Pod Insights Money Guy Show How to Combine Finances the RIGHT Way About this episode "Hi guys! My fiancé and I are getting married in December. As we look to merge our finances, what advice do you have for this transition process?"
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:07 Speaker 00 All right, this one is from TheJanine.
0:09 Brian Preston? TheJanine.
0:10 Speaker 00 TheJanine. "How do you know when you are out of the messy middle?" I'm mostly curious about your answer on this, Brian. Do you think you're out of the messy middle yet?
0:17 Brian Preston? Yeah, I am.
0:19 Speaker 02 No, no idea. No, I'm just kidding. Yeah, Brian, you know what? That is a great question because the messy middle... First of all, let's talk about how we define the messy middle. The messy middle is the time in your life where you find that you have so many different commitments and so many different things pulling you in so many different directions that you have this intersection of no discretionary time. Your time is completely gone. And also, because of all these different commitments, you have no discretionary money. So you are low on time and low on money. You're being pulled in a million different directions. For most people, this happens somewhere around their late twenties, early thirties. That's not to say that it can't happen for you later. But when does it end? How do you know that you're on the other side of the messy middle?
1:04 Brian Preston? Yeah, I've always tried to be very transparent on this because I feel like so much in social media world is everybody's giving you their highlight reel and making their life look as good as it possibly can. And that's just not the reality. I mean, there's a reason we've coined the messy middle where you're short on time, you're short on money, and you just feel like the world's working against you. And even with the world working against you, you have to take just a little bit of discipline to put something for the future just because the value of what it becomes with those small incremental decisions is too much to ignore and neglect. But so here I am, already working counter culture. Because everybody on social media is telling you how easy life is, and then here we are saying, "No, you need to embrace this messy middle."
1:45 Brian Preston? I love this question, and I can tell you specifically, this is why you need to be doing exercises like the annual net worth statement. If you go to learn.moneyguy.com, you can check that out. We have a great tool. We even have moneyguy.com/resources. We have a free template. It's because what I like about the annual tradition of doing these things is that you actually... I use it as I reflect upon what happened in the last year. And I even use the tool to then communicate with my wife, and we kind of have a state of the union for our financial household. And I can remember specifically, it was there 42, 43-ish? I know specifically, that's two years, but it is. It was 42, 43, and I remember thinking, "This is the first year."
2:29 Brian Preston? I don't feel like I'm behind and I, and I say that for, for two reasons. It's, um, I think a lot of people look at my life now and they go, man, his life was easy. Or, you know, they don't, they don't see, nobody, when you reach success, do they see the struggles? They just assume, ah, the guy, good for him, you know, or he sucks. I bet he had a, I bet he had a leg up somewhere.
2:51 Speaker 02 Yep.
2:51 Brian Preston? They never see the struggle. And so I, I, that's why I think for people to hear that it wasn't until I was 43 years of age, that I felt like the, the, the cloud of all the struggles of, you know, the kids, of the discipline of having to save for the future. It was, it didn't go away until I was in my early 40s. But then it, you know, but then I remember looking at my net worth statement, looking at my savings goals, thinking about the kids and, um, and what all my responsibilities. And I was like, no, this was, this was a good year and I felt like I came out on the other side. So that's how it went for me. And I think that's why you've got to create some, some strategies and use some tools
3:33 Brian Preston? so that you have some accounting to kind of know where you are in your journey and kind of ask yourself, hey, what, how did time feel last year? How did my money feel last year? And wow, we made some really big progress, um, both as a family, both financially, as well as, you know, making sure we're getting memories and maximizing each decade where we're on this, on this world.
3:53 Speaker 02 I think another thing that's just important to mention is we get some flack on this in the comments. No one's messy middle is exactly the same. Just because your messy middle looks different than someone else's messy middle, does not mean that you're not in the messy middle. I mean, it's, it's not a, you might have a great income and you've got the financial piece kind of figured out, but because you have young kids and a bunch of commitments and time is just strapped, you may be in the messy middle, even though maybe financially you're not having the exact same struggles with someone else. Or maybe you don't have all the family commitments yet. You don't have all the other stuff going on, but man, just trying to get your dollars, to do what you need them to do with all the different stuff, pulling you in all kinds of different directions. You may very well be in the messy middle. So be careful letting someone else define, oh, my situation.
4:38 Speaker 02 Situation's worse than yours, or I've got it worse, or you're not dealing with this. Just like personal finance is personal, messy middle is personal. I love that you said, Brian, you were able to come out of it. When you're, because your kids were still relatively young. I mean, they weren't like baby, baby kids, but they weren't out of the house at that point. But you did start to have some, some relaxation, some deep breath, some, hey, life is not quite as hard. Right now, as it was the past year, the past two years, the past three.
5:07 Brian Preston? Yeah, just to give perspective on that, I'm, I'm doing this really quick, mental accounting and public accounting, which is always scary. Yeah, you, you'd written 20, 12, 12 and six years of age. Yeah. That makes sense. Yeah, they can feed themselves. You're not changing diapers. You're right now, you're, you're sitting here thinking about when my third child is six years old. Man, my life is gonna be so much, I bet it feels, because you know. What's so interesting on how I think our human, us humans are designed is we are wired. That when that, when that baby can start feeding itself, start going to the restroom, and then it starts talking to you and hugging you.
5:47 Brian Preston? Um, and telling you, you know, it, all of a sudden, it's like you forgot how hard the first 18 months were. And I think we're designed that way. You know, yes, you're going to have to selfishly take care of this, this bundle of joy. Uh, because they won't, they won't survive on their own. And then it, we have been designed in a way. That when they get to be about three, three years of age, or even two and a half, and they start showing some love to you, like, maybe it wasn't so bad. Let's do it again.
6:14 Speaker 02 Man, can I tell just a quick funny aside that happened yesterday?
6:17 Speaker 00 Of course.
6:18 Speaker 02 Uh, my kids like eating frozen blueberries. I don't know why, it's just they like bag of frozen blueberries. And so my wife, the other day, I have a little boy, he's about to be two years old, and he was sitting in the high chair. And my wife just gives him, uh, just a bowl of frozen blueberries. So what do you think happened?
6:33 Brian Preston? It sounds like these turned into weapons or something.
6:35 Speaker 02 No, he's just covered head to toe. Like, he's like here to hear blueberry everybody. And I don't deal with messes. It's not my thing. I don't like messy fingers.
6:43 Brian Preston? Oh, you deal with them. You just don't like them.
6:44 Speaker 02 And so I'm looking at this kid and I'm like, that's gross. Like, that's, that's pretty rough, dude. You, you, this looks like a crime scene. I mean, just blueberry goo all over him. And you know what he did? He looked at me and he goes, dad, dad?
6:59 Speaker 02 Come here, son, right? Like, it's so, you're exactly right. That's exactly the way that it happens. Uh.
7:05 Brian Preston? So we bring in a fourth one to the world?
7:06 Speaker 02 We out.
7:09 Brian Preston? So maybe there are limits.
7:12 Speaker 00 All right. Thank you, Janine, for your question. Next up, we've got Holly S., who sounds like she might be entering the messy middle.
7:19 Speaker 02 Okay.
7:20 Speaker 00 She says, "Hi, guys. My fiance and I are getting married in December."
7:24 Speaker 02 Oh, congratulations.
7:25 Speaker 00 "As we look to merge our finances, what advice do you guys have for this transition process?"
7:31 Speaker 02 When it comes to couples, there's one big piece of advice that we often try to communicate, and it is communicate, communicate, communicate. Like, as you go into this marriage, as you prepare to, like, begin this union that you're entering into, you want to have the conversations around, hey, who are we? What do we value? What do we want our life to look like? And specifically, how do we think about money? Like, what are going to be our goals as a couple? Do we want to travel? And when do we want to have kids? And what do we want to do before we have kids? And what do we want to do after we have kids? And I think if you can begin to have those conversations before you get into the marriage, before things start to get heavy and before things start to get hard,
8:15 Speaker 02 there's a really good chance you're going to set yourself up for success, especially having conversations around, you know, this year will be a great time. "Hey, let's do a combined net worth statement. This will be our first year married." What's it like? "Okay, here's all the stuff that I've been doing. Here's my checking account, savings account, and investment accounts. And here's the debts that I have. And here's the checking account, savings account, and investment accounts and debt." That you, okay, great, we have these debts. What's our goal? How are we going to pay this off? Like, is my debt my debt? Or when we get married, is my debt your debt? And like, how are we going to approach this? And I think if you can have a very open and honest and candid conversation, you're going to remove the propensity for any surprises to come. You don't want to get into the new year, get into January, the first paycheck hits,
8:57 Speaker 02 and then all of a sudden, "Oh, well, I was going to, now that our income's combined, I'm going to go pay off some debt." "Well, we didn't talk about that. That wasn't part of the plan." If you can do that on the front end, there's just a much better chance that you're going to be able to navigate hard financial decisions. Because ultimately, you're going to face hard decisions. If you can start from a place of communication, You're likely going to set yourself up well long term.
9:20 Brian Preston? Holly, congratulations. I think it's super exciting when I find out people are getting married. I even celebrated at our annual Christmas parties. I tell how many babies came into the firm this year, how many marriages were happening, all kind of cool stuff like that. And so I think this is one of those life moments to definitely celebrate. I wrote down two quick things, or really it's two to three quick decision points. If you and your fiance are both fabulously broke and young, don't overcomplicate this. This is, it's the easiest thing, and I think this is a lot of people. If you're broke and young, and you both come into this marriage with not a lot going on, I want you to embrace the broke and just unite everything. Just bring it all together. Everything joint.
10:05 Brian Preston? Do the joint checking accounts, do the joint everything that you can to make sure you're tackling two becomes one on that. Now, if there's a complication point, so that's why I'm putting the asterisk out there. If this is an older marriage, meaning that maybe there's children from a previous marriage, or you're just older, so because you're older, or, and here's the other complication. One of you has assets and the other has like lots of debt and other things. Those are complications that we need to address. It doesn't mean that you still don't embrace the unite, because I like joint accounts for married couples, because, you know, especially with what you're paying the bills, what you're making those savings and investment goals for the future.
10:51 Brian Preston? I like those to be joint accounts, because money is a tool, but it's a tool that sometimes if used in an unhealthy way can have power. And I see too often, couples who the power component of money can make things very uncomfortable in the future, where, because more likely than not, one of you is going to have more success than the other in your career. And you don't want to get in, even if, you don't want to get in a power play, where one spouse is having to ask the other spouse for access, or an allowance, or something. It just, it just makes it weird. And that's, I'm not, I don't want you to get in those power plays, because it just, it doesn't bring the best out in the relationship. So.
11:38 Brian Preston? It doesn't mean you can't have separate account for like, you know, premarital assets. If you inherited some money, even if you're young, you inherited some money and you gotta protect that stuff because if you bring it into joint, it would now make it subject to, you know, everybody, you know, complexity, it commingles it. But I still want you to have that joint account so that y'all can make those marriage decisions, still two becoming one, and you take out that power structure so that there's not weird things that happen as your marriage goes 10, 20, 30, 40, even 50 years.
12:13 Speaker 02 It's awesome. It's a fun ride. Congratulations.
12:16 Speaker 00 Great. Congratulations, Holly. We're super excited for you and thank you for your question. The next one is from Kyle V. He says, "I have $30,000 in a 529 for me, but I graduated from college. I know that I can only use 10,000 of that for my student loans, so I'm wondering what would you recommend I do with the rest? Roth distributions, payout with the penalty, anything else you guys can think of?"
12:42 Speaker 02 Yeah, so it's interesting. The legislation changed a few years ago that said, hey, if you do have excess 529 funds and a few things happen, the account has been open for at least 15 years, a few other things that have to be in place, you can then use those excess funds to fund Roth IRA. So now if this is your money and it's your 529 and you're now the one who is in possession of these funds, I don't think it's crazy to think about. You can do ultimately $35,000 into Roth, so that would fund your Roth IRA contributions for the next couple of years. I don't think it's crazy to use the 529 assets to do that, but here's what I don't want you to do. Because those assets are already there, I don't want
13:24 Speaker 02 you to use them as a crutch to not continue saving, to not continue putting money away. So if I decide to take $7,000 out of that 529 and put it in my Roth and max out my Roth, the $7,000 that I would have saved to my Roth otherwise, I want to go to the Financial Order of Operations to figure out, okay, where does that need to go? Do I put that into my 401K? Am I doing step six? Do I max out? My HSA in step five, am I in step seven? Do I do an after tax brokerage account? I think it's great to use the dollars that way, but I would not use it as a crutch for you to lower or miss your savings rate. What else Brian would you say? Should he cash it out? Pay taxes, pay penalties?
14:06 Brian Preston? No, I mean, what I was sitting here writing is that if you pay a penalty or even taxes on this 30 grand, you've probably not maximized the moment because it's just 30,000. Look, it's a chunk of money, but it's, it's, it's, it's a small enough number that it's consumable over a few years. That I love because I think you're on the right branch of the tree and the fact that paying you, if you could take out $10,000 of student loans, let's do it. Because that's all, you know, it even ties into the, the, the whole intention of setting up a 529 being for education. So let's, let's wipe out the student loans. And then I am with you, but I think that I also want to give some grace here is that right,
14:47 Brian Preston? a lot of times when you're right out of college, even if you're saving like 15%, you're in your twenties and you're trying to save 15% for the future, you might not be able to max out the Roth.
14:58 Speaker 02 Sure.
14:58 Brian Preston? Because you're, you're, you're in your first job, you got a lot of life coming at you. And you, you know, because I know there were a few years when I was starting out, you know, you can only save a thousand bucks, 2,000, 3,000 bucks. Definitely if you're squeezed, even though you're making good disciplined decisions of starting, automating your financial life and saving and investing, go ahead and use these 529s to fill up the bucket completely. Let's maximize those Roth contributions. Get the full $7,000 in there. Because it is, it's not an addition. That's the point you were making. It's not when they funded this, I got so excited. We had journalists and everybody reaching out going, aren't you super excited? You turned 529s into Roth?
15:38 Speaker 02 It's amazing. It's amazing.
15:40 Brian Preston? Yeah, it's a great headline, but if you actually read the details, it's not like you got an additional avenue to get more Roth money in. They, they made you work still within the constraints of your annual funding numbers. So that's why you need to be mindful of what this does to discipline. Use it and then maximize it. The other thing we mentioned is that wasn't mentioned. You know, if you have kids this month, or you have loved ones, or you even want to continue your education down the road, you can transfer 529s to other 529s or set up other 529s. But those, I think we gave you some avenues to look into between the student loans, between the Roth, and even, you know, using the 529s for other education goals. But it's back to
16:25 Brian Preston? my point. I think if you pay a penalty or even taxes on this money, you're using it wrong.
16:30 Speaker 02 Love it.
16:31 Speaker 00 Great. Thank you so much for your question, Kyle. And thank you, everybody, for watching and tuning in to us on Tuesday. You can find all the resources that we talked about at moneyguy.com/resources, and we will be here every Tuesday to answer some more of your questions.
16:48 Brian Preston? Man, we have had an absolute blast. I think there was a theme that I felt like happened today where it's because new year, new you, focusing on financial goals, 529, I mean, I don't know why.
17:04 Speaker 02 529s.
17:06 Brian Preston? Making sure you're taking advantage of net worth tools and tracking, answering a 529 question is all in the head right now. But I really do get excited about the annual net worth, you know, statement and putting that together. So if you have not started that journey, I'm going to give you two websites. I want you to go to moneyguy.com/resources. Tons of free stuff there, but one of the free things we offer is a template to start the net worth statement and do that annual trip and adventure with us. If you want to really accelerate this thing and actually have a dashboard to know what's going on with your money and accelerate the success of that money, I want you to go to learn.moneyguy.com and look at our net worth tool.
17:46 Speaker 02 Same one that we use.
17:47 Brian Preston? Same one we use. I absolutely love this thing because it tracks over time, shows changes over time. And here's the key part. We just talked about a very powerful tool. But money, we all have to keep this as financial news. Money is only a tool. It's not a goal. So make sure you're just harnessing that to the max of what it can do for you. I'm your host, Brian Preston. Mr. Bo Hanson, Money Guy team, out.
18:13 Speaker 03 The Money Guy Show is hosted by Brian Preston. 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 and does not constitute financial, tax, investment, or legal advice.
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