles, resources, YouTube channels, all the things out there, it's not incredibly difficult to self-manage your financial life when you're first starting out for like zero to$500 ,000 of investable assets.

45:26There's so much information out there. There's so many different resources that you can do it yourself. And it's not all that complicated, right? If you want to know where to start or what to do with your next dollar, go to moneyguy.com slash resource and download your free copy of The Food. It's a nine step process to help you figure out what to do with your next dollar. And you can do that for a long time.

45:46Rebie:Had to do that for Brian. But a lot of times, we don't mean for this to happen, but complexity finds us. We just wake up, we're like, holy cow, when did my life get so complicated? And when did I start getting faced with these decisions? Like, man, I used to just have my W-2, but now I'm getting RSUs. And I have this thing called an employee stock purchase plan. And okay, I had life insurance when my kids were little, but do I still need it now? And how much? And holy cow. All right. When it was little, I said, I want this person to take care of my kids. But now my kid is like three or four years away from 18.

46:22And if I kick it, they're going to get all this money at 18. Is that really what? And you just complexity begins to find you later on in life. And so one of the things I think a lot of people do, whether it's they get too busy or they're afraid of the cost or they're afraid being sold something, they don't recognize that taking the relationship to the next level, having a professional step in and give you a second set of eyes on whatever that thing may be, whether it be on your taxes, your investment strategy, your saving strategy, whatever that thing may be, just because you, let me, most financial, I'm not even going to say most, I'm going to talk about our firm for a moment.

47:02Everyone who comes to our firm has had some level of financial success, right? Like that, that people who reach out, it's not like people come to us like, Hey, I don't know what's going on with money. No, in order to even be reaching out, you've had to have some financial level of success. So it's not that you're bad with money. It's not that you don't know what to do. It's not that you don't know how to handle it. You have had success and you've gotten to a point, but the question you begin to ask is, okay, am I optimized? Am I doing all the things that I should be doing? Am I doing them as effectively and efficiently as I could be doing?

47:32And so a lot of people from 900 to 2 million or I think 4 million, whatever your number was, there's some things you can begin looking at. Oh man, I used to do Roth 401k, but man, maybe I should be doing pre-tax 401k. Oh, I make too much for Roth IRAs. Hey, maybe I should be doing a backdoor Roth IRA. Hey, my 401k has after-tax contributions. Maybe I should be taking advantage of those. A lot of those are optimization metrics that happen as you get into that stage. So just recognizing, am I at that place where one of three things is happening? One, the gravity of the financial decisions is so great, I feel nervous handling them on my own.

48:11Two, I don't know what I don't know. Life has gotten complex and I don't know how to answer all the questions that I need answers to. Or three, I'm just too busy. Life has gotten so busy that the things I know I should be paying attention to end up getting pushed on the back burner. If one of those three things is happening for you, maybe all three of those, that might be the warning signal. Hey, I should maybe consider taking the relationship to the next level. I should consider reaching out to professional advisor to help me figure out where do I, how do I get from where I'm at today to where I want to be five, 10, 15, 20 years in the future.

48:45And if you're at that place, I'll tell you two things. One, whether you're going to talk to us or not, we have a great tool. Go to moneyguy.com slash resources. We have a great tool that's, It's like eight questions, 10 questions. Questions to ask your financial advisor. And it'll kind of walk you through, hey, ask this to make sure the person you're working for is a great fit for you. That's the first thing. Second thing, if that does describe you, we would love for you to give us a chance. We would love for you to consider taking the relationship to the next level so that we could be part of that team to help you get from where you are today to where you want to be in the future.

49:18Rebie:Good stuff. Sparinator. First of all, you get a Money Guy Tumblr since you asked your question and we answered it, just email winner at moneyguy.com. And then for Sparenator or anyone who relates to what Bo was just saying, remember you can always go to moneyguy.com and click on become a client, and you'll just find a little more information about Abound Wealth and the form to fill out to get connected and just start exploring that. So that's always available for you if you want it at moneyguy.com. Love it. All right. Leandra Jo is up next. She asked a question last week. I know. I've seen her before.

49:52I recognize a memorable name. Leandra, thanks for continuing to check in.

49:56Rebie:She says, I'm in the messy middle and will be done with Foo Step 3 this month. Let's go. That's awesome. With what level of intensity should one be funding an emergency fund? She's about to get to Step 4, which is the emergency fund. And remember, you can go to moneyguy.com slash resources to get your free copy of the nine steps. So, Bo, talk about Step 4. Emergency reserves are very important. How much intensity should she be going for in this next phase? See, this is what's so funny because y 'all recognize like all of us in the financial ecosystem, right? Like all of us folks that do this, we all know each other.

50:35We all hang out. We're all friends. So when I hear a question like at what level of intensity should I be doing this? I'm thinking, man, is there some like a safari animal out there that's like super fast? What animal would you say? I think that's what she's looking for. Um, so, you know, if you know that, if you know what animal that is, uh, good for you. Um, how quickly should I be doing that? Well, here's what is so great. Reba, you hold the thing up for me again. This is our financial order of operations. Leander Joe said, Hey, I'm about to close out step three. Step three is high interest debt.

51:10This is stuff like high interest car loans, credit cards, which is what most people fall into consumer loans, store credit, those sorts of things. And what you recognize is that when you're in that step, money is working against you. We talk about all the time. We started the show out talking about compound interest and how it can be like the eighth one of the world. And it can be amazing. It's so powerful. It can even warp time. So much so that$250 ,000 is halfway to a million. That's how powerful compound can be. But when you're in step three, it's working against you. Like it's an active force against you.

51:48And when you begin to see the light at the end of that tunnel, when you get out of that forest or you get out of that fire that is high interest debt, you think to yourself, holy cow, I did it. I got out of it. And most people I know that have had that problem, they've gotten out of it. They say, never again, never again. I got myself in that situation. I'm not going to let that happen to myself again. That right there is the exact reason why step four comes right after step three. Because what happens is, for most people, they don't have enough money that if an emergency happened, they could go pull from resources to cover it.

52:35So they have to swipe. They put in a credit card. And then it just happens, and it happens, and it happens. and the reason that it happens is because they didn't have that thing to keep their life out of the ditch. Well, step four, fully funded emergency fund now creates an environment where I know that no matter what happens, if I lose my job, if the car gets a flat tire, if the HVAC goes out, if I have that medical thing I wasn't expecting, I know that I've got anywhere from three months to six months of my living expenses to keep me covered so that when that thing happens, I don't have to swipe.

53:10I can write a check. I don't have to go back into step three. Step four is there to keep me protected. So Leander, your question, how intensely or what level of intensity should I attack level four with step four? As much as you have, as much as you can give it because you are literally running away from step three as fast as you can. You want that to be a distant thing in your past. If you were running through the woods and a bear was chasing you and you came out of the woods, but the bear was still right there in the woods, how fast would you keep running through the parking lot? Just as fast.

53:55Just because you made it out of the woods doesn't mean that you're out of danger yet. You're slightly closer to being out of danger, but you got to keep going. So I would attack it with a level of intensity saying, I'm going to do everything I can. And you know what? Maybe I can't get all six months right now, but I can get half a month. I can get half a month with my next paycheck. And then I can stack on the next, I can get one month. And then I can do that. And I can do it. And then once you get to that three months, you can go, okay. And then once you define for yourself, okay, is it three months, six months.

54:30Once I get there, now I can say, okay, I no longer have to worry about my old self catching up with me because I can take care of my current self because I have the emergency fund. Now I get to start taking care of my future self. And that's when I'm moving to step five. That's when I get to start building for my financial future, building wealth for tomorrow. But you got to make sure that you cover today and you don't let yesterday come back to get you. So, whole question. What level of intensity?

55:04Rebie:Don't stop. That's like, keep going. Every aggressive animal you can think of. That's a great perspective that I don't feel like we always cover in the detail that you just so nicely did. That the emergency fund is truly to keep you from having to go back to step three. That's it. That's really important. That's a really big milestone. If you don't have an emergency fund, your only option is step three. is to just loan. Yeah, that's I love that. So Leandra Joe, really good question. I hope that we gave you some encouragement to keep going and feel motivated to not only keep yourself from step keep yourself from step three, but also to get to the exciting part of step five as quickly as you reasonably can.

55:50And can we just pause for a moment, chat, because I just think we so often celebrate. I don't know if you've gone to our Reddit. If you go look at the money guys, there's so many celebrations of people hitting miles. I hit, I hit two 50. I hit a million. And it's, it's an amazing forum for financial. And by the way, if y 'all, if y 'all wonder, if we look at it, yes, we look at it. I love going to check out what's going on. And it's so fun seeing people at those milestones, but I don't want us to sleep on the fact that getting out of step three is a huge milestone. Yep. Most Americans out there can't even get to zero and getting to zero is just kind of like getting to the start.

56:26Most people live in that negative. So Leandra, I want to celebrate you. That is something worth celebrating. That's something worth being so proud of because you've done something a lot of folks are not able to do behaviorally. It deserves applause and recognition. Good for you.

56:44Rebie:Oh my gosh, for sure. And this is a very small but sincere token of our celebration. Thanks. Since we answered your question, you get a money guy Tumblr if you did not get one last time. Just email winner at moneyguy.com. All right. Ruby, I know a lot of people, some people might not have been here at the very beginning. If not, you should go check it out because we talk about how math is awesome. But there's another thing you said that's happening next week that I think you ought to remind the people of. Another thing that we didn't talk about? No, no, we talked about math at the beginning of the show.

57:15So people don't know that, but there's another thing happening next week. We're doing a special thing. But there's people who come in midstream that may not have heard about this special thing we're doing next week.

57:22Rebie:wrong and I would love to share again. Humphrey Yang is coming. I know we've heard from many of you that you love Money Guy and you love Humphrey Yang and that we would be a great team to create some great content. And that is exactly what we are doing next Tuesday. And since he was here on a Tuesday, we were like, you got to come on the live stream with us. So 10 a.m. Central, which we're so appreciative that you join us here every week anyway. But next week is going to be particularly special because Humphrey is going to be a guest and we're going to chat with him about wealth building, but also answer your questions from the chat.

57:56Rebie:So it'll be Brian Bowe and Humphrey offering their wisdom and perspective for you. So that's going to be really fun. I'm stoked. All right, let's do one more. Eric says, why do you say to pay off student loans at 6 % in your 30s if the S &P returns at 8 % after inflation. I'm struggling wanting to pay off the 13k debt at 6 % that I have. Just put a spicy warning label on this one. Yeah, this one's spicy. But I thought he makes a good point that depending on the interest rate of certain types of debt, like student loans, they are working against you and we do consider them a problem. So how do you think through that?

58:45How, let's, let's see if we can put our production team to the test. Okay. There's a slide that we use all the time that talks about, uh, different types of debts that you have and, and what interest rates you should prioritize them. We'll see if they can get that pulled up because one of the things that's interesting is in our opinion, not all debt debt is created the same. So we have different rules. Oh my goodness. That's close. Look, production team, I'm going to give you a C plus for effort. You got almost there.

59:15Rebie:They like took it down immediately. C plus for effort. That was one of them. That's student loans, but there's one that has student loans and then has a column for auto loans and has credit card debt. And so not all debt is created equally. And so let's start kind of at the beginning. Credit cards, that's like a zero tolerance policy. We say here at The Money Guy, credit card use is okay. It's totally fine to use credit cards. If you listen to our survey show, we're going to tell you what percentage of financial mutants use credit cards. But we say credit card use, okay. Credit card debt, no way.

59:47We'll also tell you what percentage of financial mutants carry credit card debt. By the way, it's not zero. So tune in to find out what that number is. So credit cards aren't great. Well, then we say, okay, auto loans. Well, we know that when it comes to buying autos, we want to subscribe to 23.8, 20 % down, don't finance for any more than three years or 36 months, and it can't be more than 8 % of your gross income. All right? If you're inside of 23.8, then auto loans are going to have a priority. If your auto loan is over 10%, don't prioritize it in your 20s. If it's over 9%, prioritize it in your 30s, so on and so forth.

1:00:23Well, then we come to student loans. And student Student loans is, honestly, it's a hard one, right?

1:00:27Rebie:It's the spiciest one. It's a really, really hard one. And this is Eric's question. Hey, I got student loans that are, and did Eric say he's in his 30s or is he just postulating as someone in their 20s thinking about the future? He made it sound like he's in his 30s currently. In his 30s. Okay. I got student loans that are 6%. Why would I prioritize paying them off if I know that the S &P can likely produce 9 % annualized, depending on what time frame you look at. Well, the way that we came up with our like payoff metrics was based on the wealth multiplier. And for those of you that aren't familiar, the wealth multiplier is this idea that suggests that for a 20 year old,$1 can turn into$88 by the time they were tired, but it decreases through time.

1:01:13So by the time you get to 30, that$88 now becomes$23. Well, a magical thing, I say magical, a disheartening thing happens in your thirties. you start your 30s with a 23 time multiplier, but by the time you get to 40, it drops down to seven. Now, don't mishear me. Seven is still amazing. It's still awesome. But there is a reality that being able to turn$1 into seven is different than being able to turn$1 into 23. So our dollars are becoming less and less and less valuable. Well, as we're thinking through these rules, what we're thinking is probably true about financial mutants is that in your 30s, oh my goodness, look at these They found the illustration.

1:01:53They are not the fastest, but they are good. They're the most accurate.

1:01:56Rebie:They are good. Yeah, so we say that for student loans, if you have them above 6 % in your 20s, you should prioritize them. Above 5 % in your 30s, you prioritize. Above 4 % in your 40s. So if you have student loans at 6 % in your 30s, we would agree with you, Eric, that you should prioritize. Now, this is not what I'm saying, right? Now, this is one, because Brian's not here, I can say this. So lean in close. Student loans are really interesting. And a 31-year-old is different than a 39-year-old. And we recognize that, right? So you have to define inside of your financial life, inside of your financial plan, at what level you attack those goals.

1:02:42Because here's what we, here's what, if you listen to our language very carefully. I never say something like this. If you're in your 30s and your student loans are above 5%, you should stop everything and pay off your student loans. It's not what we say. We are very specific in this. We say it might make sense to prioritize paying off your student loans. What that means is that your student loans are kind of hanging out somewhere near that step three. They might not be actually high interest debt depending on where you are in your 30s, but rather than you just making the minimum payment, you may want to begin thinking through, okay, I don't need to just make the minimums because now this interest is becoming more punitive than my dollars are going to be able to earn on the other side of the equation, right?

1:03:26So I want to begin focusing more on it in my 30s at this rate. Same thing in 20s, same thing in your 40s. So this is one of those areas where personal finance is extremely personal. Now, if you have student loans and they're above 6 % and you are in your 30s, I don't think it's crazy for you to have a strategy to figure out how you knock those things out more quickly than you would have been knocking them out in your 20s. That's something that accelerates as you move through time, but you have to define for you what is the right strategy based on where you are in your financial life.

1:04:06Rebie:Yeah, no, that was a good one because personal finance is personal. but yeah like I just doing the minimum payments when you're in your 30s might not be the move so you have to think about that and that's why we have these benchmarks and rules to help you optimize so good answer Bo I appreciate that yes all right remember next week 10 a.m central Humphrey Yang is coming and remember to subscribe not only to see when we are going live with Humphrey but also to see when the financial mutant survey show it's coming it's a good one And really only the first of the Financial Mutant shows. And it is a good one.

1:04:44Rebie:So that's coming soon. Be sure to subscribe and watch your email. If you took the survey, we'll be letting you know when it's out. I'm very excited. That's my line. That's what I say. I said very. Oh, okay. She added a superlative. That's okay. You can say so excited. An adjective. Is that an adjective? I don't know. Guys, we could not do this show without you guys. So thank you so much for showing up. Thank you guys so much for being on our socials. If you've not checked out Tangent Time with Brian. Oh, why didn't we talk about Tangent Time? If you haven't checked out Tangent Time or you don't know what Tangent Time is, stay tuned.

1:05:17It's on socials. See if you can go find it. We'll be talking more about that super fun, brand new thing that we've started doing. We love that we get to do this. Thank you so much for letting us be part of your financial journey. If you keep showing up, we'll keep showing up. I'm your host today, Bo Hanson, along with Rebe. and the rest of the Money Guy squad, Money Guy team, out.

1:06:07It does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss.