Is it Impossible to Build Wealth in Your State? (Ranked)

Does where you live determine how wealthy you become? We share our take on the cost of living by state and reveal the highest and lowest . We also share practical ways you can build wealth in any state. And...our rapid fire segment is back! From debates over Disney World to questions about investing, we share our thoughts while answering your questions live to show you there's a better way to do money. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠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. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠DRINKAG1.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

  Welcome to the 50th Hunger Games.

• 0:01Speaker 01

  Witness the beginning of the revolution.

• 0:04Speaker 00

  Hey Mitch, you've been trying to take down these games from the start.

• 0:07Speaker 01

  Filmed for IMAX.

• 0:08Speaker 00

  Make them remember you.

• 0:11Speaker 01

  The Hunger Games: Sunrise on the Reaping, November 20th, rated PG-13.

• 0:16Speaker 02

  Hey, listen. Power up your play with Nintendo Switch 2 and experience Link's legendary adventure, now reborn in vibrant detail on our fastest and most powerful system yet.

• 0:29Speaker 02

  And harness the power of the Ocarina with the built-in microphone.

• 0:38Speaker 02

  The Legend of Zelda: Ocarina of Time, a Nintendo Switch 2 exclusive. Game and system sold separately. Game rated everyone 10 and up.

• 0:51Brian Preston?

  Here's a question, is it impossible to build wealth in your state?

• 0:55Speaker 04

  Brent, I am so excited to talk about this because we know that different geographies and different states are different. No two states are the same thing. No two states have the same benefits and the same attractions. And realistically, no two states have the exact same cost of living. And depending on where you live in this country can have a big impact on what your financial life looks like.

• 1:17Brian Preston?

  Yeah, I mean, this is, look, we've done shows on taxes, we've done shows, this one will focus specifically on cost of living. And we want to talk to you, you don't always get to control where you live, so you can at least pay attention to, how do you make the most of the situation? But in the meantime, let's talk about what the high cost of living states are.

• 1:37Speaker 04

  Yeah, and this isn't going to be a huge surprise because we know that some states are much more expensive than others. According to the US Bureau of Economic Analysis, they determined that the national average for cost of living for a single adult is about $56,000 a year. So that's the baseline on which we're going to operate. Well, if we think about the highest cost of living states, California came in at the highest. It is 12.6% above the national average.

• 2:07Brian Preston?

  Yeah, by the way, if we had to do a List of the three, I mean, I would tell you none of these three, because the next one was New Jersey at 8.9% higher than the average.

• 2:17Speaker 04

  Yep.

• 2:17Brian Preston?

  And then Hawaii, I mean, they at least have the excuse that they're on an island.

• 2:21Speaker 04

  Pretty awesome, right?

• 2:23Brian Preston?

  8.6% from the national average. So those aren't shocks to me. When I saw the list, I was like, okay, here's another list of California, New Jersey, Hawaii, you know, where the top of cost of living. What might surprise people is what's on the actual low side of cost of living?

• 2:40Speaker 04

  Yeah. So again, if we're going to consider the national average is $56,500 a year for a single adult. The lowest cost of living was actually Arkansas. It came in 13 and a half percent below the national average cost of living. The second lowest was Mississippi, coming in at 12.7% below the national average. And then the third lowest cost of living was South Dakota, coming in at 11.9% below the national average cost of living for a single adult.

• 3:10Brian Preston?

  I mean, from a popularity standpoint, you know, this is one of those where South Dakota, because isn't that the only state we don't have a client in?

• 3:17Speaker 04

  I think it might be the only state that we don't have a client. 49 others.

• 3:22Brian Preston?

  There's not enough mutants taking advantage of the 12% discount they're getting. Like, I think there's just not a lot of people in South Dakota also, in our defense.

• 3:29Speaker 04

  Even if you don't live in one of these states, that doesn't necessarily mean that cost of living is not a factor for you. We know that 47% of Americans, almost one in two, said that cost of living is their single biggest obstacle to saving money. Because things have gotten more expensive, whether it's gas, travel, housing, whatever that thing may be, just the cost of keeping the lights on, of living the life you want to be, is a major obstacle to being able to build wealth. And that's pretty common across the entire population.

• 4:02Brian Preston?

  Well, that's why we wanted to do a contrarian take with doing a case study, because look, it's easy. We pick on California all the time because of their taxes and so forth. But here's the reality, historically, there's actually some pretty good career opportunities.

• 4:17Speaker 04

  That's right.

• 4:17Brian Preston?

  These high cost of living areas have Opportunities sometimes you don't have in other areas because of industry and other things that are going on in that community. So we said, let's do a contrarian take. Let's compare California Carly to Arkansas Adam. You might be surprised at what we're going to show in this case study.

• 4:35Speaker 04

  Yeah, we want to argue that cost of living certainly can play a factor in your ability to build wealth, but it's not necessarily the determining factor. So if we're going to think about California Carly, I bet you can't guess what state that she's going to be living and working in. And then we have Arkansas Adam. So Carly, we know, again, just assuming these national averages and where these states fall, her average cost of living is going to be about $64,000 a year, but Arkansas Adam is only going to be about $49,000. Now, you just alluded to something, Brian, that the career opportunities and what is likely going to be available from a trajectory standpoint is probably going to be different in California versus Arkansas. So

• 5:18Speaker 04

  so, okay, what if Carly moves out to California, decides to live there, but because she's living in that type of area, she can go out and earn a salary of $100,000. And Arkansas Adam, instead, he's going to go out and earn a salary of $55,000. Well, we know that both of those two states are taxed differently. So when we compare their after-tax income, Carly would have an after-tax income of about $72,000, and Arkansas Adam would have an after-tax income of just under $45,000. Where when you compare their after-tax income to the cost of living in their states, what you can see is that even though Carly lives in a more expensive cost of living area,

• 5:59Speaker 04

  because of the other opportunities there, she likely even has more margin available to her to build wealth than Arkansas Adam does.

• 6:07Brian Preston?

  Isn't it amazing how we can get through now, look, we're building a lot of assumptions into this, but what is the simple ingredients to wealth creation? First, you have to live on less than you make through discipline, and that discipline creates the margin that we're seeing here for Carly. And that margin is what if you give it enough time, that it actually creates the fruit of wealth. And I think that this is, and that's why you have to pay attention. We're going to get into deeper into, you have to pay attention to what can you control in your personal situation to go on this wealth building journey?

• 6:43Speaker 04

  Well, the very first thing that you can't control or can think through is how do I leverage this situation? If I'm going to live in a high cost of living area, does that mean that the vocation I pursue, the trade that I pursue is going to have higher income opportunities? If that's not the case, then it may be worth reevaluating. Okay, is it justifiable? Does it make sense for me to live in the geography I'm choosing to live in? If there aren't more attractive opportunities available to help me keep up with the cost of living?

• 7:12Brian Preston?

  Well, it's, because I want to bring these next two together, like leverage the situation. We all know, because I mean, it's a household brand, Walmart is in Arkansas too.

• 7:22Speaker 04

  In Bill Arkansas, yeah.

• 7:22Brian Preston?

  Probably now, but here's the thing, even in low cost of living states, I bet there's, because we live in Tennessee, but if you go look at the Nashville proper area compared to other parts of the state, the cost of living is completely different. So you have to pay attention to, and that's what I loved about the leverage of the situation, is what job opportunities, what things they are. And then here's the second one. Assess your location because of like in our situation, because Nashville and in Williamson County, the areas that are surrounding Nashville is so cost of living, there are a number of people that do commute.

• 7:57Speaker 04

  Yep.

• 7:57Brian Preston?

  Because you just have to go right outside of this bubble and all of a sudden the cost of living drops down significantly. So you need to kind of look at your scenario and say, am I one of those people? I hate commuting. I think it's one, you know, when you look at happiness surveys, it's not one of the greatest things you ought to be spending your time doing. But there are moments in time, I've done it in my life, where you assess your situation and you figure out, how do you make the most to, to be able to control what variables you do have?

• 8:24Speaker 04

  And then you have to take ownership of your circumstances. Remember, no matter where we are, what stage of life we are, if we want to impact our financial life, there are really two levers that we can pull. We can either increase our income, seek out opera. Opportunities that are gonna allow us to have a bigger shovel. Look for areas where there are more opportunities, build a different skillset, or we decrease our expenses. We find areas that are lower cost of living to match the vocation, to match the shovel that we have. Those are really the only two options you have, but the more deliberate you are in terms of how you pull each of those levers,

• 9:04Speaker 04

  the higher likelihood you're gonna have of not letting cost of living be a determining factor in your ability to build wealth.

• 9:10Brian Preston?

  Well, that's what we find out. These, this is your environment, this is what you're surrounded with, it definitely has a huge impact on opportunities. But a lot of times it's your choices of consumption. You know, and that's why a too expensive car in California is gonna drive just like a too expensive car will in Arkansas. And you need to plan accordingly, and that's why I would encourage everybody. I want you to go to moneyguy.com/resources, and we have all kinds of free stuff. Here's one that we just pulled off the shelf to put in front of you, 238. Because that car that you drive, that's not going to impress anybody that you think it will, will work against your wealth even more so than some of the things we've covered on today's show.

• 9:50Brian Preston?

  So pay attention to 238, pay attention to 25, you know, five, and as we're working through all of the rules, there's all kinds, I screwed that one up, but that's okay, that's okay. It's, we have so many rules, even if you screw up the rules that we have, you can go to moneyguy.com/resources to clarify and make sure you're on the right path.

• 10:08Speaker 04

  I love that the three ingredients of wealth creation stay the same. It is discipline, it is money, it is time. No matter what stage of your financial life you're in, and no matter what geography you live in, I love that building wealth and making wise and sound financial decisions is available to all of us. It's one of the reasons why we love that every single Tuesday at 10 a.m. Central, we get to sit right here and answer questions that you guys care about. We get to speak to the things that are on your mind. So if you have a question that you want to get our take on, that you want us to weigh in on, make sure you get it in the chat right now. We have the team out in the wings collecting your questions, because we really do believe that there is a better way to do money. So with that,

• 10:52Speaker 04

  Creative Director Rebi, I'm gonna throw it over to you.

• 10:54Speaker 05

  Yes, drop those questions in the chat because today is Tumblr Day and now is your moment. But before we get to the first question, I do have-

• 11:03Brian Preston?

  You know why I didn't get any quacks today?

• 11:05Speaker 04

  Why do you get any quacks today?

• 11:06Brian Preston?

  Cause there's some exciting stuff that Rebi's-

• 11:08Speaker 05

  It's true, I was about to make a big announcement, but it's fine.

• 11:10Brian Preston?

  I'm just so excited for her to say what she's about to say that I kinda blew past me that we just offered up-

• 11:16Speaker 05

  Oh, there will be more opportunity, Brian. Don't worry for your sound effects. But we do have an exciting-

• 11:20Brian Preston?

  You know, I can perform on command, but I am excited for Rebi to announce.

• 11:28Speaker 05

  We have done something.

• 11:29Speaker 04

  The first question.

• 11:30Brian Preston?

  Oh, we're not talking, we're not doing announcements yet?

• 11:32Speaker 05

  I have a big announcement because this is something that I feel like our channel has finally kind of grown into. It's something that you have asked for. It's something that we have considered and are finally able to make happen.

• 11:48Speaker 04

  And you're gonna talk about it after we answer some questions, right?

• 11:51Brian Preston?

  What are you doing?

• 11:53Speaker 05

  Alright, I have a list of all the things I'm gonna hit and what I'm gonna do, but they're not gonna let me. But I, um, now, I do wanna announce it. I'm announcing it. I've decided.

• 12:02Brian Preston?

  You do it. You do it, Rebi.

• 12:04Speaker 05

  We now have a Money Guy Clips channel. So what this means for you watching is that the Money Guy Show channel that you know and love, that you are watching or listening to right now, will continue to have all new content Monday, Tuesday, Wednesday, and Friday. Everything on this channel will be new, original content. You've noticed that we've picked up clips, like some of the most popular and interesting parts of our full episodes, and we've been posting those on the weekends or at different points throughout the history of this channel. Now those clips are going to live on Money Guy Clips, the channel, on its own. So you can kind of tailor to what you wanna watch.

• 12:48Speaker 05

  And here's the call to action here. We're doing this for you. We want this to be a great experience for everybody who finds Money Guy content. We want to reach even more people with this amazing advice. So be sure to go subscribe and watch some of our Money Guy Clips channel content to just give it a little oomph. And make sure that we can keep doing this and keep serving you with better content and keep making better changes like this to hopefully make your life a little better and make the content easier to find and easier to watch.

• 13:18Brian Preston?

  So here's what's happened in my life. Already in my friend group, we have a big text thread. Well, that's what that's what I was like, this banner that's up right now. My buddies have, one of my enterprising buddies has clipped just my picture.

• 13:32Speaker 04

  Uh huh.

• 13:33Brian Preston?

  And said, this guy looks like he could sell some used cars. So, so already some shots, because I don't choose any of this stuff. I let the content team just run raw with it. But I do, if you want to go check it out, you have to go check out, go to YouTube and we have Money Guy Clips. It was at Money Guy Clips.

• 13:51Speaker 04

  That's right.

• 13:51Brian Preston?

  Um, in case the search function isn't, because it's brand new. And then, you know, staying on that same theme, I mean, we have pulled the top off the carburetor. We've poured a little gas, but we need you to be that additional fuel to prime the pump so we can get this engine fired up and take the Money Guy to the next level.

• 14:10Speaker 04

  I love it.

• 14:11Speaker 05

  I love it. So we're excited about that. Um, go check out the channel. Go look at Brian's fun picture. I like the pictures we chose.

• 14:17Brian Preston?

  Oh, I'm fine with it. I mean, look, if I have to sell some used cars to make this thing go down, a spoonful of sugar.

• 14:24Speaker 04

  We've been talking about this for a while. It is not until this moment in the chat that I recognized how much it does sound like a barber shop. Like, I never, did y'all recognize that?

• 14:34Speaker 05

  There was a memification of that.

• 14:37Brian Preston?

  What do you mean?

• 14:37Speaker 05

  Based on a comment.

• 14:38Speaker 04

  Man, I can't wait to get my haircut at Money Guy Clips. Like.

• 14:42Brian Preston?

  I never put that together until right this moment.

• 14:44Speaker 04

  It's unbelievable. I literally never even saw it.

• 14:47Brian Preston?

  Oh, man.

• 14:47Speaker 05

  Oh, I love it.

• 14:48Speaker 04

  Oh, man. Somebody just said, Brian got you rolling. That's hilarious.

• 14:53Speaker 05

  That's hilarious. If you have not seen, Steveo got me rolling. You should watch some of our financial advisors react videos.

• 15:00Brian Preston?

  I thought you were going to come really close. Go check out some Steveo clips. No, do not go check out some Steveo clips.

• 15:06Speaker 05

  Honestly, you probably should not do that. No offense. You should go watch Money Guy react and see what.

• 15:09Brian Preston?

  Wouldn't that be funny if Steveo came and did a studio tour?

• 15:12Speaker 04

  It'd be amazing.

• 15:12Brian Preston?

  Be like, I'm a big fan of y'all's show. Y'all helped so much. That's not what we're trying to do here.

• 15:17Speaker 05

  Let's teach you about 238. Let's have us sit down. All right, let's go ahead and get to our first question from Kevin B. 8679. It says, "Hey, Money Guy team, my spouse is self-employed, making 120K annually.

• 15:30Brian Preston?

  What retirement account is best if we expect to be in a higher tax bracket later in life?"

• 15:38Speaker 04

  Well, Brian, this is interesting because, you know, one of the things that you said when you used to do taxes a million years ago, you were like, "Hey, one of the best things that I could do is whenever I sit with a, sit down with a small business owner, someone who is self-employed, owns their business, I know I can always start kind of blowing their mind in terms of tax savings." And this exact question is one of the things you always start to talk about.

• 15:58Brian Preston?

  Well, yeah, because in the past, it was easy. You just threw a SEP IRA at them. Because the SEP IRA is one of the unique tax planning tools that could go back in time, meaning that if right now, we're in the year 2026, but we're not past the tax filing deadlines or extended tax filing deadlines, if you file a tax extension that goes all the way to October for 2025. So you can imagine if you're a self-employed person and you had really, you know, income popped, because that's the thing about being self-employed, sometimes you just don't know your income is going to pop until all of a sudden, you're like, "Oh, my gosh." Because you have so much money plowing back into the business that you're shocked when those early years, when it starts piling up and because you realize, "Oh, my gosh, this thing is starting to show some success."

• 16:39Brian Preston?

  So you could fire up a SEP IRA and put up to 25% of the earnings, usually with self-employment adjustments, around 20%.

• 16:47Speaker 04

  Sure, some sort of that.

• 16:48Brian Preston?

  You know, that you could put as a profit sharing contribution. And that was all funded by the employer side, meaning you, the owner. Then along came, and that kind of really changed things a lot, because what blew up SEP IRAs was then, once people had employees, you do a simple, and then you go into a traditional 401K. Well, if you don't have employees, there's still an option that's probably better, it is better than SEP IRAs, and that's the solo 401K. Has really changed the game, because in addition to doing that profit sharing contribution that I just laid out for SEP IRAs, it also allows you to do, it allows you to do the salary deferrals, just like a 401K would. And there's even options, you can get into Roth side of things.

• 17:31Brian Preston?

  There's some really cool planning opportunities that you can do with a solo 401K. And by the way, employees can be you and your spouse only. You know, but once you, even if you start putting the kids on the payroll or other crazy things like that, it will blow up these things and then you have to go more traditional. And that's a whole nother conversation, but if you're, if you're self-employed, you don't have employees, solo 401ks have a lot of benefits.

• 17:55Speaker 04

  Yeah. So just thinking through, you know, your wife having $120,000 a comp and let's assume that that's what she's actually showing as her, her net operating income. With a SEP IRA, she could do a $30,000 contribution. You figure out, okay, if you guys are in a higher tax bracket, 30% tax bracket, you just take, you know, $30,000 contribution times your marginal tax bracket, that'd be your tax savings. If she does the solo 401k contribution, in addition to doing the $30,000 employer profit sharing, she can now add on $24,500 of salary deferral. So the total deferral of her income could be $54,500. Take that number, multiply it by your marginal tax rate and you can see that there's some

• 18:35Speaker 04

  like serious and substantial tax savings available to you by opening a solo and they're so easy to open. You can go to any of the major custodians, you know, Fidelity, Vanguard, Schwab, you know, fill in the blank, open it. There's no tax filing, no reporting, no issues until it crosses over $250,000 of assets. Once it does that, you do have to make sure that you file an annual 5500. There are no taxes due. It's an informational filing, but if you miss that filing, the IRS will send you a nasty and gnarly letter that will scare you to death.

• 19:09Brian Preston?

  Penalties are severe. So don't, make sure you file the taxes.

• 19:12Speaker 04

  Every year, make sure you track to see how big is my solo, or if you're someone who's like rolling IRA assets into a solo to open up back doors, make sure that you file your 5500 every year because you do not want to get that letter.

• 19:25Speaker 05

  That's great. Well, Kevin B. 8679, you get a Money Guy Tumblr if you'd like one since we answered your question. Just email [email protected].

• 19:36Speaker 05

  All right, before I go into the second question, I do have another small announcement. We will be doing another "It Does Not Depend" rapid fire segment between the 30 and 40 minute mark of today's episode. So if you are watching live right now, please submit your questions. Just put RF for rapid fire at the front of your question and our team is going to queue up a bunch of really fun rapid fire questions for Brian and Beau. Feel free to have fun with it. Feel free to stump them. Feel free to just ask a genuine personal finance question as we do on this show all the time and as we love to do. So go ahead and get those questions in the chat and we will come back to that after a couple more long form questions.

• 20:19Brian Preston?

  I heard last week that I said it depends and you didn't pop me around for doing that. So you have my permission to go over the top if I, because I'm the one that's gonna screw

• 20:28Speaker 05

  Honestly, by the end, we were having so much fun trying to get you to answer it in 20 seconds. I may have forgot, like dismissed it.

• 20:33Brian Preston?

  I would ask it, really. I don't think my brain can go less than 30.

• 20:36Speaker 04

  I'll bet.

• 20:37Brian Preston?

  Beau can work at a speed. It's just like when you listen to me, there's limits on how fat, you can probably listen to me at three times, four times speed because of how slow I talk, but it's, but there are definitely limits on how fast I can process a question.

• 20:50Speaker 05

  Yeah. Well, we're gonna try to find a happy medium and have some more fun today.

• 20:53Brian Preston?

  But Beau, we ought to give him 10 seconds.

• 20:56Speaker 05

  So we know it's for that segment. In the meantime, I've got a couple more long form questions. I guess that's what I'm calling them queued up. This one is from Powerbait. It says, "Hello, why do you suggest 25% of your gross income for a house payment instead of 25% of net? 25% of my gross ends up being about 32% of my net, which feels like too much." So this is regarding our house buying rule. So maybe you can kind of recap that and speak to his question.

• 21:28Speaker 04

  I want to be clear because the way that this question is worded is a little bit different than what we say. You said, "Why do you suggest that our housing should represent 25% of our gross?" We do not, we do not say, hey, your housing should be 25% of your gross income. What we say is that is the upper limit guardrail that you should use to determine if the housing that you're getting into is more expensive than it should be. Now, if you're someone who is a little more risk averse, a little more conservative, you want to have a little bit more margin in your life, there's nothing wrong with you using a net number. I'm going to do 25% of my net, or I'm going to do 20% of my gross, or 15% of my gross.

• 22:13Speaker 04

  There's nothing that suggests you have to go all the way up to that threshold in order to get into housing. It just so happens, housing is really, really expensive right now. And it's a very, very difficult thing for a lot of folks to get on to the home ownership side of the equation. And so that's why the 25% exists there. We never tell people, when like, when someone says, hey, I'm thinking about buying a house, we never start with, okay, what's your gross income? Let me tell you what your mortgage payment should be. We start with, okay, why do you want to buy a home? How long do you see yourself being there? What's the home going to do for you? What problems does it solve? And then we begin getting into the mathematics, or, okay, in the area that you live, that

• 22:55Speaker 04

  you're looking at, with the type of home you're looking for, what are those prices? Okay, now, can we make sure that fits comfortably inside your realm of affordability? 25% is not prescriptive, it is a restriction. Hey, really be careful, don't go over that.

• 23:11Brian Preston?

  Well, look, for a lot of people that live in these high cost of living areas, they're going to need every ounce of the housing that we can give them. So that's why giving them boundaries, or how much can you do without being, falling into the category of potentially being house rich, life poor? But the reason I use gross is this simple, you can't manipulate it. If anybody, because everybody's net's going to be slightly different, because where do taxes fall in that? Where does your savings rate with your employer plan at work? You know, what are your health, health insurance electives that you've chosen? How about other things if you're doing, you know, life insurance or dependent care and all kind of other deductions that you've chosen out of your cafeteria plan?

• 23:55Brian Preston?

  If we use net, now when I give you a specific recommendation, that's going to be completely different than everybody else. But if I go off of gross, you can't manipulate that number. It is what it is. We all know our top line number. So it gives you a little extra grace and takes it all the way up to 32%. If you live in a high cost of living area, I'm okay with that, especially in this unique time in history where we are, where housing already is so much harder. As long as you are doing all the other it depends stuff and you're saving for the future, you're making sure that you're keeping your other debt limits within thresholds and the boundaries we share, it all works together. And that's why I always say when we do personal finance stuff, it's exactly what Bo was talking about.

• 24:37Brian Preston?

  He basically just gave you the triage list that we have to go through to assess where somebody is in their financial life. We give rules to give boundaries and guidance, but it still has to come back to the personal side of personal finance, which is going to be so unique that that's why I can load you up with so much free advice is because everybody, when you get to the critical mass point of that, hey, these are big decisions I'm making, my simple life has gotten super complicated. We kind of help bring it all together as financial planners. And that's why I don't, I don't worry about my job with even all the crazy technology that's going on is because that's going to continue to be very personalizing, unique, and the implementation is a whole nother level that I haven't even talked about. One thing to know strategy is another thing to actually make it happen.

• 25:25Speaker 05

  Power bait. Thank you for the question. If you would like a Money Guy Tumblr, just email [email protected]. Next question's from Bennett B. It says, if I'm 24 years old with very low fixed expenses, can I commit the foo sin of contributing $625 a month to my Roth IRA while simultaneously building up my emergency fund, already getting the full employer match?

• 25:53Brian Preston?

  What I think is interesting. I mean, cause I don't know, Bennett, 24, it's definitely young and I'm super excited, especially if you can, I mean, you're at the point where we can already be thinking about Roth IRA. I will absolutely love that. But you just answered your own question in a way because you have very low fixed expenses. So if you know that to get out of step four, you just have to basically know you have three to six months of living expenses covered and you back to quote, very low fixed expenses. And you know, let's just say if you were, cause look, there's no shame in the game that when I graduated college, I lived at home for three months, three or four months. Cause my apartment

• 26:35Brian Preston?

  that my buddies and I were moving into, it didn't open up until September, October. I graduated in June. I bought the sweetest purple leather recliner with some of those savings and I, you know, saved up some additional money that went into emergency reserves and so things. It was on sale.

• 26:51Speaker 04

  Oh, just price.

• 26:52Brian Preston?

  I mean, you know, back then it's a burgundy purple type color. You don't, it's a bunch of guys, like Rob, my other buddy, he bought the leather couch. It was brown, mine, you know? And so we, and then another guy bought the like subwoofer and speakers. I mean, this is, these are priorities that roommates, you know, we all assign. We did a zone, zone coverage on what we were going to fill this place up with. But it's back to the point of, I, I think you're going to, you're going to be able to cross out of step four and ride into the six 25 within a month. I mean, so we're really talking about, are you getting cute for a month to, to get, cause I want you in the Roth as fast as possible, but I just want to make sure that, you know, you're being smart on the risk side of us, of your, of your exposure as well.

• 27:31Speaker 04

  Yeah. I want to, I wish I knew more numbers, Ben. I'd love to ask, okay, when you say like very, very low fixed expenses, is that like $2,000 a month? I'm just kind of making up a number. So three months of those fixed expenses will be a $6,000 emergency fund. But when it comes to emergency fund, we don't just want necessarily fixed expenses. We want you to actually have the true cost of living that you're experiencing. So whatever that may be, if it's three grand a month, it's three, six, nine for three months. I want you to have an emergency fund so that you can keep your life out of the ditch, but you're trying to like, play a little bit of a game here by doing step four and step five. So this is the first question I would ask you. All right. How much emergency fund do you have? Like, are you like a month and a half, two months in? Is it only going to take you one more month to fill that bucket up?

• 28:15Speaker 04

  If so, go ahead and do that and then get back to the Roth. But. I will say as an honorable thing to just like a little asterisk honorable mention. One of the unique things about Roths. Let's say that it's you're getting close to the end of the year or you're getting close to the end of the tax filing deadline. You've almost maxed out your Roth for last year, but you're not quite there. And you have, man, you just need to squeak in a few more contributions to fully hit the max. One of the unique things that's true of Roth IRAs is that if you absolutely had to, you could get to your basis penalty free, tax free. Now you should never, ever, ever, ever, ever do that, but if you had to, you could. So if it comes down to, man, all right, I just want to make sure I get that last little bit in.

• 28:58Speaker 04

  Am I going to be okay if you take the 625 and you put in your Roth? And you just let it hang out in cash. I know that sounds crazy, but you let it hang out in cash. Until you get your emergency fund fully funded and then you invest that. I'm not going to fight you on that because I know that once we pass that tax filing deadline. You don't have the ability to go back and max out the Roth for that year. So those dollars are precious. They are special. They are coveted. But I don't want you to run afoul of the foo. So yes, there are circumstances where you can do both. But you gotta be unique in how you do it and you gotta make sure you're doing it the right way. Agree, disagree?

• 29:36Brian Preston?

  No, I like that. I like that because I mean, there are moments in time where especially where. Because you're right, like we're in this unique time between January and April where you can still fund for last year's taxes. You know, tax last year's Roth contributions. As you get older and more successful, you're going to be sad if you didn't fund some of that. So I get it and it look, you do have a break glass opportunity to get to the basis of the Roth. I always just get nervous because I don't want people to look at their Roth account as a piggyback.

• 30:04Speaker 04

  Well, and that's, that's why I told him, and this is the part that's going to be so painful for a 24 year old. You make that 625 Roth, I want you to have it sit in cash. And what I hope happens is you see that $600 in your Roth and it just drives you absolutely nuts. And you start losing your mind so that you get your emergency fund fully funded. And then you can go invest those dollars. Let the it sitting in cash be the thing that motivates you to fully fund the emergency fund. Because cash in Roth sucks. That's not a good thing.

• 30:34Brian Preston?

  No, I agree with that.

• 30:36Speaker 05

  That's great. I'm just getting ready for our rapid fire segment, but Bennett B, thank you so much for the question. If you would like a Money Guy Tumblr. Hang on, let me give Bennett his Tumblr. [email protected]. Bennett, email there. If you don't have a Tumblr, we'll get you one. All right. We are almost to the 30 minute mark. So let's go ahead and gear up for this rapid fire section. Again, this is called the It Does Not Depend rapid fire segment. Brian and Beau have to answer your questions in 30 seconds today. And they cannot use the phrase, "It depends." I will give you 30 seconds each to start. To start. And you cannot say it depends.

• 31:16Brian Preston?

  We gotta flip a coin to see who goes first, because...

• 31:19Speaker 04

  We'll just alternate back and forth.

• 31:20Speaker 05

  Let's alternate back and forth. I like the idea. Someone suggested I give each of you 10 seconds for each 10 years of life, but we're not doing that.

• 31:27Brian Preston?

  Oh, I like that.

• 31:29Speaker 04

  Wow.

• 31:30Speaker 05

  That made me laugh. All right. Are you guys ready for the rapid fire segment?

• 31:36Speaker 04

  Ready.

• 31:37Speaker 05

  All right. So I will ask the question and then the timer will start. First question says, "Best way to teach kids about money. Want them to be responsible, but not misers."

• 31:48Speaker 04

  Depends on how old they are.

• 31:50Speaker 05

  Nope, nope, nope, nope, nope.

• 31:51Brian Preston?

  Oh, God.

• 31:54Speaker 05

  Disqualified. Brian, you're up.

• 31:57Brian Preston?

  Go to moneyguy.com. There's some, there's actually some shows if you, because our search feature is so good now. If you type in, I'm trying to think of 15 year old savings or, because I had, did a show specifically with my daughter when she was 15. That show's gold. You'll see how much weight I lost. And it's, but it's good. We laid out some basics and we've done, we sprinkled in some other things and we want to do even more content.

• 32:21Speaker 05

  We do want to do even more content to serve you as parents.

• 32:24Speaker 04

  Somehow you smashed me. You just went over time and you still smashed me on that one.

• 32:28Speaker 05

  Next question says, "Should I continue contributing to 401K if employer suspends employer match? Or should I work on the next step?"

• 32:40Brian Preston?

  Where are you at in the financial order of operations? Cause you've got to go, you gotta go add now, look at your, your high interest debts and says, you gotta look at your emergency reserves, you gotta jump right into the Roth IRA. And then if there's room, yes, definitely go back to the employer savings plan, assuming that it has decent investment options that makes it worthwhile. Otherwise you might want to drop down right to doing an after tax account if it's so horrible because your employer works with his golf buddy.

• 33:12Speaker 05

  I need a sound effect. Wow. Okay, Bo, you're up.

• 33:14Brian Preston?

  We do need some sound effects.

• 33:15Speaker 04

  Yes, go to next step. Go to next step with the food. Do three, do four, get to tax free. If you're doing Roth 401k tax free, do that and then get to step six.

• 33:26Speaker 05

  Love it.

• 33:27Speaker 04

  I'm, I'm so ashamed of myself for blowing the first one so bad.

• 33:31Brian Preston?

  I love it. It worked out beautifully. Took that, talking about all nerves just went away because Bo just sacrificed himself.

• 33:40Speaker 04

  It was the first words I said. It was the very first word.

• 33:44Speaker 05

  Here's a fun one, but 30 seconds remains. Biggest miser moments.

• 33:49Speaker 00

  Welcome to the 50th Hunger Games.

• 33:51Speaker 01

  Witness the beginning of the revolution.

• 33:53Speaker 00

  Hey Mitch, you've been trying to take down these games from the start.

• 33:56Speaker 01

  Film for IMAX.

• 33:57Speaker 00

  Make them remember you.

• 34:00Speaker 01

  The Hunger Games: Sunrise on the Reaping, November 20th, rated PG-13.

• 34:05Speaker 02

  Hey, listen. Power up your play with Nintendo Switch 2 and experience Link's legendary adventure, now reborn in vibrant detail on our fastest and most powerful system yet.

• 34:18Speaker 02

  And harness the power of the Ocarina with the built-in microphone.

• 34:27Speaker 02

  The Legend of Zelda: Ocarina of Time, a Nintendo Switch 2 exclusive. Game and system sold separately. Game rated everyone 10 and up.

• 34:34Speaker 04

  Biggest miser moments.

• 34:38Speaker 04

  I ate cereal, I ate cereal for every single meal when I was freshly graduated out of college. Breakfast, lunch, dinner, two for one, public steal.

• 34:49Brian Preston?

  I still have my friends bring up that IHOP, when we were in our early twenties, I was so frustrated that I said, I'll split the bill for everybody. So I had them give me the receipt. I screwed up the math. I don't know if it's because we had had adult beverages or what, but it, but anyway, I got in an argument with the, with the waitress. I was wrong and I felt like the biggest miser. And if, now if we just split the tickets like I normally do, it'd be fine, but I was so worried about how, I was a miser back then. I was so bothered with what everybody ordered.

• 35:19Speaker 05

  I don't think I've ever heard that story. I like it.

• 35:21Speaker 04

  With my first daughter, she had outgrown her diapers, but I didn't want to waste the diapers. So I kept using two small diapers and she blew out for weeks on end, every single day.

• 35:31Speaker 05

  That is a legendary miser moment.

• 35:32Brian Preston?

  We also used to put the kids in pack and place in hotel rooms. I know, but there's all kinds of miser, but you will, if you have more success.

• 35:39Speaker 04

  The very first time.

• 35:40Speaker 05

  We will do the segment at the end where you get to say all of the things you didn't get to say.

• 35:43Speaker 04

  No, but I got one more. The very first time that me and Brian ever went on.

• 35:48Brian Preston?

  Oh yeah, that is a miser moment. Oh my gosh. I know what you're gonna say.

• 35:52Speaker 04

  The first time we ever went on a business trip together.

• 35:54Brian Preston?

  With, with my other business partner. This is before Bo.

• 35:57Speaker 04

  With another business partner. They were so tight.

• 36:00Brian Preston?

  Oh gosh.

• 36:01Speaker 04

  They got one hotel room with two full beds or two queen.

• 36:06Brian Preston?

  Right.

• 36:07Speaker 04

  Two beds.

• 36:08Brian Preston?

  We rolled a cot in between us.

• 36:09Speaker 04

  And they rolled a cot in for 21, 22 year old Bo. So that all three of us slept in the same hotel room and I slept on a cot.

• 36:18Brian Preston?

  That is a solid, that one should be breaking the rules. They're allowed to go over 30.

• 36:22Speaker 04

  That's a big miser moment.

• 36:23Brian Preston?

  Yeah. Now, now when we do book tours, it's everybody gets their own room except for Brian and Bo.

• 36:28Speaker 05

  I can explain. Anyway. All right. Uh, next question says, should I keep a down payment on a house for three to four years from now in a taxable brokerage account? Time starts now.

• 36:41Brian Preston?

  You or me?

• 36:42Speaker 04

  You.

• 36:44Brian Preston?

  A portion of it should go in the taxable brokerage account in cash equivalent. All of it can go in the taxable brokerage, but the majority of it, a good portion of it's gonna be cash. Because you're so close to five years, you could have some short-term assets that have a little more risk than cash, but get you a little better yield.

• 37:00Speaker 04

  Yeah, I think majority I would keep in cash so that it's available if the house, if the right house shows up. But I do think that's a long enough timeline that you could have a portion of that invested in the taxable brokerage.

• 37:12Brian Preston?

  But maximize the cash.

• 37:14Speaker 04

  Maximize the cash.

• 37:15Brian Preston?

  Don't let it be in like F cash.

• 37:16Speaker 04

  Because what happens is the economy goes down and all of a sudden there's an opportunity. Real estate slows down, you want to be able to move on a house really, really fast. You want to make sure you have your capital there and the market hasn't gone down. You want to make sure that you're available to capitalize when the opportunity presents itself.

• 37:29Brian Preston?

  You turn into the Micro Machines guy.

• 37:31Speaker 04

  I just want to.

• 37:32Brian Preston?

  You really do. It's amazing how you can speed up your voice. My voice, well, here, I can't do that.

• 37:39Speaker 05

  If I give you an inch, you guys really take a mile. You tag teamed and took all of that time.

• 37:43Brian Preston?

  We're still, we blew past 30 seconds. We're horrible. They need to get.

• 37:47Speaker 04

  No, she said 30 seconds.

• 37:48Brian Preston?

  Shot callers. I'm proposing we get shot callers for me and Bo and then we let Rebi push and pull the thing.

• 37:56Speaker 04

  If we did a shot caller segment, that would be insane. Hold on, you said 30 seconds.

• 38:01Speaker 05

  I'm usually not for these crazy things, but I like that. I'm here for it.

• 38:03Speaker 04

  You said 30 seconds each, a minute total, right?

• 38:05Speaker 05

  Yes, but you guys were really being very liberal on how you shared that time, let me say.

• 38:09Speaker 04

  Well, you know, it's tag team.

• 38:11Speaker 05

  Next question for the rapid fire segment says, how does one encourage a spouse to be more mutant-like?

• 38:18Speaker 04

  Begin with the end in mind. Talk about the goals that you have and reverse engineer into mutant tendencies that will lead you towards those goals.

• 38:26Brian Preston?

  Also, use the net worth as a tool to communicate. And y'all do that annual planning session like we do with our spouses where you come up with what the goals are. That way it seems like you're doing this in a collaborative method versus you getting up high and saying, hey, you need to do this, you need to do this. Nobody, nobody likes to feel yelled at or preached to. They want to feel more like we're doing this together.

• 38:48Speaker 05

  Next question says-

• 38:49Brian Preston?

  Welcome to the Money Guy Show. Watch the Money Guy Show every Saturday as a fan, as a couple.

• 38:55Speaker 05

  Wait, what?

• 38:57Speaker 05

  Every Saturday they're gonna watch it?

• 38:58Brian Preston?

  See, this is the problem with 30 seconds. My family and I have certain YouTube channels we watch every Saturday as a family together. And I'll say, make us part of your tradition.

• 39:06Speaker 05

  Cause I was like, we don't technically have a new video on Saturday. We have one on Friday.

• 39:11Brian Preston?

  This is why, this is why rapid fire is hard for us.

• 39:15Speaker 05

  Next question says, are annuities bad investment vehicles? If an older family member already has several, where do they go on their net worth statement? Go. Brian first.

• 39:29Brian Preston?

  For most people, annuities are not the first investment you should do, but I want to put the word of caution if they've already made the mistake and gone into annuities. Don't just assume that liquidating is the best option. You might have to figure out how you get yourself out from where you are currently versus just, you know, turning it all into cash.

• 39:49Speaker 04

  Not all annuities are created equal.

• 39:52Brian Preston?

  That's true.

• 39:53Speaker 04

  Some are better than others and some are more appropriate in certain situations than they are in others. So you have to assess them on an individualized basis for that specific individual.

• 40:06Brian Preston?

  There are a lot of bad annuities though.

• 40:08Speaker 04

  Agreed.

• 40:09Speaker 05

  Great.

• 40:11Speaker 05

  Next question, when does a 401k loan make sense?

• 40:15Brian Preston?

  Oh gosh. I'm glad Bo's going first.

• 40:18Speaker 04

  Never.

• 40:21Speaker 05

  Top that.

• 40:24Speaker 05

  Top that time.

• 40:27Brian Preston?

  I mean, I always have a no hypocri- I've never used a 401k loan, but I'm, I could see a moment where it would have to be a last resort.

• 40:36Speaker 04

  Not if you have step four done.

• 43:04Speaker 05

  All right, last one. You can answer this in 10 seconds. Can Bo bench Brian?

• 43:13Brian Preston?

  Yeah.

• 43:13Speaker 04

  That says Brian.

• 43:14Brian Preston?

  I weigh less than like 350 pounds, so.

• 43:18Speaker 04

  Yes, I can bench Brian a lot of times.

• 43:23Speaker 05

  Have we tried it?

• 43:24Brian Preston?

  No, we're not doing that.

• 43:28Brian Preston?

  You know, what's funny is I threw out shock collars, but all of a sudden that's a bridge too far.

• 43:35Speaker 05

  Oh, man. All right, that was good stuff. Thank you for submitting your rapid fire questions. Now, let's just make sure, was there anything else that you would like to say for our It Does Actually Depend segment? Any miser behaviors, any clarification on the 401k loan, anything left to say?

• 43:53Speaker 04

  I do, I do want to mention on the annuities, annuities are not inherently a bad thing. They solve a problem, a very specific problem in very specific circumstances. But what's happened is that industry has kind of morphed to where it got broadly applied to way more people than they actually made sense for. So I don't want to say just throw out all annuities completely, especially if you have an older family member, an older relative that you're doing this analysis for. You want to go through, because some annuities, it may not make sense to get rid of it, but there are things you can do like, hey, this annuity has this really interesting feature where I can activate the income rider and those dollars can sit there, but now it can start generating real income for me on a month over month, year over year basis.

• 44:38Speaker 04

  And it makes sense to do that because I've been in the annuity for so long. So you don't want to just like throw them completely out with the bathwater. You want to do the analysis to determine, okay, which ones are worth keeping, worth having, and which ones are worth not having?

• 44:51Brian Preston?

  If we were doing a quick summary, like a fixed annuity that's acts like a pension, that's probably the one with the least amount of. Crazy stuff going on if you were just trying to, because we see people set up their own pensions like that. Variable annuities, equity index annuities, those are the ones that usually have a sales force attached to them. And they're very profitable for the people who sell those products. And you just need to be careful if it sounds too good, because they always say, hey, we can give you the returns of the market without the risk. Just off that statement alone, your spidey senses ought to go, that sounds a little too good to be true. And historically, when you go look at the data, you can see, yeah, there's a lot, there's

• 45:36Brian Preston?

  a lot going on with that sales line that doesn't hold up when you go back to us and look at what they do historically. Because I think a lot of people also don't understand, when you look at these great, these products, when they say, hey, we're going to give you all the great returns of the market with no risk or limited risk. And then when you go find out that they, they cap you at very low returns, meaning that those years that the market makes 20%, you don't get 20%. You're capped at whatever low number that is. And that oversized performance is what really drives a lot of your other years. And then the, and then also, and the fact that if you got an emergency and you needed access to this money, a lot of annuities cap you at, what is it, 5% or 10%?

• 46:17Speaker 04

  Yeah, super even low.

• 46:18Brian Preston?

  Depending on how they're structured.

• 46:19Speaker 04

  Yeah.

• 46:20Brian Preston?

  And, you know, you're going to blow yourself up if you need that money and have no way to get access to it because you're, you're stuck within the timeline.

• 46:29Speaker 04

  Another, I think the second part of this question, and thanks for reminding me in the chat, was, you know, where do these find themselves on the net worth statement? Well, that does depend a little bit, because annuities can be qualified annuities, meaning that they're bought inside of an IRA, inside of a tax-deferred structure. They can be non-qualified, meaning that they were bought with after-tax assets. And while they may have grown tax-deferred, when you begin receiving those payments, you're likely enough to pay some sort of pro-rata allocation of taxes. So it'd depend determining what kind of annuity, where on your investments inside the net worth statement it would go.

• 47:05Brian Preston?

  You want to really get into my crawl is, is have a qualified annuity in an IRA retire rate. Because I'm like, why would you put an annuity in an IRA unless you're just trying to sell a product?

• 47:19Speaker 04

  It's like putting a rain jacket on and jumping in a swimming pool. Don't make no sense.

• 47:22Brian Preston?

  And I know, I don't know if I love that analogy, but especially with swimming with Bo, but it's, but I see what you're trying to do.

• 47:29Speaker 04

  Really?

• 47:31Speaker 05

  There you go. Look at all that extra color you got to add to your answers. Well done.

• 47:36Speaker 04

  I'm trying to go back through all the questions, see whether there are any other ones where I

• 47:39Brian Preston?

  The only other thing I was gonna say is Disneyland's, the reason that Anaheim is so great is because the climate is incredible. All those rides are outdoors because they just don't have the humidity that we have in Orlando and it's spectacular from a climate and weather standpoint.

• 47:54Speaker 05

  Great. Our friend Humphrey Yang did submit a rapid fire question right at the end.

• 47:59Speaker 04

  Oh.

• 47:59Speaker 05

  I'm gonna give it to you for fun. I think you can answer it fast. It says, when your salary can be covered by your investment returns, what would you name that?

• 48:09Speaker 04

  Financial independence.

• 48:09Brian Preston?

  Was that milestone four on our list or something? We have a milestone for that one.

• 48:14Speaker 05

  You have a lot of markers for it.

• 48:15Brian Preston?

  You're not necessarily financially independent, but you are getting Richter scale close to really cool things happening.

• 48:23Speaker 04

  This is literally the point where your dollars can work harder than you can with your brains, your back and your hands. They can literally do the job that you're doing and oftentimes they can do it even better. They can make more while you're sleeping. That's a pretty exciting spot to be.

• 48:39Brian Preston?

  Thank you Humphrey for jumping in and asking that too.

• 48:41Speaker 05

  It was fun to talk to him in the chat.

• 48:42Brian Preston?

  Let us know when you're coming back to this neck of the woods.

• 48:44Speaker 05

  Absolutely.

• 48:46Speaker 04

  It would be cool if he came back and did something else. That'd be awesome.

• 48:49Speaker 05

  We're here for it. Alright, we're gonna dive into some more personal finance questions. This next one is from-

• 48:55Brian Preston?

  Can I ask something in real time?

• 48:56Speaker 05

  You go.

• 48:57Brian Preston?

  Because I don't, you know, y'all keep computers and distractions away from me. How many subscribers are we up to on the Clips channel? Is it rude for me to ask that in real time?

• 49:07Speaker 04

  Why don't you look that up while we're answering this other question?

• 49:10Speaker 05

  That's what I will do.

• 49:10Speaker 04

  We'll have an answer after this question.

• 49:13Speaker 05

  This question is from Fuziotherapist. Very nice. Very nice username. It says, "Good morning, money guys. At what stage of your wealth building journey did you take your foot off the gas? I'm 33 with about $1 million in invested assets."

• 49:29Speaker 04

  Whoa.

• 49:30Speaker 05

  So, doing very well.

• 49:31Brian Preston?

  Goodness gracious.

• 49:32Speaker 05

  Trying to balance my wealth multiplier with enjoying my 30s. Thanks.

• 49:39Speaker 04

  Here's a question I would ask Fuzio, because I think this is really unique. And by the way, you are such in like, unique rarified air. It's an interesting place to be at, to be that young with that, with that much wealth. The question I would have is, were you able to get to a million dollars?

• 49:55Brian Preston?

  Does that come through on the audio?

• 49:57Speaker 04

  I don't know. Were you able to get to a million dollars because you have like, an insane savings rate? Meaning you're saving 50, 60, 70% of your income and that's how you've done it? Or are you one of those young people that has a very, very high income? And because your income is so high, at a very reasonable savings rate, you've still been able to accumulate that level of wealth? If it's the former, if you're someone who's had that crazy high savings rate and it's caused you to miss out on stuff you want to do in your twenties, miss out on living for the day, miss out on getting to enjoy the present, then I think there's a really good conversation around taking your foot off the gas and getting to enjoy the fruits of some of that labor.

• 50:39Speaker 04

  But if you're someone who's 33 years old and you're just a 25% saver and you've been stacking, stacking, stacking, stacking, I don't know that you have to take your foot off the gas unless there is stuff that you're missing out on, that you would like to be doing and your savings is causing you not to do that.

• 50:58Brian Preston?

  What I, here's, the reality of the situation was, and I, and I put this in the book, I didn't feel like I was financially comfortable until I was in my early 40s. And that worked out nicely, because that's the age, I told my wife that we could take our foot off the accelerator if we'd make the sacrifices in our twenties and thirties. But also, I, I had the mindset in my twenties and thirties to still bedazzle my basic life. I mean, we were still traveling, still doing things. Now, what you might find yourself, now you're much better situation, 33, is I would challenge you, is you have to ask yourself, because I, when I got into my 40s, I didn't, my income got to the point where I didn't necessarily have to dial it down to zero and do coast fire or anything. I was able to still save, because I just looked around and I was like, well, what makes me happy?

• 51:42Brian Preston?

  What's, this is only a tool, what is, how is money used for me? I didn't want a bigger house. I didn't want fancier cars or anything like that. So if, if, I, I asked myself, well, am I traveling enough? Am I doing enough, making enough memories with the family? And then I just let the money continue to build up. And what's been great is now I'm in my 50s. And it's kind of, if you could see some of the charitable giving that I get to bless upon people and institutions and organizations and truly start moving the needle, the why eventually shows up for you on how this money, if you, because I just didn't, I didn't feel the need to go spend it if I didn't need to. It felt better to let this money grow in the background and be a bigger resource. And that's shown up in our content and how

• 52:24Brian Preston?

  we can buy stuff or invest in stuff that's irrational, that nobody would do because we don't have, it doesn't have to be tied to, to, to the grounding of this is a good decision or not a good decision. And that's what the flexibility of good financial management do. So I just, you have to kind of be honest with yourself and know thyself on are you living your best life? Now, I worry for misers that they're going to ask that question and not be able to see, I'm not, I should be living life more. Cause I will say, we, we had a dear friend, a client of the firm who passed away this, this weekend and way too young, younger than me. And it kind of caught me off guard and it was just a really tough

• 53:08Brian Preston?

  thing to see. And I'm glad that some of the sacro, some of the, some of the, I wouldn't say he went against us, but he definitely did some things that I thought were financially a little more aggressive. And I'm kind of glad he pushed on those things. Cause not that we, we make our clients misers, but I do want to make sure everybody's honest with themselves that you look at your life and your happiness, are you doing those things? Cause money is nothing more than a tool. And I don't want you to, to, I don't want you to be in your twenties or thirties or even fifties and sixties and have regrets. I want you to balance out what's the analytical needs, plus the mindset, plus the memories that I need to be building in each stage. And that's why I tried to cover all that mindset stuff in Millionaire Mission. I really did. I spent, that's what some of the favorite

• 53:52Brian Preston?

  chapters, everybody always puts in the comments is in those latter chapters where I really load up what I've done in my own life to try to balance that because there is a fine line between mutant and miser. That's great.

• 54:04Speaker 05

  Love that. Go to moneyguy.com/millionairemission if you want to get Brian's book. It's still out there, rocking and rolling. And special thank you to.

• 54:16Speaker 05

  Well, that was Fuziotherapist. I had all my usernames up here and I wanted to make sure I got it right. If you would like a Money Guy Tumblr, email [email protected]. We'd love to send you one.

• 54:25Speaker 04

  Thirty-three with a million. That's huge.

• 54:27Speaker 05

  Yeah.

• 54:27Speaker 04

  Moneyguy.com/becomeaclient.

• 54:30Speaker 05

  Also, well, yeah, go to moneyguy.com, click on the become a client button if you're interested, you know? Just check it out. It can't hurt to talk to somebody. We'd love to meet you.

• 54:40Speaker 05

  All right, Britt M. is up next. It says, "How do you factor not owning a home into plans for retirement? My mom retired and sold her house to live near me. She plans to stay a renter as it's a high cost of living area. Just curious how to plan for that potential."

• 55:00Speaker 04

  Well, I think that there's a common misnomer that you have to be a homeowner in order to be financially independent. And that's just not true. Now, a lot of people are homeowners and a lot of people choose that who are financially independent. But we have a lot of clients who they might live and work in one area of the country for their entire lives. And they decide, hey, in this next season, this next phase, I don't want to be tethered to any one place. I want to have flexibility that if I want to go somewhere else, or if I want to travel for part of the year, if I want to spend time in different parts of the country, close to different family, being a renter affords you the opportunity to do that. So I think you would factor that into the retirement plan the same way you would factor in any other cost.

• 55:42Speaker 04

  The one difference, the one caveat being, when you have a mortgage, when you have a fixed expense, it's very, very easy to project out, okay, this is what my house is going to cost, or my housing's going to cost me over the next 30 years. I know what the mortgage payment is. I have a reasonable idea of what insurance and taxes are going to be. Rent is a little bit different. If it's in a high cost of living area and a lot of people are moving to the area and it's causing rents to increase, there can be some escalation on that expense. And so what I would do is I would put a buffer into my expense category for what I think housing, not necessarily is just going to cost me today, but what I reasonably think is going to cost me five years from now, 10 years from now. And so long as you budget and account for that, I think you'll be okay.

• 56:26Brian Preston?

  I think a lot of people, I always try to help them understand the why. Why do things work the way they are? And if you're especially live in a high cost of living area. Right now, there's a kind of an arbitrage situation where you can definitely rent cheaper than you can buy. And the why on that is, is you think about, we have such a fast run up in housing costs. Meaning that in addition to the the cost of housing going way up. The cost of interest rates, meaning interest rates went way up. And that's a double whammy. Because it not only means you're paying more for the houses, but it also means the cost to carry. If you leverage and not paying cash for the, which most people don't pay cash for real estate. It's gone up significantly too. So those two things together. Mean that it's hard for you to buy.

• 57:07Brian Preston?

  But there's a lot of people out there that owned, that have the rental property. That locked in with sub 4% mortgage rates. Sub 2020 pricing on these houses. So they, so that they can offer very reasonable rents. Because they, they don't have the carry cost of high mortgage payments. And they don't have the carry cost of high interest. And all the other things. So you can go and be the beneficiary of that. And rent probably in that area cheaper than you can buy. Pay attention to that. That's why I always like to tell people, you need to know how money works or understand it. So you can kind of analyze, is this a buy situation? Or is this a rent situation? That's why I want you to understand the why. So you can quickly look at it and go, wow.

• 57:51Brian Preston?

  With these interest rates, with these housing prices in this area. Probably ought to take advantage of this moment in time and just rent. But then keep my eyes out because at some point, maybe the pendulum swings the other way. Or maybe in that community, because different communities have different. Personalities on even what the cost of housing is. You can, if you know where you are in the system or know where you are in the location, location, location of the real estate. You can quickly analyze and figure out what's best for you.

• 58:20Speaker 05

  Britt M., thank you for the question. If you'd like a Money Guy Tumblr, email [email protected] and we'd love to send you one, just as a thank you for asking.

• 58:27Brian Preston?

  Well, and the reason I was thinking about this is because like Bo and I do commercial real estate and there's some properties intriguing at first when you find out they're coming on the market. Super cool properties. And you get excited, but then, but then when you back test and you do the math on, you're like, well, you could never buy that because the tenants won't be able to afford to pay the rent for what the premium is and what the cost of the real estate is now. And that's why, so I think about those things. I'm always thinking about that. And what is, you know, because that's, that's what, if you wonder why things get more expensive too, it's because every time a property sells, it has to be reset. You know, this goes for commercial, this goes for residential. And, and that's why you're trying to find the arbitrage of finding somebody who bought

• 59:10Brian Preston?

  that real estate with a low interest rate, pre 2020, because those people are sitting pretty, in a pretty good situation and can pass those savings potentially on to you. Now, because there are a lot of, there's a lot of inefficiency in residential real estate is because like we had, we had a house here in this, I hate it that this firm let it go. Two miles away. Yeah, because there was, there was a single family house that was two miles from our office and the, the owners were artific, they knew their rent was low, but they was more about the quality of the tenants. They wanted great tenants. That was than they, I'm trying, because they were going to keep this house. This was going to be their house that they, they, it was like their first house that they started their family, they moved away because of work. They wanted to keep this house because they thought someday they might come back to the

• 59:54Brian Preston?

  community. So they were on purpose keeping rents reasonable so they could attract really high caliber people and you, you need to be on the lookout. I know that that's a needle in the haystack, but I'm just trying to tell you how you make the most out of, you know, hard moments is because you might get lucky. Luck sometimes is better than being good. So, so pay attention to these things. Yep.

• 1:00:15Speaker 05

  All right, we're gonna do another question from Chris H. It says, "Hey Money Guy team, my wife and I, 31 and 35, have 388K in retirement, all in equities, low-cost index. Do we need to be more diversified? Or is it okay to be this far out on risk at our age? Our income is 185K."

• 1:00:38Brian Preston?

  Wow, they're doing really well.

• 1:00:39Speaker 04

  You're doing awesome. Here's a question I'd ask Chris, and this is not incredibly uncommon, because I would argue at 388,000, you are crushing it. You're likely or not quite at the boiling point, critical mass, at that point, you're close. So a lot of times, we tell people, "Hey, in this stage, in this phase of your wealth building, you can look for really, really simple solutions, like low-cost index funds, or oftentimes like target retirement index funds, because it does some of that natural allocating for you. My question for you is, if now is not the right time, and what you're gonna think about this, to diversify, to spread out, to take some risk off the table, when is? Is it 35? Is it 40? Is it 45?

• 1:01:22Speaker 04

  Because so often, and this happens all the time, we'll have people reach out to us, and they'll have big portfolios, and they'll be in their late 40s, mid 50s, "Hey guys, I've got 2 million, 3 million, 4 million dollars invested, and I've been a great saver." And we look at it, and it's all equities. And we're like, "Well, why did you never take any of the risk off the table?" And they say, "Oh, well, because this strategy I had worked so well, and it worked so well, it worked so well." And that's true until it doesn't. That's why, whenever you look at your portfolio, you have to measure not only your risk tolerance, but also your risk capacity. It's not just about how much risk can you handle, it's how much risk should you handle? So, I don't necessarily have an issue with your portfolio being all equity at that size, but I would be thinking, "What are your trigger points?

• 1:02:07Speaker 04

  Is it 35? Is it 40? Is it half a million invested? Is it a million invested?" And so long as you can be honest and truthful with yourself about when that's gonna happen, I think it's okay, but you probably ought to start having those thoughts.

• 1:02:21Brian Preston?

  Well, and it also, it comes back to the Financial Order of Operations. You know, one of the things that I always remind people, by the way, I didn't give that a proper shake. There we go. Look at this thing. I want to make sure it's still working. Is that, don't sleep on the fact that steps one and four is your deductibles covered in emergency reserves. Is that, because as somebody who's making your level of income, now we've already taken off what the assumptions were, but I remember they were making how much per year? $185,000. $185,000 a year. So if we take half of, basically you just say if your cash reserves was like 100 grand, and you said your portfolio was 388? 388, yep. Yeah, so you got that part right. I mean, your true risk, if you had a fully funded

• 1:03:03Brian Preston?

  emergency reserves, even though you're 100% equity, the risk of your financial situation might be not as risky as you think. Not as aggressive, yeah. Because you followed the financial order of operations and you had enough cash, so if you had emergencies or bad things happen. Now, look, you're getting into the weeds of, how do we maximize the investment portfolio to max? But I always say, these things are all working together. It's not only just what's going on with the investment portfolio, but what is going on from a risk standpoint with your entire financial order of operations, so you can make sure that you're not skipping steps. That would be more of my concern, is skipping steps and being that aggressive, than just making sure, hey, is this the time I need to go buy 15% or 20% of bonds?

• 1:03:46Brian Preston?

  I think there's a bigger question to ask that ties into the financial order of operations. Love it.

• 1:03:51Speaker 05

  That's great. Hey, if you want to dig deeper into these financial topics, or if you want to work for us, go to moneyguy.com. And yes, I said that right. We have a whole resource page for, full of free resources, diving deeper into everything we talked about today. We also have some new job postings up on our Join the Team page. We've got a video editor and a content developer role in particular that we're looking for right now. So if that's you, we would love to talk to you, would love to see your application. So be sure to go to moneyguy.com for all things Money Guy, and keep letting us know what you want. Keep tuning in on Tuesday at 10 a.m. Central. We love talking personal finance with you, answering your questions, and hearing about the things that you're

• 1:04:34Speaker 05

  thinking about. So hopefully, we can speak to it and help you build just a little more confidence each time.

• 1:04:39Brian Preston?

  And there's a Clips channel.

• 1:04:40Speaker 05

  And there's Eclipse channel.

• 1:04:42Brian Preston?

  Where's that at? Look at that. Look at those pictures.

• 1:04:44Speaker 05

  Oh, you're right. I forgot to announce it.

• 1:04:46Brian Preston?

  It's still time. It's still time to let me know where we're at.

• 1:04:50Speaker 05

  We are at 1,458 subscribers on our brand new Money Guy Eclipse channel.

• 1:04:55Speaker 04

  Almost 1,500. That's great.

• 1:04:57Speaker 05

  We like it.

• 1:04:57Brian Preston?

  So I like that. I also love the rapid fire segment. I feel like we packed a lot into this show today. Thank you all for supporting us. It means the world to us as we keep doing scary endeavors, like even launching a brand new channel so that we can clean up the feed for you. So you can actually know what's long form content, what's short form. We listen to you guys. And by the way, if you could seen our content meeting this morning, we even poke our head into that Reddit thread every now and then, just to keep an eye on what those discussions are. And you guys, you're witty, you're funny, you're smart. Make sure you're not sleeping on those job postings that we have because I know that

• 1:05:38Brian Preston?

  our next, you know, team member who's going to join the family is probably lurking around on those Reddit threads and we'd love to have you apply. So I'm your host, Brian, joined by Mr. Bo Rebe and the rest of the content crew. Money Guy out.

• 1:05:54Speaker 04

  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 involved.

• 1:06:24Speaker 00

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  Witness the beginning of the revolution.

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  Filmed for IMAX.

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  The Legend of Zelda: Ocarina of Time, a Nintendo Switch 2 exclusive. Game and system sold separately. Game rated everyone 10 and up.