Are You Middle Class In Your State? (And Why It Doesn’t Matter)

What does it take to be “middle class” in your state? From Mississippi’s $49K to Maryland’s $90K, the income range might surprise you. But here’s the bigger truth: labels don’t create wealth, behaviors do. We break down the data, reveal the three key ingredients to wealth building, walk through the Financial Order of Operations, and answer your biggest money questions on mortgages, car buying, and life insurance. ⁠⁠⁠⁠⁠Jump start your journey with our FREE financial resources⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Reach your goals faster with our products⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Take the relationship to the next level: become a client⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Subscribe on YouTube for early access and go beyond the podcast⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Connect with us on social media for more content⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. ⁠⁠⁠⁠⁠⁠⁠NordVPN.com/MONEYGUY Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 0:30Speaker 01

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• 1:06Brian Preston?

  Have you ever been curious what's middle income or middle class by state?

• 1:12Speaker 03

  Brent, I am so excited to talk about this because today we hear this all the time. We hear middle class, middle class, and we're going to talk about by state, what it actually takes to fall into that category. You may be surprised because honestly, the range was different than I guessed it would have been.

• 1:32Brian Preston?

  And it's like most things financial, it depends on where you live.

• 1:37Speaker 03

  That's right.

• 1:38Brian Preston?

  Actually, we pulled this data from Visual Capitalist and Smart Asset, but look at this, you can compare and contrast, there is a broad difference here. If I look at who's the lowest, Mississippi, 49,000. If you look at the highest, now there's a few that were in the $90,000 range, but the highest, according to the stats, was Maryland, right at $90,000.

• 2:00Speaker 03

  And if you look at the average across all 50 states, it comes in right at $69,000 to be labeled middle class, so ranging From as low as Mississippi to as high as Maryland with an average right around 69,000. But the question becomes, okay, is this helpful? Is it valuable? If I know that I fall into the middle class, does that actually impact and affect my financial journey? Or is it something that's even worth knowing at all?

• 2:31Brian Preston?

  Yeah, I mean, this is one of those things where I'm trying to figure out what's the actual teachable things from just knowing the data on where middle class falls. And so we did try to create a few takeaways for the audience. So y'all can start, you know, seeing if there's a teachable moment here or takeaway for you. And the first thing is don't get caught up in the labels.

• 2:51Speaker 03

  That's right.

• 2:51Brian Preston?

  Is that I will tell you that there are times in our life that our incomes were, you know, in this, this lower side, but that didn't define us at the time. It was more of the behaviors, the discipline, we'll get into even that more so. But don't let the labels define everything you are or you're not.

• 3:08Speaker 03

  Yeah, income is crucial to being able to build wealth, but it's not all that matters. It's not the only thing that matters. And one of the things that we want to encourage you, no matter where you fall on the income spectrum, is figure out, are there ways that you could be harvesting the white space? No, no matter where you are, what stages, are there opportunities where you could potentially increase your income? Maybe you live in one of these states and you're not middle class. Or maybe you live in one of these states and your income has you in that middle class range. But there are opportunities for you to expand that because the bigger your shovel gets, the more you can increase that, the more opportunities you give yourself to save and begin to build wealth. So are there side hustle opportunities? Are there other income things?

• 3:50Speaker 03

  Are there things that you could do even inside of your vocation to advance your career? Again, it's not about moving from middle class to upper class. It's about recognizing that there are three key ingredients when it comes to wealth creation. And one of those ingredients is margin. And if you have the ability to influence your income, you can then increase the margin you're able to use to build towards financial independence.

• 4:15Brian Preston?

  I love that because that leans into the whole discipline component when we're talking about those three ingredients. To wealth building and that leads to the next point is that the foo is your all terrain vehicle. If you think about what foo does for you, it fills in the basics of hey, go get the free money from your employer. If they're offering you dollar for dollar match, don't leave that on the table. Stay away from the the credit card debt. So you're not paying 20% to this bank, you know, while you go, you dig a bigger and bigger hole for yourself with fake consumption dreams. And then emergency reserves is of course going to create that buffer. It's such an important thing that it steps one and four, the financial order of operations. So you don't have to make desperate decisions when life happens.

• 4:54Speaker 03

  Yeah, if you would like your free copy of the financial order of operations, Brian, we hold yours up for me real quick. Yours, the one that you download might not be laminated, but it could be. But if you want your free copy, you can go to moneyguy.com/resources to download that. And what we hope that you take away, and this is maybe the big summary point is that when it comes to building wealth, your behavior is likely much more important, much greater than your income. Brian, we have seen people and we have clients here to bound wealth, who never actually made it past six figures of income as a household, and yet they are fully financially independent. And we have folks on the other end of the spectrum that have huge incomes that would

• 5:36Speaker 03

  certainly be labeled as upper class by income, and yet they are not at financial independence yet. The behavior matters, and it doesn't matter what your label is, it matters. Are you using your resources to create the great, big, beautiful future that you want?

• 5:51Brian Preston?

  Yeah, the two that kind of I feel like marry nicely together is that the behavior and then the harvest, the white space. If if people can lean into the discipline on living, less than you make, and if you feel like, hey, that's impossible, because just life is too expensive for me to even have that margin, then go out there and figure out how we can increase that component, that shovel of the income. These are the things you don't have to be stuck. What I love is after we record this live stream, we're actually doing Our millionaire survey where we actually look at all of our clients and we share the content that came from the doing the survey of our clients. And what's so amazing to me is how many of them, just like all the stats, when I read

• 6:32Brian Preston?

  millionaire next door, I put the stats in millionaire mission, and now even the surveys from all of our wealth management clients, how many of these people are first generation?

• 6:41Speaker 03

  That's right.

• 6:42Brian Preston?

  Meaning they are the first ones in their family that crossed into that seven-figure sphere. You also have the opportunity, if you just maximize that huge component of your behavior and taking control of what you're doing with your financial life.

• 6:56Speaker 03

  Brian, I love that we get to sit in this spot. I love that we get to answer the question, hey, do labels matter? Is that something I should focus on? And if not, what should I focus on? And what are the decisions I can make to better my financial life? It's one of the joys that we get to do. We get to curate this content and put it together. But we also love that every single Tuesday at 10 a.m. we get to show up right here to answer your questions and load you up because we care about the things that you care about. That's why, right now, we have the team out in the wings collecting your questions. So if you want to get our take on something, if you want to ask us a question, you want us to weigh in on your situation, make sure that you get your question in the chat right now. So with that, Creative Director Rebi, I'm going to throw it over to you.

• 7:41Speaker 04

  Yes, I have a question from Jerry to start us off today. It says, hi guys, what is the difference between step seven, hyper accumulation, and step eight, prepaid future expenses in the financial order of operations? We are definitely past step six, but I'm not sure which step we are on now. Thanks. A classic foo question.

• 8:02Speaker 03

  I love, I love this question because I feel like we get asked this one a lot. For those that aren't familiar, step seven is, Brian, can you hold the thing up? Step seven is hyper accumulation and then step eight is prepaid future expenses. Or I'm sure Brian will tell you has another cute little name for that. And this is one of the things that you wrote extensively about in Millionaire Mission.

• 8:24Brian Preston?

  I was thinking the same thing.

• 8:25Speaker 03

  Because you get asked this, hey, how do I know? Okay, I understand step six. I understand maxing out. My employer sponsor retirement plan, but then what about seven and eight? Like, how do I navigate this? What was it you wrote in the book?

• 8:38Brian Preston?

  Yeah, if you look at the one of the things, this is why I do love the financial order of operations and the fact that it is an all terrain vehicle. It serves you no matter where you are in your journey is a lot of steps. If you think about steps one through four, they're they're really to keep you from making those desperate decisions. Keep your life out of the ditch of of making bad mistakes like credit card debt, missing out on free employer money. Or not having that margin of their emergency reserves. If you think about the steps five and six, these are math and tax based driven that they're trying to give you. How do you maximize the saving element of your life that lets you keep as much of this working for you as possible?

• 9:16Brian Preston?

  It's not until you get to step seven, where if you think about hyper accumulation, this is where I'm counting on you to be able to know. Hey, how am I going to use this money? This is the first step that says, no, let's not let this be formula based or maximization based. Let's say actually, how are we going to use these resources? Because personal finance is so personal, there's a huge difference between somebody who says, I'm going to retire at 55. Versus somebody says, no, I kind of, I'm one of these people, I think I'm going to work until 65 or 67. Your goals are completely different. You're making different structures with how your accounts need to be set up.

• 9:52Speaker 03

  That's right.

• 9:53Brian Preston?

  So that's why you can't skip through step seven where it says, hey, how am I going to use this money in retirement? What does that look like from taxable assets, tax deferred, tax free like Roth? When will I need to get, you know, into these accounts? And then that will set up to where now you're educated. It's not just a guess or a reward system. You get to now go to step eight, which we we titled prepaid future expenses. But it also like then Bo's right, I call it abundance goals is because this is now where, yeah, do the kids college? If you want to get into residential real estate investing or commercial real estate investing, it's okay. Cause you have now a financial base underneath you.

• 10:32Brian Preston?

  If you want to go extend your lifestyle with maybe a nicer car or some other big expense or a trip or something that that seems like it's excessive. You've now put in the work that this is the right time to do it because you did all the work through steps one through seven.

• 10:47Speaker 03

  I love it. If you're someone, again, you want to know more about this, a few ways you can learn about the foo. One, you can go to the website. You can download your free copy of the resource, moneyguy.com/resources. You can also do a deep dive into the foo course. You can go to learn.moneyguy.com. We have a curated course with modules you can work through so that you understand that. Or you can pick up your copy of Millionaire Mission if you have not done that. By the way, it's a great gift for a lot of your kids that are like starting back as seniors or freshmen in college. It's a great way to get them to start thinking about money the right way as they move into these big transition periods of life.

• 11:25Brian Preston?

  Yeah, the last review on Amazon currently, unless somebody writes another one today, was from late July. And they were like, this is the greatest book since Millionaire Next Door.

• 11:35Speaker 03

  Let's go.

• 11:37Brian Preston?

  Is it okay if this is the last comment we ever get on here? But it's also, it just, y'all have no idea how much it warms my heart when I see people look at this instruction manual that took some time to write, and then people are actually getting a lot of fruit from it, and it's actually changing their financial lives.

• 11:52Speaker 03

  That's a hefty compliment.

• 11:54Brian Preston?

  Oh, yeah.

• 11:55Speaker 04

  That's a Brian kind of compliment.

• 11:57Speaker 03

  I like that.

• 11:58Brian Preston?

  I mean, that is, you have no idea. If there's like a bull's eye on compliments, that one's like

• 12:02Speaker 04

  That was it.

• 12:03Brian Preston?

  Right in the middle. I mean, stuck it.

• 12:05Speaker 04

  That's what he was going for. Well, Jerry, thank you for asking the question. It is your lucky day because it is Tumblr Day.

• 12:10Speaker 03

  Hey.

• 12:10Speaker 04

  And you got your question answered on the live stream. So Jerry, if you would like a Tumblr, email [email protected], and we would love to send one to you.

• 12:18Speaker 03

  The chat says, write another book, Brian, write another book.

• 12:21Speaker 04

  It's all cash.

• 12:23Brian Preston?

  What's funny is that I had a lunch with my publisher yesterday.

• 12:26Speaker 03

  Oh, it is?

• 12:27Brian Preston?

  He was like, I tried not to pressure you, but if y'all want to write another book, it would be okay. And I'm like, yeah.

• 12:32Speaker 04

  Your answer was good, though. You were like, if something like comes to me that I'm passionate about, then I would consider it. But like, right now, Millionaire Mission is like.

• 12:40Brian Preston?

  Yeah, no, it's still checking a lot of the boxes.

• 12:42Speaker 04

  You know?

• 12:42Brian Preston?

  And I even think, you know, one of the things that, because we had a lunch with the publisher, he was, of course, pitching ideas and stuff. There is probably going to be some opportunities for us, even with Millionaire Mission, to kind of do some additional things. So, I mean, you guys put on your thinking caps. If there's things that you're like, man, this was 99.5% awesome. What's the point five that we could have done better? There is going to come a point where I won't feed back from my financial mutants.

• 13:07Speaker 04

  Yeah. No, I love that.

• 13:10Speaker 04

  All right. Next question is from Joe C. It says, hi, Brian and Beau. At what income threshold would you say it's no longer appropriate to finance a new car with 23.8 and that you should pay cash instead? For reference, I make 120K, I'm 32 years old, and I'm on foo step seven. So is 23.8 for anyone? Or is there a point where you're like, you should be paying cash? Give them some guidance.

• 13:40Brian Preston?

  I want you to kind of fill in the gaps here, but Joe's got something that I, and I hate that that we've got a preconceived notion that I think is false here on the way this is set up is that we prefer cash on all cars. I mean, that is the 23.8 is supposed to be a lifeline, a bridge. For those of you who need good, reliable transportation to get to your J O B. Cause that's your first step in building wealth.

• 14:07Brian Preston?

  What would you add?

• 14:08Speaker 03

  Okay.

• 14:09Brian Preston?

  Did I take it all?

• 14:10Speaker 03

  No, no, no, no, I love that. Because your question was, what is the income threshold? Where I should consider paying cash instead of 23.8? I would argue it's at whatever income allows you to do that. And so we have people who have, again, below six-figure household incomes, but because of the way that they're able to save and because of the way they're able to build up and because of the way they do sinking funds, they save up for money in cash so that they can pay for cars outright without sacrificing saving 25% of their gross income to the future. We have other folks who have very high incomes that aren't there yet, based on their lifestyle commitments, depending on the part of the country they live in and what their mortgage payment is and where their bills are going.

• 14:54Speaker 03

  They just don't have the margin to be able to pay cash for a car yet. So a lot of it does become behavioral, but our preference is always for you to pay cash. But if you can't, if you're not in that position, if for some reason you're not allowed to do that, or if paying cash would cause you to have to do so at the consequence of being able to fund your other financial goals.

• 15:20Speaker 03

  Then we allow you to do 238 where you can put 20% down on the automobile. You don't finance it for any more than three years or 36 months and your total car payment cannot exceed 8% of your monthly gross income. Now, a lot of people think this is only for new cars, but you can apply this to used cars as well. Any car that is new to you, we'd love for you to pay cash. But if you can't pay cash or paying cash would cause you to deviate from your other long-term financial goals, we allow you to do 238 so long as, and there's this third caveat. If you're buying a luxury brand, you can't do it. If you're going to buy a luxury brand and you're going to try to use 238 to justify it. Our opinion is you are buying more car than you can afford.

• 16:03Speaker 03

  If you can't pay cash for the luxury, it's not time for you to get a luxury. That's thing number one. Thing number two, we never want your monthly car payment to be more than your monthly savings and investment amount. So if you have, we did this react video a couple of weeks ago, it's like a thousand dollar car payments. If you have a thousand dollar car payment, buddy, you better be having more than a thousand dollars a month going into your investment accounts. If you're not doing that, you're doing it the wrong way.

• 16:29Brian Preston?

  Always people want to know, how do rules come to exist? You know, what is this? For me, it was more of a, we got to have a no hypocrite policy. I think about my journey to wealth building and it's easy for a guru to tell you, you should just pay cash for all cars because cars are absolutely horrendous for the wealth building journey. But then I looked at my own life and I goes, yeah, but there's a portion of my life when I was in my early twenties where I got my brand new job and I couldn't, I had like a thousand bucks to my name. So how was I going to go pay cash for a vehicle? No, I needed, I needed, I needed to finance a car. So, okay, well, if we've got to finance a car, how do we do it in a responsible way? So that we don't steal from our future self, so we never have future success, you know,

• 17:14Brian Preston?

  financially. And that's where 238 comes from is because I think it's sometimes in the, the, Choosing your expert that you're following, there's a lot of people that will tell you what you should do, but when you actually do the research on what is successful people doing, these are the absolutes that yes, in best case scenario, you know, you'd like to do it this way, but if we all had wings, we'd fly. And that's just not the reality we live in. So we've tried to give you the best system that actually meets you with the reality of where you are versus just making you feel really guilty.

• 17:47Speaker 03

  That's right.

• 17:47Brian Preston?

  Because you might have to go finance your first car.

• 17:49Speaker 03

  Yep.

• 17:51Speaker 04

  Great job, guys. Josie, thank you for asking the question and for being here in the live stream. And for that, we would love to send you a Tumblr. Just email [email protected] and we'd love to send you one.

• 18:04Speaker 03

  We have a thing coming up. Are we, can we talk about the thing now or can we not talk about it?

• 18:09Speaker 04

  You are being very Brianish right now. What are you doing?

• 18:12Brian Preston?

  There's a lot of things, so I'm curious to know what thing he's in.

• 18:13Speaker 03

  No, no, no.

• 18:13Brian Preston?

  Usually this is the role I play.

• 18:15Speaker 04

  I know. Usually I'm looking at Brian.

• 18:17Speaker 03

  The thing where we, I was just gonna tell our people to keep an eye out. We've got like some audience financial mutant engagement stuff coming out in the future.

• 18:25Speaker 04

  That was a nice way to tease it.

• 18:26Speaker 03

  I know it's not ready yet, but I just want them to know that, hey, one of the things we value, because I'm just watching the chat. I love all the stuff that comes in from the chat. Like right now, people are throwing out, I missed what caused it, but like all kinds of merch ideas, right? And I'm like, okay, if we did merch, what would you want? Would you want a hat? Would you want a t-shirt? Would you want a Tumblr? Would you want a mug? Like what are the, actually, that'd be a great survey to do. What I'm saying, though, is I love when we're able to get like insight and feedback and information from our financial mutant audience, so much so that we have some stuff coming out about that.

• 19:03Speaker 04

  Yeah, between now and the end of the year, we will have, hopefully, multiple avenues for you to do that. And that will be amazing. I can't wait to hear what you have to say because it really does make our content better. And I just love hearing from you. So. Watch for that. Make sure you're subscribed here on YouTube and then make sure you go to moneyguy.com and click on follow us and subscribe to our email list because that's where you get even more info right into your inbox.

• 19:27Brian Preston?

  I thought because you know, we just had where we did, we went on Ice Coffee Hour and truly amazed to see how much of our audience, I mean, wow, I mean, that really, the interview did great, really impressive. So, thank you guys, all my financial mutants that went out there and supported us on that. But, and I don't know what's in the, in the air, but we also have another collab coming out with Aaron Talks Money. Cause a lot of you guys in the comments, y'all are like, you know, I like Aaron Talks Money. Like, good, because we just did some-

• 19:58Speaker 04

  We do too, it turns out. She's amazing.

• 19:59Brian Preston?

  And by the way, she was awesome. Yeah, that was, that was a really good experience, having her come in studio for that too. So, so really cool things coming down the pipe for you guys. And then we even have some more collabs in the future that we're working out the logistics on right now. So, I, I, I don't, I'm not saying it's a new chapter necessarily, because we, we do these things as they come available, but it is, I think we are seeing the power of it's fun to kind of get with people who-

• 20:25Speaker 03

  Think about money the same way.

• 20:26Brian Preston?

  Who think about content, creativity and finances.

• 20:30Speaker 04

  I agree. Speaking of finances, one another question?

• 20:34Speaker 03

  Yes ma'am.

• 20:36Speaker 04

  John West asks, Mr. Ramsey says, investing while having a mortgage is sa- is the same as taking a loan to invest. Are the money guy, the money guys are okay with arbitrage, but not okay with loan for investing? So, what's the difference?

• 20:53Speaker 03

  Now, do you think this is in reference to Gordon Ramsey? Cause I've not, I've not heard-

• 20:57Speaker 04

  What is Gordon Ramsey's, uh, house buying rules?

• 20:59Speaker 03

  I haven't heard a ton of that. Uh, yeah, we hear people say this all the time. Okay, uh, if you're going to invest, this is the way they posed the question, Ryan. If you're going to invest while you have a mortgage, if you had a paid for home, would you go take a mortgage out on that home and then use those dollars to go invest? Explain why that's a straw man.

• 21:21Brian Preston?

  It's a straw man because look, nobody, I've actually, there are people that have done that strategy and they were, I've even had a prospect that I've told you guys from all the way back to 2003, that that's when they came to me is that they had an advisor that was recommending they take a home equity loan to go put it in the financial markets. I've never, ever, ever, ever recommended that because, but this is why it's a straw man argument. Is because when you go take out debt on a house, there's a lot of friction costs. You think about all the recording fees, you know, you have to pay the banks to do the loan. There's just a lot of things that go into it that that's, that's a, you're never going to recommend that.

• 22:00Brian Preston?

  Plus, we don't think it's a, it's a smart strategy to have an asset and then immediately go and leverage it up. We've never been like, and that's the thing. And look, we're not picking on Dave. Because I think Dave is trying to get people to focus who are really bad with money on how extreme they have to, to, to think to fix their life. But, but sometimes Dave does get carried away where he tries to, to expand the umbrella so far that it, that us financial mutants get caught up in the wash of it too. And that's the part I'm here to try to clarify is that, yeah, know thyself. If you are a person that you can't trust yourself, that if you get a paycheck,

• 22:40Brian Preston?

  you know, you're already headed to the check cash in place as fast as you can get it to burn a hole in your pocket. Then yeah, you probably ought to lean heavily on these absolute T total rules. But if you're somebody who's just always been good at math, you know, you were the kid in second grade or first grade. I can't even remember what year you learned to do multiplication tables, but you're the one winning all the speed drills. And you're like, wow. And you get your calculator watch and you realize how cool just doing math is. And, and you hear Dave's rules and you go, something's just. I know that I'm not going to run up 20 credit card debt, that I'm paying 20% and all these other things, then I don't, I would rather you have a balanced approach that we understand

• 23:22Brian Preston?

  when we have, especially in historical, we've had low mortgage rates and you have this arbitrage of that you, every month, you can set up a systematic, automatic, for the people behavior of putting a few hundred dollars in. Cause remember, I'm the guy that learned in high school, a hundred dollars a month would make me a millionaire. And that concept right there is what lit the light bulb off that said, yeah, I don't come from money, but man, oh man, I can save a hundred dollars a month. And that is the power, I am the proof that this works, is that you can, you can put a little bit of today for that great, big, beautiful tomorrow. And that's one of the things that, that, you know, and like I said, we love Dave and them, but it breaks my heart when I see people forego their employer match,

• 24:04Brian Preston?

  that's a dollar for dollar match, because the just compounding, if you go to moneyguy.com/resources and look at the wealth multiplier for a 21, 22 year old, and then people say, yeah, but it's only for two or three years that you're going to miss out on the employer match. Go extrapolate that. You will, you will be shocked that this one decision could literally be hundreds upon hundreds of thousands of dollars. Look at my book, Millionaire Mission. I missed out on $10,000 of Roth IRA contributions back in the early part of my career, and I still kick myself for that $10,000 because I highlight in the book with real performance of what I've done in my Roth IRA account, and then even took it and said, hey, if I kept going at this pace, what does it turn into? It was hundreds and thousands of dollars

• 24:49Brian Preston?

  worth of decision. So I'm not picking on Dave, because I think that's what John, you know, you're bringing up Dave into this, but, but it is one of those things, I think you just have to know thyself. And if you resemble more of a financial mutant, and you know that, you know, a credit card debt is not going to be hiding under your bed at night, and our credit card use is not going to hide under your bed and chip at you when you get up to go to the bathroom in the middle of the night, or, you know, you understand that you can, you know, pay down your mortgage in an accelerated fashion. But by the way, I will give, because I even sent this to somebody over at the Ramsey organization that we're friendly with, no names will be given. But when I paid off my mortgage, I got a, I got a text. And I said, you know, it is interesting that almost to the day I paid the house off within 10 years.

• 25:33Speaker 03

  Wow, that works.

• 25:34Brian Preston?

  And so, and I know it's a stat from, if you remember from everyday millionaires, it says millionaires pay their houses off in 10 years. Yes, but I am a far journey from where I was when I bought my first house. And that's something I always remind people, there's a time and a place for all, even stats you have to be careful of. Is that yes, I've paid my house off in 10 years, but I was also in a much more mature place to where my mortgage and even the home value compared to my total net worth is, is just not that big of a deal. So that's why I don't want somebody who's the opposite of that, where you have zero financial assets, but all of your, your net worth is in your house to think, oh my, well, I don't ever need to go, I'll just paid off this house. And then I'll invest because you'll, it's just, it's harder and harder for you to build those financial assets

• 26:19Brian Preston?

  that can work harder than you can with your back, your brain in your hands.

• 26:22Speaker 03

  That's what I was going to say, and I want to be careful not to put words in Dave's mouth. Cause a lot of times people will say, oh, well, Dave says this, well, it's not actually what Dave says.

• 26:28Brian Preston?

  It could be Dave-ish.

• 26:29Speaker 03

  But I hear people who will take this stance, no, I'm going to pay off the mortgage and then I'm going to invest. And I don't think that's exactly what Dave says, but let's use that argument. So say you take the time from 20 to 35 and you pay off that mortgage. All the time people say, yeah, yeah, if you're investing, you're not factoring in risk, you're not factoring in risk. No, there's a very real risk that if you do not start saving until age 35, depending on the time, kind of lifestyle you want to live, you cannot make up for that time that you lost from 20 to 35. And so that's why what we build into the financial order of operations, what we build into our philosophy around money is what decisions can you make will give you the highest probability of success? Given the things that we do know and the things that we are familiar and comfortable with.

• 27:13Speaker 03

  And we know that the earlier that you start investing, the better off it will likely be for you in the long term. Because time is one of the three ingredients of wealth creation that is so, so valuable. And we hate to see people, especially young people, miss out on that. So that's why we're. You're okay if you do a 30-year mortgage. We're okay if you don't put 20% down. We're okay if you have a mortgage payment so long as it's less than 25% of your monthly gross income because that leaves a margin for you to get to continue building for your other financial goals.

• 27:47Brian Preston?

  I have a stat that is, now, this is not scientific because it's the, the population size is pretty small, but 100% is where the stat's at. For every person that comes in and does the studio tours or a meet out and they say, Brian, I did something that you're gonna hate. I followed Dave and I paid off my mortgage early. And I'm always like, wait a minute, let's, let's, let's dive into this. Because once again, you have to be careful of statistics because they can, they can skew. I said, I have a question for you on this because I think you might not be breaking the rules, my rules, as much as you think you are by following what Dave suggested. I said, are you, were you saving and investing 25% of your gross income first before you threw that extra money on the principal of your house?

• 28:31Speaker 03

  Oh, yeah, yeah, yeah.

• 28:32Brian Preston?

  And they're like, oh, yeah, I was saving 32%. And then, you know, and then I was like, well, you're doing it. That's the, that's the whole part of the Financial Order of Operations is, was when you get to steps eight and nine, do what you want with the money at that point. I just want to make sure that I don't have 32-year-olds.

• 28:48Speaker 03

  That's right.

• 28:48Brian Preston?

  Not saving and investing a penny because they're trying to pay off a 4% mortgage. That's, um, that's gonna break my heart because I just know the value of that army of dollar bills. But that's why I think I have found, instead of this being a divisive issue, that more often than not, you guys have the instincts where you, you're like, yeah, I want to pay off my mortgage, but I'm gonna make sure I get that investment in there first. So I don't think, be careful of straw man arguments because I don't think it has to be an either or that you, I think that there's a balance there where you can pay off the mortgage in a healthy period of time, but also make sure you're building your army of dollar bills so you live your best life.

• 29:26Speaker 03

  Love that.

• 29:27Speaker 04

  Love it. Remember, if you want a refresher on the Financial Order of Operations or the home buying rules, go to moneyguy.com/resources. We have downloads there that you can get for free so that you can actually look at it and internalize that and just have that in front of you. Even when Brian can't talk to you personally in the moment, we have those resources for you. All right. And John, by the way, thank you for the question. Just email [email protected] to get your Tumblr.

• 29:53Brian Preston?

  People don't think there's a turf war between us and the Ramsey folks, do they?

• 29:57Speaker 03

  No.

• 29:57Speaker 04

  I don't think so.

• 29:58Brian Preston?

  I think it's just nuanced.

• 30:00Speaker 03

  Dave walked in right now. We say, Dave, come sit down.

• 30:03Speaker 04

  What up, Dave?

• 30:03Speaker 03

  Come hang out.

• 30:05Speaker 00

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• 30:35Speaker 01

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• 31:05Speaker 03

  Yeah.

• 31:06Speaker 04

  All right. Mrs. Sass has a question for you next. I recently found you guys and we are trying to figure out what to do with our whole life insurance policies. Our premiums for the policies add up to $630 a month. If we close out the policies, we will lose $20,000 that we have paid in so far. Should we keep them and use them as an extra emergency fund in retirement? Or should we cut our losses and max out our Roth IRAs, investing 25%? And they are investing 25% and have 540K invested net worth. And I also want you to talk about what you think about life insurance because she found you and now they're thinking about their whole life insurance policy differently.

• 31:51Speaker 03

  All right, so we're saving 25%, 540 invested. I'm gonna give you the answer right away, Mrs. Sass, to what you should do. And the answer is, it depends. Because unfortunately, we don't know enough about the individual policies. And even not all life insurance policies are created the same. What I'm going to imagine is going on right now is that you've been paying into this policy $630 a month. But if you were to surrender it right now, you said you would lose about $20,000. Now, I'm not sure if this has been a longstanding policy and you're calculating the tax impact, or more likely, if this was some sort of product where there's a surrender period, where if you tried to sell the product, or tried to surrender the policy now, it'd be inside this surrender.

• 32:35Speaker 03

  And so, one of the things that I would want to do, if I were looking at these policies, is I want to figure out what all of my options are. Okay, if I were to surrender today, what are the consequences of that? If I were to hold on to this policy for the next two, three, four years, what would the consequences of that be? Meaning, could I get past this $20,000 surrender charge to get to the other side of it, and then potentially surrender? Or, third, if I don't want to continue paying $630 every single month for this, are there other options? Maybe I could turn this into what's called a paid up insurance policy, where I don't, maybe I don't have this amount of death benefit, but I'm gonna take $100,000, $200,000 less in death benefit, but I don't have any more capital outlay, and the cash value in the policy will provide a life insurance benefit for the rest of my life.

• 33:20Speaker 03

  So, I want to go through all of the different scenarios available with this policy, and I'd line them up next to each other, and I'd figure out, okay, which one of these possible scenarios most closely aligns with the things that I'm trying to achieve with my money? Anytime you have an annuity-based product, insurance-based product, something like that, you're gonna want to do this, because it's not a one size fits all. It's not that one answer is always the right answer. But the second half of this question, Rouse, what do you guys think about whole life insurance? What are your thoughts on that?

• 33:49Brian Preston?

  I couldn't, because the question got taken down. I didn't get to see it. What was, how much coverage was this?

• 33:55Speaker 03

  I don't think it said the death benefit on there.

• 33:56Speaker 04

  It didn't say the specific coverage, yeah.

• 33:57Brian Preston?

  That's the thing that I think is also interesting. $630 a month is a lot of month. You think about if you were, what that is.

• 34:05Speaker 03

  You're putting on a Roth IRA.

• 34:06Brian Preston?

  And then I think about, because this, and this, we'll get to what Bo's question is, is, because I think, I hate the question is an either or. Am I doing a Roth IRA, which we love Roth IRAs, or should I do life insurance? Well, we actually like life insurance. It's just, we probably would have chosen a different version of life insurance initially. Is that, because I think when you're starting out on your journey, your biggest risk to your loved ones is that you just, you're not able to fulfill the promises of what your income or your future income is going to provide. So you've got to feel something, buy something that will insure away that risk. So your loved ones are left okay. And that's why I like term insurance is because now it's more of a math equation of, hey, when, how long do I have this risk?

• 34:50Speaker 03

  400K for her and her husband. Just saw that come through.

• 34:52Brian Preston?

  So you're paying $630 a month for 400K. Well, we, we just did a, and I didn't, I didn't see their ages, but I know we just did a Making a Millionaire where we were showing what term life insurance costs. And for the, the wife, it was like less than 200 bucks a year.

• 35:07Speaker 03

  Yeah, it was cheap, cheap, cheap.

• 35:08Brian Preston?

  200 for, for, and I think that was $750,000 worth of coverage for another, for the, for the gentleman. And these were, they weren't like 20-year-olds.

• 35:17Speaker 03

  Young, young, yeah.

• 35:18Brian Preston?

  He was buying $2 million of insurance and it was still well below $1,000 a year. So I like term insurance because now, look, it doesn't have cash value. There's no investment component. But I'm okay with that because I'm just trying to buy the insurance or the protection for my loved ones. So then I can get to work on building my own pot of money to, to, to be financially independent and self-insure in the future. Now, there's other components that Mrs. Sasse that you got. Look, there is a true component that, I don't know your health. I don't know your future health. And, and that's what insurance agents will, will scare you on that. And you do need to take into account, is, are you insured?

• 35:55Speaker 03

  Insurable in the future.

• 35:56Brian Preston?

  Yeah, if you're not insurable in the future. Well, that's so you have to there's a this is a very personal part of it. I just think that, you know, because I think in a very orderly way. I don't typically think people starting out, meaning you have zero assets when you're starting your wealth building journey. Life insurance is not the first stop on the train stop to building my million dollar portfolio. Now, it is true that once you get super wealthy, yes, life insurance can come into play in many different facets, but it's not the component that should be the first thing that people throw out there as an investment. It's more of a protection. Think about all the insurance you know in your life, your car insurance, you know, disability insurance. These are things you don't like to pay, but

• 36:40Brian Preston?

  you pay because they provide you protection from catastrophic events happening.

• 36:44Speaker 03

  Yep.

• 36:44Brian Preston?

  It's only life insurance that all of a sudden people go, no, it's an investment. And you're like, is it a good investment, though? And that's and that remains to be seen, especially if you're in the beginning part of your journey. Here's another thing that that you're like, why are there so many people out there selling it? Well, Bo, you worked, I mean, you can, you can, you've worked on the in the in the background typically on permanent policies that are not like term and so forth. In the first year premium, pretty much all commission.

• 37:11Speaker 03

  Yeah, you could get almost 100%. Again, depending on the company, depending on where you are in your career, you could get like 100% of year one premium as a commission. So you think about if somebody sells you a policy that's costing you $600 a month, they could be making $600 a month on that in year one, potentially.

• 37:29Brian Preston?

  So that's what just ask yourself, what's the motivation? What? How does this intersect with your needs? And but I liked and kind of bringing it back to your original question, I never tell people to immediately just go surrender insurance policies because you that's where the it depends really is very powerful because if you've been paying on this thing for years, go see what that paid up because you might have some now protection for the rest of your life. And it's not going to be a ton of protection, but at least now that money can, you know, it's paid up. You don't pay any more insurance premiums on it. But now you're freed up on that 630 to live your best life and figure out, hey, should I go with a portion of this? Buy some term insurance to increase that death benefit because now I have multiple kids

• 38:13Brian Preston?

  and I'm worried what happens if I die prematurely, but then maybe there's enough margin on top of that that you can now go fund those Roth IRAs and make it happen. Cause that's the other part I don't like about this question. If your insurance premium is so big that you're having to ask yourself, can I, I can't fund my Roth IRA? We have a problem because that, that is, your insurance premium should not take away all the oxygen in the room. So you're not left with any wealth building capital to put to work.

• 38:40Speaker 03

  And, and there, look, it's not hard to go just, uh, there's tons of tools, tons of providers where you can go run term insurance quotes to see what terms should cost you versus what you're paying in whole life right now. And there are tons of options out there that you can use just to kind of give you an idea. So you can see how vastly different those premium amounts are.

• 39:03Speaker 04

  That's great. Mrs. Sass, um, you said you recently found us. So we're so happy to have you as part of the Money Guy family. And I hope that helps you think through your insurance question. So as a thank you and a welcome to the Money Guy family, we'd love to send you a Tumblr. Just email [email protected].

• 39:20Speaker 03

  How, but how funny is that? Like, uh, just found us and

• 39:23Speaker 04

  Got a Tumblr.

• 39:24Speaker 03

  But a lot of people are like, I've been listening to you guys for years and I can't get my question through.

• 39:28Speaker 04

  Mrs. Sass, this is very special.

• 39:29Brian Preston?

  Sometimes it's better to be lucky.

• 39:31Speaker 04

  Yeah. We're just, we're glad to have you. All right. Brooke is up next. It says, "The hubby and I are 28 and 29. We want to move next year. We would be selling our current home. Should we rely on the proceeds from the house as our down payment or should we save up on top of that? My savings rate is 25%."

• 39:54Speaker 03

  Okay. So this is a bit of a nuanced one. And Brooke, here's, I want you to do one thing really quickly. Very first thing I want you to do is I want you to subscribe to the channel right now because every other Monday, we have a Making a Millionaire episode coming out. And we actually have a few coming out, one specifically that I'm thinking about for a couple in a very similar situation, trying to make a housing decision. And I want you to go watch how we counsel them on how to think through that and how to approach that because the question is, should I count on my home equity? Well, a lot of people have to, a lot of people, in order to be able to put a down payment on the house, I need the home equity to do that. But I don't think it's a bad idea, whenever you're going through any sort of life transition,

• 40:38Speaker 03

  whether it's having a child, buying a home, moving, changing jobs. I don't think it's ever a bad idea to have a little bit of extra liquidity to help you with those unknown unknowns because if all you do is you say, you know what, I am gonna just count on the home equity and that home equity is gonna be what I use to do my down payment and then something happens, closing gets pushed back or the inspection comes back wonky and now all of a sudden you have to drop your sales price of your current home? Is that now gonna put you in a position to where either you can't afford the new home, meaning the bank won't lend you the money, or your monthly payment's gonna be so big that it breaches the 25%? So there's nothing wrong with having a little bit of extra liquidity. And then in the worst case scenario, you sell the house for what you think it's gonna

• 41:23Speaker 03

  be worth, you use that equity for the down payment and then you have extra liquidity for the other stuff you haven't thought about, like blinds or lawn mowers or those sorts of things that tend to come with new home purchases.

• 41:38Brian Preston?

  Yeah, I mean, I always think it ties into what Bo was just talking about. Big life moves, they're usually more expensive from a liquidity standpoint than we give it credit for. So I think having a little extra margin in your life, not the worst thing. I do like people to put down 20% on that second home.

• 41:58Brian Preston?

  Just because it keeps it in check. The big thing that I want people to understand is financial mutants and a lot of the survey and the data shows when you're trying to build assets that are working harder than you are, you know, when you're trying to replace labor and you want your money working for you, income producing, we gotta get it outside of just your home, your net worth has to get outside of just your house. And so it's a big component that I don't want people only having housing assets and not ever funding their Roth, their 401ks and other things. So that's why the home equity, I think it's okay to let it roll forward into the new house, but then let you keep the behavior focusing after you get that little extra

• 42:43Brian Preston?

  cash, because I know I'm giving you a little bit of this, but that is you get to work as fast as possible, still building up assets so that your net worth is not all on the use asset of how big your primary residence is.

• 42:54Speaker 03

  And also, I love the fact that you're saving 25%. Do you realize if you go to moneyguy.com/resources, we have a resource that says, how much should you save? Is that the name? Did I get it right? Is that the name of it?

• 43:09Speaker 04

  I think you did.

• 43:10Speaker 03

  How much should you save? And it shows what 25% can do for you. If you just go look for a 28, 29 year old, which rounds up to 30, sorry, you can go see saving 25%. The trajectory that you're going to be on, if you're already doing that, there's a good chance that you're likely well ahead of the curve. So if you have to pause for a moment, just to make sure you shore things up for this new home purchase, that's okay. That's life happening. Get back to the 25% as quickly as you can and keep rocking and rolling.

• 43:40Speaker 04

  Keep rocking and rolling, Brooke. Thank you for the question.

• 43:42Speaker 03

  I got the name right.

• 43:43Brian Preston?

  Look at you. It shows old dogs can learn new tricks.

• 43:46Speaker 04

  I forget the name of that download for some reason. You just, I don't know, struggle with that one. It's a very popular one, though. Brooke, if you would like a Money Guy Tumblr, since we answered your question, we'd love to send you one. Just email [email protected].

• 43:59Brian Preston?

  Hey, if we ever did do merch, are we still doing tumblers? Or is there other merch that will start be given away?

• 44:07Speaker 04

  Great question.

• 44:09Speaker 03

  Maybe like

• 44:09Speaker 04

  What do you think?

• 44:10Speaker 03

  Like, maybe we don't, maybe we have like exclusive like Q and A tumblers that you only get from the Q and A.

• 44:15Speaker 04

  Honestly, that's my

• 44:18Brian Preston?

  All these things when we talk about merch, it always like my, my anxiety goes up when I start thinking about inventory. It's nice when you have just tumblers sitting in the back closet and then

• 44:28Speaker 03

  Don't tell them where they are. We're gonna have a run on the place. Don't tell them where we

• 44:32Brian Preston?

  Versus, but you start adding hats and shirts. Where are we putting all that stuff?

• 44:36Speaker 04

  I have, I have, I have

• 44:37Speaker 03

  You know what? I bet Reba's gonna

• 44:39Speaker 04

  I have plants.

• 44:39Speaker 03

  If this happens, I bet Reba's gonna figure it out.

• 44:44Brian Preston?

  Meanwhile, if it was up to me, I'd say, let's just do 50 shirts. And that way I can have one and then we'll sell 50 until they're gone.

• 44:51Speaker 04

  It's almost like you've said that before.

• 44:52Brian Preston?

  And then the next hat I want, I'll just do, well, let's do a 50 hats.

• 44:55Speaker 03

  There's gotta be one with Brian. It's like a, his face with a mohawk and a gold chain that says

• 45:02Brian Preston?

  CPA life?

• 45:03Speaker 03

  No, I pity the fool, right? I think we gotta have that one.

• 45:07Brian Preston?

  I thought, I thought, I thought you were going CPA.

• 45:08Speaker 03

  I was going Mr. T.

• 45:09Brian Preston?

  Okay, that's not very good.

• 45:12Speaker 03

  That's not

• 45:13Brian Preston?

  I'm already, I'm already, I'm already, I don't know. We'll see. Maybe when that turns into a shirt, we're gonna, we're gonna put this in the marketing.

• 45:19Speaker 03

  I don't know. I, I, we're workshopping it. We're workshopping that one.

• 45:22Speaker 04

  Witnessing brainstorming in real time.

• 45:25Speaker 03

  Okay.

• 45:28Speaker 04

  Hey, no bad ideas and brainstorming.

• 45:29Speaker 03

  That's right. That's what, that's what she says in our meetings. No bad ideas.

• 45:35Speaker 04

  All right. Want to do another question?

• 45:37Brian Preston?

  Sure.

• 45:37Speaker 03

  Yes, ma'am.

• 45:38Speaker 04

  We have one from out of here.

• 45:40Brian Preston?

  Out of here.

• 45:41Speaker 04

  Out of here. It says, I turned 46 last week and also just inched above one, the $1 million mark in savings and investments, which is so exciting. Well done. It's all in target date index funds and money market funds. How do I know it's time to quote unquote, take it to the next level? So like, it does kind of feel like, hey, I've made it. Now what? You know, like what happens next?

• 46:09Brian Preston?

  Oh, you do a good job. You always talk about there's like three key things that we see when people hire us. What are those key, big questions that kind of pop up?

• 46:17Speaker 03

  Yeah. So generally speaking, when someone makes the decision to take the relationship to the next level, one of three, if not all of these three things happen. One, the gravity of your financial decisions becomes so great that you begin to get uncomfortable making decisions by yourself. If I make a 10% uh oh on $10,000, it's probably not going to change my life. But if I make a 10% uh oh on a million dollars, well, now that's substantial. That's like $100,000. That's like more than I save. That might be more than I make in a year. So the gravity of the decisions becomes very, very high. Number two, life and complexity just kind of finds you and you didn't realize, man, there's all these things that I didn't know that I didn't

• 46:59Speaker 03

  know. There's all this new stuff that's entered in that I want to make sure there aren't things that I'm missing. I want to make sure that I'm dotting every I and crossing every T. So I just want to make sure that I know the things that I should know. That's the second one. And then the third one is life just gets busy and I know that I should update my estate documents, but gosh, it just keeps getting pushed on the back burner. Man, I started when I very began, I started using target date index funds and that was a wonderful solution. And I know that I should probably move from this generalized investment of lives to like a more specialized portfolio that has a custom allocation designed specifically for me. Ah, but I just keep not doing it. It

• 47:41Speaker 03

  keeps falling on the back burner and you find yourself in a place where important things end up getting on the back burner. That might be the time when it makes sense to make sure you get someone in place to help you keep things on the forefront of your mind.

• 47:53Brian Preston?

  And I think it ties into that on account structure comes into play too. You know, it's one thing, we love index target retirement funds, but there is going to come a time, especially crossing into seven figure status, you're going to be like, man, if I know I'm retiring before 59 and a half, I better make sure that I have access to some capital. That's going to be not going to be penalized or other things. So and plus, I don't like paying taxes to the government. It'd be nice if I could put this type of investment in this account structure and this where it's tax-free growth. If I put growth assets over here, it'd be nice if somebody did that. And then that leads to the question, knowledge is one thing. Implementation is a completely different thing. And I think that's one of the big elements that I'm always proud of is that we actually not only help you create the

• 48:38Brian Preston?

  plan, but we implement the plan. And that's what a lot of successful people, it's just having somebody who will actually do the work and actually see it through the process. Because it's one thing just to know, hey, yeah, I know I need to do this. It's like right now, I have a garage door that every morning right now, I'm raising and lowering this thing mainly because my garage door opener is broken. And I need to get it fixed.

• 49:01Speaker 03

  So like you like disengage the lock and you walk over and you lift it up?

• 49:05Brian Preston?

  Yeah, it's a thing. And I need to get it fixed, but I just haven't had time. And I know I'm going to hire a garage door opener or repair person to come out to the house to fix it. But I just haven't had, I don't have enough time. And I'm like, every day goes by and I'm like, how in the world did I let another day go by? And I think that that happens for a lot of us with just our finances is that we know we need to be doing some of these strategies, but we just, the day gets beyond us. And then I'll tell you the fourth one, this is kind of like an honorable mention. If you're a financial mutant and you're just absolutely crushing it, but you have a significant other that just is not into the financial game like you are, I want you to ask yourself, what happens if you're

• 49:46Brian Preston?

  not here to navigate those and make those decisions? I think you'll probably have a little bit of a fear or concern that, man, if my spouse had to go navigate this without me, not being financially minded, do they know who would actually think like I think? Because that's what I think a lot of you guys that are financial mutants, you're like, that's what you love about us is that you're like, these guys get it. They think just like me. I don't need to hire them because I'm already doing everything these guys are telling me. But does that mean that that goes to your loved one as well? We have a lot of brilliant people that have hired us to essentially be the contingency plan, just in case. And a lot of you are like, whoa, that seems like an expensive contingency plan. Yeah. I mean, when you're running, when you're the CEO of a multiple seven-figure enterprise,

• 50:31Brian Preston?

  you'll start realizing, man, there's a lot of expenses and costs that maybe it's okay to pay a little bit to make sure that this, this operation keeps rocking and rolling for as long as possible.

• 50:41Speaker 03

  Love that.

• 50:43Speaker 04

  Love it. Out of here. Thanks for the question. If you would like a Money Guy Tumblr, just email [email protected].

• 50:48Brian Preston?

  It's a well-earned Tumblr. Basically let us give an infomercial on a question. That's great. I love that. Well done.

• 50:53Speaker 04

  Because he's crossed a million net worth. It's like a congrats Tumblr.

• 50:56Brian Preston?

  By the way, I did think that, here's another little tidbit that hit me when I was reading the question. We know that it takes 27, 28 years, depending on what year you look at the data was published, for the typical millionaire on their journey, once they started investing their first dollars, and they're typically right around 49 years of age. So, well done for Outta Here to reach it three years ahead of schedule.

• 51:19Speaker 03

  I just like that you assume that that's the accent. Like, that's the...

• 51:22Brian Preston?

  Was that an accent?

• 51:23Speaker 03

  Was that an accent?

• 51:24Brian Preston?

  Was that an accent?

• 51:25Speaker 04

  Kinda.

• 51:26Brian Preston?

  I was just trying to add a little emphasis to it. I didn't know I put an accent on it.

• 51:29Speaker 03

  So, here's my question. When you leave the house, do you go back into the garage to re-engage and then walk out the front door?

• 51:38Brian Preston?

  I'm gonna take the fifth because of security purposes for my house right now. So, let's not talk about that.

• 51:43Speaker 04

  Oh, man. Somebody in the chat said they had the same garage door problem right now.

• 51:47Speaker 03

  It's the, I've had it before. It's the most frustrating thing in the world, the garage door doesn't open. It's, ah, I'm with you.

• 51:53Brian Preston?

  It's quite frustrating.

• 51:55Speaker 03

  How long has this been going on?

• 51:57Brian Preston?

  It's only this week.

• 51:57Speaker 03

  Okay. So, it's not like it's been like weeks and weeks.

• 51:59Brian Preston?

  I'm gonna do some, look, you know, Tuesday recording days are intense. I mean, we love, these are my, this is my favorite day of the week is recording days.

• 52:06Speaker 04

  We pack a lot in. It's true.

• 52:07Brian Preston?

  But it is, I mean, but it is, it is, it is hard. And the fact that you, at the end, when we've hit stop recording at the end of the day, I'm usually, I'm like mentally spent.

• 52:16Speaker 03

  Chest bump, high five.

• 52:17Brian Preston?

  So, it won't be today. That's probably on my Wednesday list is find a garage door repair company.

• 52:23Speaker 04

  Seems reasonable, honestly.

• 52:25Brian Preston?

  So, don't come rob me today or tomorrow, please.

• 52:27Speaker 03

  You're gonna rob him. Just wait till after Wednesday.

• 52:30Speaker 04

  Try next week.

• 52:32Brian Preston?

  Oh, my gosh. Maybe we should edit that out.

• 52:36Brian Preston?

  It's live. Great. And not only is it live, it's out there forever. Definitely getting fixed tomorrow.

• 52:46Brian Preston?

  Well done, Brian.

• 52:47Speaker 04

  Oh, man.

• 52:49Brian Preston?

  Why did I use that analogy?

• 52:50Speaker 03

  It is great.

• 52:52Speaker 04

  It was fun.

• 52:52Speaker 03

  I thought it was great.

• 52:53Speaker 04

  For me? All right. Are you ready for another personal finance question? Bo's not. Bo hasn't recovered. But I do have one queued up from Alex S. It says, "Good morning, Money Guy team. Which step of the foo do you feel is the most overlooked for mutants in their 30s?"

• 53:16Speaker 04

  We like to talk about financial order of operations. We like to talk about the 30s and the messy middle. So what's overlooked?

• 53:21Brian Preston?

  It's two for me, Bo. So I'll let you put the... I think three and four are the first two that grabbed me.

• 53:26Speaker 04

  And those are?

• 53:28Brian Preston?

  High interest debt.

• 53:29Speaker 03

  Will you hold the thing up, Brian? Can you hold the thing up?

• 53:31Brian Preston?

  You too can have one of these. MoneyGuy.com/resources.

• 53:35Speaker 04

  It's for free.

• 53:35Speaker 03

  So you were saying you think it's three and four?

• 53:37Brian Preston?

  Yeah.

• 53:37Speaker 03

  Which are?

• 53:40Brian Preston?

  High interest debt. Act like I don't know what it is. High interest debt, number three, and then emergency reserves is number four. Really, it steps one in four. But it's... But people, I think, sometimes, especially financial mutants, think that cash is trash. And I just don't disagree. I don't agree with that.

• 53:55Speaker 03

  I think it's a combin... Because you said Alex asked specifically in the 30s. And I know a thing or two about being in your 30s. And I think that what happens is, is yes, there is this idea that, man, I recognize. I went to MoneyGuy.com/resources. I looked at the Wealth Multiplier. And I know how powerful every single dollar can be in my army of dollar bills. And I don't want any sitting on the sideline not growing for me. So that is one side of the equation. But there is this other side of the equation. Something that often happens for people in their 30s is they get into the messy middle. And all of a sudden, life just starts happening. And out of nowhere, your kid has to have six fillings. Even though you just tell her every night, "Floss your teeth and brush."

• 54:39Speaker 03

  And you try to not let her eat all the candy and stuff. But she still has to have six fillings. And it's just like an expensive thing. And these things happen. And then all of a sudden, the HVAC goes out. Then you've got to replace tires on the car. Well, because you've been a diligent saver, you use that emergency fund. It's what it's there for. You pull my... Money out and you pay for the braces and you do the HVAC and you replace the tires. But what you often forget to do is double back and say, oh, I need to go build that back up. And so I had this emergency fund that was $20,000, but then I had 2,000 go here and then 1,000 over here. And then, and then before you know it, you went on that vacation or what, and your emergency fund that was supposed to be at 20,000 is now gotten down to like 15,000, 16,000.

• 55:22Speaker 03

  But you never like go back and revisit that because you left your savings the same. You still did your Ross and you still did your HSA and you still did your 401k. And then something big happened. You're like, oh no, the car just went out. I have to go replace it. I don't have an emergency fund in place. That's something I feel like I see a lot of 30 year olds or people in their 30s fall into. So one of the things that I encourage folks to do is every single year, you ought to be doing an annual net worth statement.

• 55:51Brian Preston?

  For sure.

• 55:51Speaker 03

  If you don't have, if you don't have a template, we have a free one at moneyguy.com/resources. Or we have a ballin' one you can use at learn.moneyguy.com. That is the exact same one that we use every single year. If you're doing it at least annually, one of the things that you will always be able to hold true to is when you look at your cash on there, it will cause you to answer the question, is my emergency fund, is my emergency fund fully funded? Have I actually completed and left step four completed? I think if you can do that in your 30s and really at any age, you're going to protect yourself from those unknown unknowns, causing you to have to drastically veer off financial course.

• 56:33Brian Preston?

  I will say I stand corrected. I misread the question a little bit because Alex specifically said for financial mutants. I think for financial mutants, without a doubt, it is step four. And you laid out the perfect case for why that is because people, it's the trap of cash is trash. Or life, it just takes it or your life changes. You get bigger income increases, your lifestyle expands and nobody ever revisits what their emergency reserve should be. When I said three and four. The general population, it's three. That is the trap that I think that if you probably look around, you financial mutants, and look at your peers, your friends, your family, a lot of them have consumption issues. And that's, it's not always an income issue.

• 57:14Brian Preston?

  It's a discipline issue on their lifestyle choices. But that's not typically a financial mutant. Financial mutants are sometimes their own worst enemy by not making sure that they're keeping enough margin or reserves there so they don't have to make desperate decisions in the future.

• 57:30Speaker 03

  Love that.

• 57:31Speaker 04

  Alex S., thank you for the question. We would love to send you a Tumblr as a special thank you. Just email [email protected]. Lucky day to get your question answered on a Tumblr day.

• 57:42Speaker 03

  Let's go.

• 57:43Speaker 04

  As Beau alluded to, make sure you are subscribed to this channel and then go to moneyguy.com. Make sure you're subscribed to our email list because we have a lot of really fun and very interactive ways for you guys to help us shape the show coming up very soon and throughout the rest of the year. So be sure to be on the lookout for that. We're very excited and we love hanging out with you every Tuesday at 10 a.m. Central and answering your questions.

• 58:07Brian Preston?

  Things have been popping. I mean, it's been, it's been kind of fun seeing the, seeing where the numbers are coming in at, the live streams. They don't let me have a, I mean, a computer, so I have no idea if maybe only six people showed up today, but, but, um, and the things have been-

• 58:20Speaker 03

  But we love all six.

• 58:21Speaker 04

  It was more than six.

• 58:22Brian Preston?

  Things have been booming recently. We do not take that for granted and I appreciate it because that's, that's the thing that I love and it just shows the value of the message is I think people can tell we really are passionate. We did an interview, you know, we did, went on Ice Coffee Hour and I don't, you know, I didn't agree with every comment that was out there, but one of the things that I did like, there was a consistency was, is that people could tell that we really are trying to make the world a little bit better on your decision-making. We want to be, play the role of educators on the wonderful world of personal finance. And I think that, you know, I think that that's a pretty pure message that has never- Misserved us. I mean, it seems like the more we pay it out, the more good things

• 59:04Brian Preston?

  happen. And that's hence, this is why we call it the abundance cycle is we have never been hurt by being abundant with our knowledge as well as sharing resources and letting you become the best version of yourself. So if you resemble any of the stuffing, you're starting, you realize, hey, I am the CEO of a multiple seven-figure or even first seven-figure enterprise. We'd love for you to consider taking the relationship to the next level. We'll leave the porch light on for you because this thing still has a lot of, of gas in the tank. I mean, we are absolutely loving creating this content for you guys, creating community with you. So thank you, thank you, thank you. I'm your host, Brian, Mr. Bo, Rebi and the rest of the content team, Money Guy team, out.

• 59:47Speaker 03

  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. All investments involve a degree of risk, including the risk of loss.

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