How Much Do You Need to Retire (By State)?

How much do you actually need to retire? It turns out, the answer varies drastically depending on where you live. We break down retirement costs by state using new data and estimate how much you need using the 4% rule. Then, we answer real-time questions from our audience about IRAs, homeownership, and early retirement strategies. Whether you're decades away or nearing the finish line, this episode is packed with insight to help you plan smarter. ⁠⁠⁠⁠ 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.

• 0:01Speaker 00

  This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web. Like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18 plus.

• 0:27Speaker 01

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• 1:01Brian Preston?

  Hey, we got some interesting information to share. How about how much your retirement's going to cost you by where you live?

• 1:08Speaker 03

  Brent, I am so excited to talk about this because it's one of the questions that a lot of people have. Okay, what do I actually need to retire? What do I actually need to experience financial independence? And this won't come as a surprise, but where you live will actually likely have a huge impact on what the answer to that question is.

• 1:26Brian Preston?

  And it's not, you know, one of the biggest things. When we do content shows, one of the hardest things for us is we have to use some number for people who are not retiring for 20, 30 years.

• 1:36Speaker 03

  That's right.

• 1:36Brian Preston?

  And sometimes we use a percentage of income to assume expenses. But that gets to the point that what's really the most important, it's not really what you make, it's what you actually go spend in retirement.

• 1:48Speaker 03

  So visual capitalists came out with this really interesting chart that shows the entire United States and it shows the annual retirement costs by state. And this is again is across food, shelter, transportation, healthcare, utilities, and then like a little bit extra to kind of show you. Okay, well, what would be the annual retirement spend? Annual living retirement need by states and unsurprisingly, there are some that are relatively low and reasonable and there are some that are pretty high and a hard, hard level to get to.

• 2:23Brian Preston?

  Well, let's compare and contrast here. If you want to know on the low side, where would you have to live? It's West Virginia with $58,000 in average annual retirement spending. If you want to know the highest, we've got Hawaii at a coming in at $129,000 and the national average is 71,640. So then we said, hey, let's in money guy fashion, let's take this in a different way because I love what visual capitalists put together here with the go banking, go banking rates data. But we're like, okay, what would you actually have to have in assets to replace this level of expenses? And we came up with using the 4% withdrawal rule, a whole spread here for you.

• 3:08Speaker 03

  Yeah. If we think about just the average, the national average we said was 71,640. That means that on average, you would need almost a $1.8 million portfolio across the country. But if you want to get specific, we said, okay, if we take that same, that same thought process and apply the 4% withdrawal rule to all of these states, what are the lowest 10 states in terms of the size of portfolio you would need and what are the highest 10? It was kind of remarkable that if you look at the bottom 10s, this is West Virginia, Oklahoma, Alabama, Indiana, Iowa, Kentucky, the portfolio value falls somewhere between 1.4 to 1.6 million dollars would be what would be

• 3:50Speaker 03

  necessary with a 4% draw rate to reach that average standard of living in that state.

• 3:55Brian Preston?

  Now, here's the thing, because a lot of people are going to see this and be like, oh no. I mean, I just don't know that I'm on track to have a million and a half dollars, much less $3 million. And that's why I think it's important. And this is why when we've done content in the past, we've tried to take a percentage of income or other things because there's always typically an offset. And let's face it, when we think about offsets, a lot of you, especially if you're retirement age, you might be old enough. That you will qualify for a pension, you know, because pensions did, they were much more prominent in the past. And most people, especially those approaching retirement, qualify for social security. That is going to have a direct offset to your expenses or cash flow needs.

• 4:37Brian Preston?

  And that can have a dramatic need. Think about for somebody in Hawaii, $3 million. That's a lot of net worth that you would have to have, a big lift to save to build that type of net worth or basket of holdings. But if you had a pension that was going to provide our social security and those two in combination were $40,000 a year. All of a sudden, instead of being around $3 billion in need, you might need $2 million.

• 5:04Speaker 03

  That's right.

• 5:05Brian Preston?

  You just trimmed a full million dollars off of that. So don't let this panic you. You just need to, it shows how important it is. Take inventory, because once again, personal finance is very personal. What do you have coming in and what are you going to be able to use to build that awesome retirement?

• 5:20Speaker 03

  And of course, the actual answer for how much you need to retire is dependent solely on you. Just because someone else might be able to live at a stated standard of living does not mean that's the standard of living that you want to or need to live in in retirement. So as you get closer to retirement, we want you budgeting. We want you tracking. We want you having a really good understanding of what your retirement expenses will be. But Brian, we have a huge audience out there and they say, oh, okay, I'm in my twenties, thirties, forties. And I want to know what my number is. How should I be trending to? How should I be thinking about this? And you already said this, one of the most difficult things that we do is try to project what living expenses will be 20, 30, 40 years into the future.

• 6:03Speaker 03

  And so when someone in their twenties or in their thirties asks us, hey, guys, I'm trying to figure out my number. What should my number be? We say, your number should be. 25%.

• 6:14Brian Preston?

  Well, yeah, you can quickly see, this is the personal and personal finance is that if you go look at our, and I love the intersection point, how much should you save in retirement? If you have not checked this out, go to moneyguy.com/resources. This is going to let you now look at, hey, okay, I'm in my twenties. Because I'm starting this much earlier than the average American who doesn't start saving and investing for the future is usually in their early 30s, early to mid 30s at this point, because it changes from year to year. If you're in your twenties, you're going to getting a huge head start and you're giving your army of dollars that much more compounding interest opportunity, your savings rate might be able to be well below 20%.

• 6:55Brian Preston?

  So that's why, go check this out, individualize your journey, but the big thing is, don't let studies like this on how much things are going to cost in retirement, focus on what you can control and your savings rate is a big factor in that.

• 7:08Speaker 03

  I love, Brian, that we get to share this kind of information, that we get to help you dream and plan for what retirement and financial independence look like, but I also love that we can speak to things that are going on in your life right now, today. It's why we show up every Tuesday at 10 a.m. So if you have a question you want us to answer right now, we have the team out in the wings, collecting your questions. Make sure that you get them in the chat, because we believe that there is a better way to do money, and so we want to load you up. So with that, Creative Director Rebi, I'm going to throw it to you.

• 7:40Speaker 04

  Yeah, Amber H. has a question for you. She says, what are your thoughts on never buying a home? What are some considerations on how this may impact your net worth and your retirement? What do you think?

• 7:54Speaker 03

  So I think this is a take that a lot of people will find interesting. We subscribe to the idea that homeownership is not a requirement for financial independence. Homeownership is not a requirement for retirement. Homeownership is not a requirement for anything financially related, unless owning a home is a goal that you have. Now, don't mishear me when I say that. We love homeownership and there are certainly tons of value to owning a home. Home and being able to have something that you've paid off and is yours. But it's not an absolute necessity and we have a number of clients who maybe at some point in their life prior were homeowners.

• 8:34Speaker 03

  But now at this stage of life or where they're at, they've made the decision, hey, I don't want to be tied down to one specific location and they actually don't own a home and they're still financial independent and there's financial independent, they're still have flexibility, they still can live the life that they want to live on their terms. So I do not think that homeownership is an absolute necessity for everyone.

• 8:56Brian Preston?

  But Amber, I'm going to be completely transparent and honest with you is that if you look at the data from the Fred, that's the Federal Reserve, they published data of changes of net worth. Sadly for the typical American, they're all of their net worth is tied up in their house. So it's almost like this this big financial transaction that people do is what unfortunately is all that drives their long-term success and the growth of their net worth. And they chose it because this is, I guess, part of the American dream of the past. So I will tell you with that type of knowledge and understanding is that doesn't mean that has to be your story or your path.

• 9:34Brian Preston?

  It just means more responsibility falls on your shoulder to actually not be that stat, actually start saving and investing, live on less than you make. Actually start putting a little bit of your money to work so it can start growing on its own. Because it just depresses me that we create all this content, we try to motivate people. And then you just don't see the needle move with the typical American on building assets that can work harder than they can with their back, their brain, or even their hands. It's because people just let life happen to them. So Amber, I have no problem. And we have a lot of very successful, especially if you live, think about people who Silicon Valley or on the, on the, the, the West Coast, the East Coast, where the super high cost of living, we know some very multi-seven-figure families.

• 10:21Brian Preston?

  That we've helped out with that never owned their homes until retirement. You can still, you know, do all the things of set roots, create community, but you know, you still, it falls on your shoulder. Make sure that all of your net worth, when you track it, is actually growing in the background by saving and investing in the future by putting it to work into your army of dollar bills.

• 10:43Speaker 03

  Now, if you are someone out there who is interested in homeownership, and that is a goal that you have, we have tons of resources out there for you. If you go to moneyguy.com/resources, you can check out our home buying checklist, you can check on our home affordability calculator, you can check out all the housing shows we've done to help walk you through how to make sure that when you make this huge life decision, you make it well and you take into consideration the factors that should be affecting that decision. So if it does make some, if it does make sense for your situation, we've got tons of resources out there for you.

• 11:18Speaker 04

  That's great. Amber H. Appreciate you being here and thanks for the question.

• 11:23Speaker 04

  Danny Tsunami is up next. It says, I've completed steps one through four of the FOO and I have enough funds to max my Roth IRA. No HSA available. Why is it recommended to match my Roth IRA before maxing out my employer 401k plan?

• 11:42Brian Preston?

  Well, maximum flexibility. Plus, it doesn't have to be an either or. I think it's, look, we like the IRA first because guess what? You have complete control.

• 11:52Speaker 03

  That's right.

• 11:53Brian Preston?

  You have limited control with your employer. Yes, you get to determine how much you can save in your employer plan, but you don't, the investment options? What if it was the golf buddy of the owner of your company who set it up and it's got all these subaccount fees, it's got, you know, it's not, index funds isn't even an option. There's lots of things that are outside of our control, whereas that Roth IRA, you get to choose the custodian that you go work with, you get to choose the investment you go work with, and then guess what? Even if you change your job, you don't have to go to HR to move those assets out. You actually still have control of every bit of that. That's why we like the Roth IRA first, but ultimately the goal is that you go do both.

• 12:36Speaker 03

  That's right.

• 12:37Brian Preston?

  I'd love for you to load up step five, max out the Roth IRA and then yes, move to step six with loading up those retirement assets and topping off with that 401k.

• 12:47Speaker 03

  Yeah, we love Roth assets because Roth assets are a great tool where you can put money in today. You don't get a current year tax benefit. Those dollars grow tax deferred. And then when you go to distribute them in retirement, assuming that certain qualifications are met, you get to pull that money out completely tax free. So that's why it's the tax free growth, why it starts earlier in the financial order of operations. Cause that can be wildly valuable for you. It's even, you may be someone who says, oh, but guys, I've listened to your stuff and it says, okay, if I'm in a higher tax rate, then I should do pre-tax and a lower tax, I should do Roth. So should I just skip the Roth and then go to the 401k? No, not at all. If you're in that situation where you're in a high tax bracket,

• 13:29Speaker 03

  we still would love for you to do backdoor Roth conversions even before you go back to your employer sponsored plan, because we know that that tax free growth is so, so, so valuable over the long term. But I love what you said, Brian. It's not an either or. Hopefully as you're working through the financial order of operations, Brian, can you hold the thing up for me?

• 13:46Brian Preston?

  Oh, yeah.

• 13:47Speaker 03

  Hopefully as you're working through the financial order of operations, you're not stopping at step five, you're continuing on through step six and you're doing both of them.

• 13:59Speaker 04

  That's fantastic. Well, Danny Tsunami, thank you for the question. I hope that helps you think through that.

• 14:04Brian Preston?

  I like that name, by the way.

• 14:06Speaker 04

  I know. Not a good one.

• 14:07Speaker 03

  Danny Tsunami.

• 14:09Speaker 04

  Solid name.

• 14:09Brian Preston?

  It feels like you ought to, you know, have maybe a DJ booth in front of him and, you know, design like a dead mouse type, you know, helmet to wear with it and he could mix it up.

• 14:21Speaker 04

  Okay.

• 14:21Speaker 03

  Dan, if you need more career advice from Brian.

• 14:23Speaker 04

  Or design, fashion advice, costume advice. All right. Well, if you like that.

• 14:29Speaker 03

  I was thinking like a surfer. I wasn't thinking like a DJ. I was thinking like, in my mind,

• 14:33Speaker 04

  I mean tsunami.

• 14:33Speaker 03

  Danny Tsunami kinda looked like Johnny Utah.

• 14:35Brian Preston?

  Do you think surfers wanna talk about tsunamis?

• 14:38Speaker 03

  Well, no, no, I just thought like when I think of tsunami, I think of surfing. Yeah.

• 14:42Speaker 04

  Yeah, something opecide. If you like that username, you're gonna like this one. Um, TragdoorTheBurninator has a question for you.

• 14:51Speaker 03

  Is that a reference I don't get?

• 14:52Speaker 04

  I don't get it and I'm a little bit nerdy, so I don't know. You tell me. Let us know in the chat.

• 15:01Speaker 04

  He says, hey, B and B, thoughts on keeping a first home with great equity and a low interest rate when buying a second home? It should stay cash flow positive, but I'd likely put down less than 20% on the new one. And in case anyone is new here or needs a refresher, you guys typically like putting 20% down on your second home as part of our home buying guidelines. So what would you say to Tragdoor, the burnator?

• 15:31Speaker 03

  A lot of people have found themselves in the situation. They bought a home a number of years ago, pre 2021, 2022, pre run up, and they've seen their house go up a ton in value. Perhaps it was in a great location, there were a lot of reasons to hold on to it, and they have a super low mortgage on that. And they think to themselves, man, I've got this house that has all this equity in it. I got a great deal on it. I bought it at a great time. I've got this low interest rate. I've got a good mortgage on it. Man, I hate to see that go. And the rental market in my area substantiates that I can actually put someone in this home and their rental payment could even cover the mortgage. So I can get even more price appreciation over the long term while having someone else pay the mortgage. And frankly, we love that idea. We think that's great.

• 16:15Speaker 03

  And we've seen tons of clients that have done that. We actually, um, we have a Making Millionaire episode coming out. It's not come out yet, but it's coming out in the next few weeks or months of someone who that's actually the very way that they built their wealth. That's one of the ways they built their wealth was by buying a house and then moving out and renting it, moving out and renting and kind of rinse and repeat that process. So I was all with Tragdoor, Trag, did I say that right? Tragdoor, Tragdoor. I was all there until the part where you said, oh, but you know, it's gonna, I'm gonna have to run afoul of one of the rules when I go to buy my second house, I'm not gonna be able to put 20% down. In my mind, I had some just yellow flags go up on that because there are some things

• 17:00Speaker 03

  I'd like to see differently if I had my preference.

• 17:03Brian Preston?

  Well, let's go through the, the mind map on this is because I think there's some really cool things that is unique to this moment in time is that without a doubt, now when you sell a house or you're considering moving or looking at, should I sell or turn it into a rental? The, the interest rate you have on that current mortgage is valuable because it's, it's just like when you buy bonds. If you, if you have a You know, 7% bond and now the bonds are all at 4%, then you have a premium in the value of that bond. Well, it's the same thing your mortgage. If the market is 6.5% to 7% and you have a 3.5% mortgage, there is some built-in value or premium that you have that

• 17:48Brian Preston?

  lower interest rate. And that actually moves the needle over to, in some cases, to you keeping that and turning it into rental property. But you have to offset it. I'm just going through kind of the decision matrix here, that the government gives you a very unique opportunity when you live in a primary residence for two of the last five years. If you're single, it's $250,000. If you're married, it's $500,000 of tax-free gain. There's not many things in life that the government says, you know what, we're going to let you make hundreds of thousands of dollars and take it out completely tax-free. I mean, that's a unique thing. So you can see how these two things now are in complete conflict with each other. So that's why I'm going to tell you, I have no problem with you because there is a premium now on

• 18:30Brian Preston?

  where the interest is. If you look at that and go, man, I couldn't replace this. And then, but also, the offset of that is the tax-free growth opportunity. So it's going to come down to what you desire and want to become. If you want to become a real estate, you know, maven, then maybe that pushes it more towards the interest rate. But if you're one that says, no, I like the hands-off, let my money maximize and grow, and I'll just take these proceeds, or I'll put them into the new house, and then I'm going to load up the index funds. I'd love to have that $500,000 of growth opportunity, then that's going to push it the other way. But Bo is exactly right. I, you know, and I will say, like this Making a Millionaire, they did foo-ish in some ways, but they had a

• 19:14Brian Preston?

  reason. So I'm not going to go at them. And look, you can, you can break rules, and sometimes you'll still get rich doing it. You don't get caught, yeah. Because the tide didn't come back in and catch you skinny dipping. You know, you weren't caught swimming naked. But we're trying to give you rules to protect you from taking on too much risk to where you get caught and it becomes catastrophic. And that's what happens. And Bo is spot on. I like on that second home. You're putting down 20% because let's just play this out the other way. Now, this like this, this person we had on Making a Millionaire, they had a little thing that not is not reproducible for everybody. They were in the military and the military was subsidizing each move that they did.

• 19:56Brian Preston?

  So it was creating an automatic transaction every three to four years that allowed them to buy a new house, get some subsidy in it. And then they kept doing this and it stacked, just like all good things with compounding behaviors that are, that are good for wealth building. They work together. You're not going to be able to do that. But what happens if you keep the existing house? Now, look, the carry cost is going to be much lower because probably you're in a super low interest rate, but you go buy this next home. You only, you know, you're paying six and a half percent mortgage.

• 20:26Speaker 03

  What if the tenants don't show up?

• 20:27Brian Preston?

  And the tenants, but that's exactly right. What happens? All of a sudden the tenants leave and it's just like even this couple that we're going to have on Making a Millionaire, their very first rental property, he says, look, I didn't do very good in the screening process.

• 20:39Speaker 03

  Don't tell them. Don't tell them what they were.

• 20:41Brian Preston?

  Let's just say that they had somebody and it's not, their story is not unique.

• 20:46Speaker 04

  Save it.

• 20:46Brian Preston?

  I have seen people get into rental property, not know the ins and outs because all good things, sometimes a little bit of experience is required for you to become an expert. And you find out, no, not only do people quit paying rent, but they might also destroy the property on the way out the door. You've got to cover that, plus the mortgage payments, plus your mortgage on the new property. Just make sure you don't get caught swimming naked.

• 21:11Speaker 03

  Love that.

• 21:12Speaker 04

  Love that. If you want to see that episode of Making a Millionaire where Brian and Bo sit down with a real life person and talk finance, we just recorded it and it's not out yet. So that's why you need to subscribe to this YouTube channel right now so that you will get updated every time we release a new video.

• 21:28Brian Preston?

  See, this is why we need real time, like throw the screen up because trog door is an old internet meme from 2000.

• 21:34Speaker 04

  I was about to say, I was Googling it like that whole time.

• 21:36Brian Preston?

  We are content team. Not worthy because you see how they brought it up in real time. If you want to know if this is a live show.

• 21:45Speaker 03

  Is that just for us or did you bring it up for the audience too?

• 21:47Brian Preston?

  There you go.

• 21:48Speaker 03

  Is it a snake? Is it a snake with a big arm?

• 21:51Speaker 04

  It's a dragon. It's a dragon. Okay.

• 21:53Speaker 03

  I gotta be honest.

• 21:54Brian Preston?

  Bo likes an arm.

• 21:55Speaker 03

  I love that he lives. That's all I could see. I was like, all right. Trog door is jacked.

• 22:00Brian Preston?

  Lot of arm curls in that, on that meme.

• 22:03Speaker 03

  So it's just, it was a meme? It wasn't like a cartoon or anything?

• 22:07Speaker 03

  Internet cartoon skit.

• 22:09Speaker 04

  Part of a popular website series.

• 22:11Speaker 03

  Now I'm the, the, the more you know.

• 22:14Brian Preston?

  Now you know.

• 22:15Speaker 04

  Wonderful. Well, this trog door, the burner nator, thank you for the question and thank you for being here on the live stream and for the amusement.

• 22:22Speaker 03

  Did y'all know that or did y'all like go Google? Oh, you knew it.

• 22:26Speaker 04

  I had to Google it. Although, once I Googled it, I did recognize some of the channel, like the Hope Star Runner channel. So I was like, oh, I have seen this around.

• 22:33Brian Preston?

  You, you would not be surprised. I'd never seen that in my life. I'm fully insulated.

• 22:37Speaker 04

  Now you have.

• 22:40Speaker 04

  All right. Next question is from MI Football.

• 22:43Speaker 03

  You were hard, messy middle in 2003.

• 22:45Speaker 04

  Yeah.

• 22:45Speaker 03

  Like hard, messy middle in 2003.

• 22:47Speaker 04

  That's right. This wasn't really your scene.

• 22:49Brian Preston?

  Nerdy about 2003 for me was while I was, you know, helping my wife waking up in the middle of the night, a lot of Stargate Atlantis.

• 22:55Speaker 04

  Oh, okay.

• 22:57Brian Preston?

  Jason Momoa, if he'll always be Stargate Atlantis.

• 23:01Speaker 03

  That's where he was from. He was from Stargate Atlantis?

• 23:03Brian Preston?

  Well, he, he was also Baywatch, like Hawaii years. I mean, it's, it's funny. I don't know why we're talking about Jason Momoa, but there you go.

• 23:11Speaker 03

  Now I know.

• 23:11Speaker 04

  I don't either, but that was great.

• 23:13Brian Preston?

  Okay. Let's go back to the question. So the MI Football, Michigan Football feels respected.

• 23:18Speaker 04

  That's what I thought too. Yeah. How does the foo change if you have a Roth 401k and an HSA? Does the IRA become less important further down the list? I save about 24% and do not max out my 401k yet.

• 23:36Speaker 03

  So the real question here, I think, and tell me if I'm, I'm just right, is hey, what's the difference in Roth 401k and Roth IRA? Why would I prioritize the Roth IRA over the Roth 401k? And there are a few reasons why you might want to do that. Now, don't mishear us. We love both of them, right? But when it comes to Roth IRA, you can choose where you open that account at. Do I want a fidelity Roth IRA or a Vanguard or a Charles Schwab or fill in the blank? With your 401k, you are held captive to wherever your employer has that plan. So it might be at a expensive insurance company, or there might not be very good investment options, or there might be limited investment options in. There. So when you choose your own Roth IRA, you get to pick where it's held.

• 24:22Speaker 03

  You also get a wide array of investment universe that you get to choose from. So maybe your 401k doesn't have target date index funds, but inside your Roth IRA, you really want to go buy target date index funds. So I don't think it's an either or, like I have to choose one or the other. But there are a few small reasons why Roth IRA in our mind comes up a little bit before the Roth.

• 24:46Brian Preston?

  And by the way, if you think about step two is employer match, get that free money is you can do Roth 401k contributions into that. Fill up the free money bucket, but then yeah, get to step five, love the HSA. And then I love the thought of you thinking about this, not an if and either or. It's, it is really an and because you're going to do the Roth IRA next. And then after you fill that bucket up, then jump over to step six and you're going to load up that Roth 401k over as part of step six as well. So don't think about it as either or, it's more of an order of operations. Hence financial order of operations so that you can get, take advantage of all of these

• 25:28Brian Preston?

  great tax favored, heavily incentivized options to build your great, big, beautiful tomorrow.

• 25:35Speaker 04

  I hope that helps clarify some things, MI Football. Thanks for asking the question.

• 25:41Speaker 04

  All right. OstTheBoss1216 has a question for you.

• 25:46Speaker 04

  Hello, money guy. I plan on being a homeowner in the future, five plus years. Is it a good idea to bank with a credit union now so I could get a mortgage there and have the best chance to do a rate modification? Thanks.

• 26:01Brian Preston?

  Oh, wow. Man, thinking about.

• 26:04Speaker 03

  Holy cow. Yeah.

• 26:05Speaker 04

  Really thinking ahead.

• 26:06Speaker 03

  Let me start with, I'm going to start with what is a rate modification and why does it matter? So for those of you that aren't familiar, a lot of people think about, okay, if I go buy a home now and I've got this interest rate, the only way that I can improve my interest rate at some point in the future is if I refinance my mortgage, which means I have to go through a new closing with a new mortgage company and new terms and all that stuff. But what you may not recognize is that a lot of times when it comes to a loan, if the prevailing interest rates have dropped, you can reach out to your current mortgage lender and you can say, "Hey, rather than me refinancing this whole loan, or rather than me changing providers, would it be possible for me to do a rate modification where all the terms of my loan stay the same, except for my interest rate?

• 26:51Speaker 03

  And I want to modify my rate from where it was when I originally closed to where rates are now." And usually, there's just a few pieces of paperwork and a couple hundred bucks to knock that out. So it's a lot more cost-effective than doing a true refinance. Well, what Oz is referring to is that oftentimes, credit unions, if they're holding your mortgage, might be, because it's more of a relational interaction, might be more susceptible and more agreeable to doing a rate modification. So with that context, should he go ahead and begin establishing a relationship with the credit union now? And I think it may even be interesting to talk about like the difference in like credit unions and big banks. I don't know a lot of people know that.

• 27:29Brian Preston?

  Yeah, no, I think this is probably from an educational of what's happened in the wonderful world of finance. Post-Great Recession, a lot of your banks have now become... They're not relationship-focused. I mean, I think that the Great Recession really broke the banking situation because you had a lot of consolidation where a lot of local banks got completely busted up, meaning they just went bankrupt. Or, you know, they couldn't make it. So the bank had a lot of shotgun... The federal government came in, did a lot of shotgun marriages, created a lot of consolidation to where you have a lot of big banks now. And unfortunately, with big banks, and we've seen, I'm not going to say the names, but you've all seen the scandals where artificial accounts

• 28:14Brian Preston?

  not focusing on not your relationship, just being straight up. And I've even experienced that with you have a great local bank and then they get gobbled up by a big national bank. And then all of a sudden, you see they cut staff, a lot of the service goes away and just that special connection is lost. So here's the way I would tell you, and I love where your thought process is, is you're thinking ahead at least three steps here. I love credit unions. I will say that. I mean, one of our dear, dear friends, I even gave him a complete shout out in Millionaire Mission because of what he's done in my life. And I've told this story before is that, I mean, one of my early clients back in the early 2000s, when I went on

• 28:55Brian Preston?

  my own, was a school bus driver who'd come into a large sum of money, seven figures plus. And I thought it was, I'll never forget, I got a phone call one day when this person had just signed the contract. And then I get the phone call and it's the president of a credit union in Georgia saying, hey, I've got a member who's coming to a large sum of money. I know this member and I'm just a little nervous. I want to find out who's going to be helping her out with her decisions. Make sure you're not a crook. And if you're worried, he was trying to keep the money. He was not because he was like, look, we can't even keep this money because it messes up some variables. And he gave the whole reason. He just wanted to make sure that I wasn't going to take advantage of his member. And he was very

• 29:38Brian Preston?

  sincere. So this phone call, I was so impressed with it. We ended up, it turned into like a 45 minute to an hour phone call, created a friendship, which is kind of crazy if you think about it from a serendipity providence type standpoint. And then we ended up started doing work and other things with that credit union. But I think it just shows the heart. And so I think if you go, now, look, there might be credit unions because look, their game is very much like the bank game is the bigger, bigger, bigger. Sometimes they might lose focus of the mission as well. But I think you can go quickly, interview, see how serious or how good they treat you. And there is nothing wrong with you going ahead and setting up a relationship. If you get those warm fuzzies

• 30:18Brian Preston?

  when you, when you meet this credit union, or even I was gonna say, look, we've, because Bo and I, we own businesses and we, so banking relationships mean a lot to us. They matter, yep. So we've, we've always focused on going and interview the banks, seeing if they're, if they're gonna be in our corner. And I even have like, in the last two weeks, we have a bank. That we're changing some things around account wise and structure wise. And there was a, an oopsie, meaning that I had a, a, a draft system that was changed. And they didn't, the, the vendor didn't update things, even though they had sent me a confirmation email saying, no, we've got this updated to the new account. Well, there was like a 10, 11, $12,000 draft that hit.

• 31:02Brian Preston?

  Well, there wasn't enough money in the account because of the structure. They covered it and said, hey, Brian, I know that you and Bo don't want this thing to bounce. So we went ahead and covered it. You need to, you know, can we make sure that there's, and I was like, yeah, I'll immediately.

• 31:13Speaker 03

  And it was the relationship that allowed that to happen.

• 31:15Brian Preston?

  But it was a relationship. I mean, they very quickly could have easily just let that bounce. It'd have been embarrassing, even though it was just an error. And that stuff happens to everybody. So you have to go figure out what you want from the relationship interview. And then just see, are you just a number? Or are you going to actually be able to build a relationship here that has value? And, and can, they can be on this journey with you.

• 31:38Speaker 03

  Can I, can I go just a little bit longer on this one for a moment? I think it's interesting. Most people don't realize, cause I wanted, I want you to tell one more story. If you're up for Brian's story time. Uh, most things in, in, in this world are negotiable. A lot of people don't realize, but like, if you actually have a relationship and can talk to another human being, you can negotiate. I'm thinking about your very first car loan. Do you remember this? You remember this story?

• 32:00Brian Preston?

  Yeah.

• 32:00Speaker 03

  Tell about that and tell, cause that was because of a relationship or you were setting the fact, because.

• 32:05Brian Preston?

  I was trying to set the foundation. So now look, this bank is now gone because they've been gobbled and part of this great recession. They've been gobbled up and now I know which bank they're a part of. I'm not going to say the name of them because they have, I have a storied history with them too. But it's, um, I went in after I got my first job. I had not even started this job, but I had the offer letter and I was trying to, and you guys, I've told the story. I drove around, it's a raggedy car all through high school and college. Um, I got, I got my first offer and I knew I need, immediately needed to get a, a car. So I had this used car that I was going to be buying for $10,100. It was a Mazda 626, 1994 oscillating fans. I love those oscillating fans. I still had a five speed. Um, it was, it was a really slick car and I went to the, to this bank.

• 32:51Brian Preston?

  And they immediately said, hey, I had my offer letter and they were like, um, this is, you know, you don't have enough credit. We're gonna need you to have a cosigner. And I was, I came back. I actually went home and then I thought about it and I went back and I was like, man, this, this stinks. I don't want, I'm trying to build, open my wings, leave the nest. And then here they are telling me I have to go ask my parents to help me out. So I went back to the, and I talked to the branch manager and I said, look, here's the thing. I said, and this is why it is negotiable. I said, I'm brand new to my career and, um, and I'm gonna be a CPA. I've got all these things going on. Here you guys are making me bring my parents in. They don't have a lot of money and you're gonna make them now be,

• 33:33Brian Preston?

  sign off on my name. I don't like that. If you, if you take it, you need to take a chance on me. Because look, if you make me happy, you might, I'm gonna eventually buy a house. I'm gonna need to buy more cars. And I'm gonna need a place to deposit my savings accounts. Why don't you see if you can make this work? Because you're betting on me and the, and the future, future relationship we're gonna have. And, um, he says, man, I appreciate that. And he actually called me back. He goes, you know what? Um, we're gonna do it. We're gonna give you the loan when I go and do the cosigning. Isn't that awesome? And what's funny, I did give them close to 20 years banking relationship. And, you know, before all this gobbling up and horrible service kicked in.

• 34:13Brian Preston?

  And all the scandals that happened with this big consolidated bank afterwards. But at the time, I, I stayed true to that. I ended up opening up many accounts, business accounts and other things with this same bank. So yeah, if somebody, if you don't like, if it leaves a bad taste in your mouth, don't feel like you can't advocate for yourself. Because I do think that a lot of these things are negotiable. And, um, and they would have been crazy not to give me that loan. I mean, it was just, it was insane. I mean, it, but I'm glad I stood up and, and didn't just take the first thing that they threw at me.

• 34:44Speaker 03

  Love it.

• 34:45Speaker 04

  Yeah, that was a great experience, Cher. And I hope that all of that helped you, Oss the Boss 1216. Uh, thank you for the question and thank you for being here.

• 34:54Brian Preston?

  I think, don't you, cause like we had that, that making a millionaire couple that was on, I can't wait. But Bo put it in my head that they're, you know, I, it's just like, they came from nothing or it came from modest beginnings. And then they built this big portfolio. And I remember telling them at the end of the interview, I was like, I wish I could have met the 22 year old version of yourself. And I kind of wish I could go back and meet the 22 year old version of myself to see that idealistic kid that basically was like, hey, you sure you don't want to give me this loan? I mean, I just, I would, I wish I could have been a fly on the wall to, to, to experience that. If you're having your Ebner's or Scrooge type, you know, go back in time or Back to the Future, that would have been a cool thing to witness.

• 35:36Speaker 03

  As someone who's been hanging out for 20 years, I feel like you haven't aged a whole lot over the last 20. I imagine 22 year old Brian's pretty much just like the guy sitting right here today, right? Not a whole lot.

• 35:45Brian Preston?

  I think I was probably funnier back then.

• 35:46Speaker 03

  You think so?

• 35:47Brian Preston?

  Oh, man, if you could have seen me before CPA turned, CPA lifestyle turned me into this, that was a good time back in those days.

• 35:55Speaker 04

  That, that makes me happy imagining.

• 35:58Speaker 03

  He didn't choose a CPA life, CPA life chose him.

• 36:01Brian Preston?

  I'm telling you, it's, it's, it's like, it's made me smarter and better with money, but I'm probably a little less fun than I was back in college. Brian was a good time.

• 36:10Speaker 04

  Well, you're still really fun. So props to you. It all worked out.

• 36:13Brian Preston?

  Maybe I needed to moderate it then.

• 36:17Speaker 04

  All right. Here's another question from Fabreeze Me Up.

• 36:21Speaker 04

  We have some good usernames today. It says, I just received an inheritance from 10K, uh, of 10K from bonds. I want to take that and reinvest. What are some good options? Love the show. And I mean, I think this is an interesting question. Whenever you have a lump sum of money.

• 36:38Speaker 03

  Yeah.

• 36:39Speaker 04

  You know, what do you do with it? What's next?

• 36:41Speaker 03

  So here's a, here's the very first thing I would do. The very first thing I would do, Fabreeze, is I'd go to moneyguy.com/resources and I would download my free copy of the Financial Order of Operations. Brian, will you hold that up to me for me? Because one of the things you need to answer is where am I in my financial journey? You know, what's, am I still trying to get my highest deductible covered? Do I have high interest debt that I need to be paying off? Am I putting money in my 401k? Where am I in this journey? And then I would say, okay, I've got this windfall. I've got this $10,000 that's now come my way. What is going to be the best use of that? If I have some debt that's high interest, maybe I don't need to invest this $10,000. Maybe I need to go satisfy some of that debt and wipe that off of my balance sheet. But let's assume for a moment that you've gone through the financial order of operations.

• 37:26Speaker 03

  You know exactly where to put that 10,000. You know, I'm either going to put it in my Roth IRA or I'm going to use it to put more money in my 401k. Or maybe I'm in step seven, I'm going to put it in an after-tax brokerage account. Well, once you've made that assessment, what you invest in and how you choose to invest will also depend on where you are in your financial journey.

• 37:44Brian Preston?

  Yeah, I think where you are in your journey, but then also I want to talk about the logistics of how you actually do it. Here's something you might not realize. Now, first, you have to go see if you wanted to, because you talked about reinvesting. I'm basically thinking, you're thinking about liquidating and then putting those assets elsewhere. What are the transaction costs on that? You need to go figure out, because bonds, sometimes you need to just figure out what is it worth? You know, what's the spread? Is there any inefficiencies with that? But after that, there is a nice little thing about inherited assets. They get what's called a step up in basis, meaning that I don't know if there's any built-in gains to this bond from whoever you inherited it from. But the good news is, is that whatever the value was on the date of death, there will be a step up to that value.

• 38:28Brian Preston?

  So you could potentially be able to convert this to cash, tax-free. Doesn't mean cost-free, because there might be some transaction costs. You need to know what those friction costs are. But then you can kind of get a start at square zero and figure out where in the nine steps of the financial order of operations that this is going to really help you out. Because that is, and then I think that also honors, well, I always like to tell people when you inherit assets, also take a moment to just think about what would whoever, you know, bless you with this, would kind of put a smile on their face too? Because I do think that there's some weight to when you get a blessing like this, what the intent and how can you make this actually have some legs that you can remember this

• 39:11Brian Preston?

  and it actually has some long-term value to you and gives you a leg up? Because I hate it when people come into money. And they go buy a new car or they go put it in lifestyle and then you think about this blessing just got squandered in a lot of ways. So I always tell people when you get any type of blessing or somebody gives you an inheritance, try to honor it and make sure it actually sticks around and gives you some legacy.

• 39:36Speaker 03

  So when they think about like what to invest in, they've gone through all that. Should they go buy some individual stocks, maybe some Bitcoin, maybe they should go do some options.

• 39:46Brian Preston?

  Well, it's back to your point. I mean, if this is, I mean, cause I can.

• 39:47Speaker 03

  When it comes to investing, what are the actual things that they should be buying?

• 39:51Brian Preston?

  Yeah. I mean, we like index funds, you know, index, you know, that's what Roth IRAs, you know, those type of things. And that's why I even think about, y'all, y'all know I've lost my, I lost my father in my mid twenties. My mom gave me and my brother $10,000 from a life insurance policy. And I can never forget, I paid off a little bit of, you know, it helped me catch up on a, you know, I didn't have credit card debt, but it definitely, there were some periods, some expenses that I need to get caught up on. I might've paid off, I think that maybe that car loan that I might've paid that off, but then I definitely funded a Roth IRA with that money. And that's, it makes me still happy that I think about, you know, came into this money for the, something I'm not, you know, would love

• 40:33Brian Preston?

  to give the money back and have my father, but still I feel like it has legacy now because that's part of this Roth IRA that I have.

• 40:39Speaker 03

  Yeah. So if you're, if you're early on in your journey, a great solution might be target retirement index funds. It's a type of investment where there's only really two answers you have to come up with. How much can I save? In this case, $10,000? And when do I think I might need this money? If I think I might need it 30, 40 years in the future, I can look at a target date index fund some point in the future. Or maybe you're further along in your journey. You've reached the boiling point and you're at 500, $600,000 of assets. Well, then I would look at my overall allocation and say, okay, where am I underweight? What are the undervalued asset classes that I might want to get exposure to? And then I think about really good, low cost index funds inside of those asset classes to make sure that I have a very robust and well diversified portfolio.

• 41:25Speaker 00

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• 41:51Speaker 01

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• 42:00Speaker 01

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• 42:21Speaker 04

  Great, Fabreeze Me Up? I hope that helps. Thanks for being here and asking the question.

• 42:27Brian Preston?

  But look at the content team. We realize Fabreeze is a cleaning product. First released in 1998.

• 42:33Speaker 03

  What do they? They think they don't know what Fabreeze is? That's so messed up. We know what Fabreeze is.

• 42:38Brian Preston?

  Isn't Fabreeze one of those, um, those things that's part of the Mandela effect? Mandela effect, um, where the logo changed or something?

• 42:48Speaker 03

  I don't think that was Fabreeze, was it?

• 42:50Speaker 04

  I don't remember that being, no.

• 42:52Brian Preston?

  I thought it might have been one of those.

• 42:57Speaker 04

  Bo is looking up.

• 42:58Speaker 03

  Yeah, Ruby, you tell him a joke while I'm looking this up, bro.

• 43:00Speaker 04

  A joke? I have a question.

• 43:01Brian Preston?

  I might be wrong. I know Fruit of a Loom is one of those things. The Monopoly is one of those things.

• 43:05Speaker 03

  Oh, oh, I'm sorry. Yeah, so it is part of, look at you, steel trap. Uh, one of the, people remember Fabreeze being F E B R E E Z E with two E's instead of the correct spelling with just one.

• 43:18Brian Preston?

  Correct spelling.

• 43:20Speaker 03

  I don't know.

• 43:20Brian Preston?

  Cause that's not, that's not a real word.

• 43:22Speaker 03

  Well, I'm just by the correct spelling of the brand. Some people say that they changed it.

• 43:25Speaker 04

  Which one is it? We don't know.

• 43:27Speaker 03

  Mandela effect, I mean, that one still kind of messes me up.

• 43:31Brian Preston?

  I mean, Donna's getting started about Sinbad.

• 43:33Speaker 04

  Yeah, we're, we're not gonna, we're not getting started on this. No, Bo, don't do it.

• 43:38Brian Preston?

  He just is embarrassed.

• 43:39Speaker 03

  It was in the movie. That was real.

• 43:43Speaker 04

  Okay.

• 43:44Speaker 03

  I watched this kid.

• 43:47Speaker 04

  We have a question from.

• 43:49Brian Preston?

  But can I say one more thing?

• 43:52Speaker 04

  Okay.

• 43:53Brian Preston?

  Bernstein Bears or?

• 43:54Speaker 04

  Oh, my God.

• 43:55Speaker 03

  No, this one you debunked.

• 43:56Brian Preston?

  I will say, unless the collateral really did create and change things. I went home, we have all of my childhood books or my wife's childhood books from like the 60s and 70s from like, because we got them all. It was spelt.

• 44:13Speaker 03

  It was spelled the way that we didn't think it was spelled.

• 44:15Speaker 04

  If you don't know what they're talking about, go Google the Mandela Effect, Berenstain Bear, Sinbad, and you too can have the hilarious day that we did when Bone Bryant discovered the Mandela Effect, so.

• 44:29Speaker 03

  Fruit of the Loom changed too. I'm going to stick by Fruit of the Loom change.

• 44:32Speaker 04

  The breeze, apparently.

• 44:33Speaker 03

  And Sinbad was in that movie. It was, it was just, it's true.

• 44:38Speaker 04

  All right. Are you ready for TWC's question?

• 44:41Speaker 03

  Absolutely.

• 44:41Speaker 04

  Because I've got it queued up here. He asks, investment options in 529 plans are too conservative for funds that won't have to be liquidated for 18 to 22 years. Could a Roth be used as an alternative approach for paying for grandkid college expenses?

• 45:03Speaker 03

  Okay, let me, let me, let me double back before, I don't even, I don't even want to really talk about the Roth part because you said, hey, 529 plans are too conservative for funds that are going to be 18 years in the future. Most 529 plans now, and you can go look, because every single state now sponsors their own 529, most 529 plans will give you a number of different options you can choose from on how to invest those. So one of the options might be an age-based allocation, which I agree with you, tends to be pretty conservative inside of 529s. But then oftentimes, there's also an aggressive age base, which is a little bit more equity-heavy than the regular age base, and it's less conservative, or maybe even a little more fitting. But then even most plans now will allow you to do your own customized portfolio

• 45:48Speaker 03

  across the low cross, low-cost indices that they have. So if you are someone who wants a. Specific level of risk exposure inside the 529, it's not uncommon for 529 plans to have a small cap index, a large cap index, a total market index, an international index, where you can build an allocation to match the level of aggressiveness that you want to have inside of that plan. So I'm not going to concede that all 529s are too conservative.

• 46:14Brian Preston?

  No, that's too strong of a statement because you think about, you even get to choose, you don't have to work in your own state unless there's a huge tax benefit in your state. Because you can go look at, like, and I'm just doing this off memory, but Utah is Vanguard.

• 46:27Speaker 03

  Yep.

• 46:28Brian Preston?

  I mean, you get to go choose whatever index fund that you want to maximize a 529. Here's, here's the crux of what I think he's getting at is he's looking for, instead of doing the 529, he wants to use the Roth IRA. And I would tell you, it's back to, this isn't an either or, it's really an and. Because I don't, when you get money into a Roth IRA, because you're limited on how much you can put into a Roth IRA, they cap you out at around $7,000 a year, you're going to not want to use those assets. Whereas college is going to happen, you're going to want to use it. And I will tell you, having a child that's a senior in college right now, and I'm happy to report, we, we just,

• 47:10Brian Preston?

  she's, we just paid this, the, basically, we've paid for three and a half years. Because we just paid her last semester of her, I mean, her first semester of her senior year. So we're three and a half out of four years paid for. And the 529 covered three years. And I'm very pleased because you don't, I didn't want to be left holding the bag on. Now, here's the good news. 529s have gotten a lot of escape patches built into them now. You can fund Roth IRAs with them, you can pay off student loans with them, you know, you can do K through 12, you can pass them down to relatives. Lots of escape patches if you overfund it. But I like that it's built into the system that you're going to use this. And if you use them for qualified expenses, it's completely tax-free growth.

• 47:53Brian Preston?

  Whereas the Roth IRA, I just, that money is so valuable that I want you, as soon as your kids, and this is a conversation I had with a client over the weekend. Their kids are starting to work. They're teenagers. They're lifeguarding. They're doing other things. And I'm like, go start doing dollar for dollar match on those custodial Roth IRAs. So you can prime the pump, get that money in those Roth IRAs, so that you can turn them into savers and investors at an early age. So that way, it's not an either or, it's an and. And so that you not only have the 529s, but you also can prime the pump, once they start working and open up those custodial Roth IRAs. Man, oh, man, are you creating a legacy for the next generation if you can combine those things.

• 48:35Speaker 03

  Love it.

• 48:37Speaker 04

  Great. TWC, thanks for being here and thanks for the question.

• 48:42Speaker 04

  Matt C. has question next. He says, is medical debt, good debt, quote unquote? My youngest needs braces. Quoted 6K before insurance if I paid in full, or 150 per month with 2K down at 0% interest. Should I use my emergency fund?

• 49:03Brian Preston?

  Well, what is it after insurance?

• 49:06Brian Preston?

  Or is there not insurance?

• 49:08Speaker 03

  It's a great question.

• 49:09Speaker 04

  That is a great question. I kind of took those as two options, but there may be another option.

• 49:13Speaker 03

  There's literally someone out there who is pinning their kid's smile on us. Like, you know what I mean? They're gonna be like, ah, sorry, juniors.

• 49:21Speaker 04

  I just thought this was an interesting question about

• 49:22Speaker 03

  Couldn't get your braces.

• 49:23Speaker 04

  Types of debt. Because you do talk about good debt and bad debt and emergency funds and choices you have to make.

• 49:28Brian Preston?

  This is more, this isn't a good debt, bad debt. This is more of what's the need for my child. And that's the thing is that now, well, look, this is why these industries, oh, they really get you. Because you're like, oh, my gosh, I gotta do. But you have to kind of, you know, your situation and have to do what's the best for your child. And this isn't really debt. It's really of, do you have the money? You don't have the money because they're doing a 0%.

• 49:52Speaker 03

  Well, that's what I'm, what I'm, what's unclear that, and maybe I missed this, is were you getting a discount for paying the $6,000 upfront? Or could you just pay that 150 a month at 0% interest indefinitely? Because if there's no discount for paying upfront, The 0% is certainly something that you could take advantage of here without getting yourself into precarious spot, but I'd want to do the math on that. Generally speaking, when you pay upfront, you pay upfront because you're going to have some sort of cost savings there. But even if you were to take advantage of 0% on this type of thing, that debt's not supposed to stick around forever. So I'd want to have like a very finite plan about how, okay, I'm going to knock this out over the next 12 months or over the next 18 months so that you get it off the balance sheet and move on.

• 50:37Brian Preston?

  I would rather be, if you, assuming you have a well-funded emergency fund, I'd rather just knock it out because I worry about the unintended consequence of, because look, there is a bank being brought in here and yes, it's 0%, but they're waiting for you to step out of line and then slap you with interest and penalties. All those, a lot of times when you see 0%, they're very effective if you use them perfectly, but there's a lot of language in there that if you fall off the straight and narrow that you get slapped with fees and, you know, even they, sometimes they even bring in the interest that you've, you know, got to defer.

• 51:15Speaker 03

  But there's a, there's a, there's a relativity question here too. I mean, I just, I'm not disagreeing with you that they could use the emergency fund, but if your emergency fund is $8,000 and you take $6,000 to go, that makes me more nervous.

• 51:28Brian Preston?

  You have to triage your situation and go, man, because yeah, if you get where it's taking you down to where you're hitting bone, yeah, well, take advantage of this, but then you've got to, you know, put yourself under the pressure of that you've got to follow the straight and narrow and then get yourself back as fast as possible. Because look, your health is, I'm never, you can't write us a question saying, should I buy my kid's prescription or fund my Roth IRA? Come on, guys. We all know the answer. I mean, seriously, we're going to tell you that money is only a tool. It's not, you know, it's not the only thing in your life. You know, there's, there's a lot of things outside of the money that we get and that's why we try to give you the flexibility. And it also ties back to, this is why a lot of

• 52:12Brian Preston?

  people think the financial order of operations is a walk up the mountain hitting each step. And if the content team wants to pull up, it's actually not. It's a, there's a lot of things that are going to happen in your life that pull you forward, pull you backwards. You just need to be prepared and maybe this medical expense is one of those things that sets you back a little bit.

• 52:27Speaker 03

  Did you find, have, have, have your kids really had dental stuff yet? Any dental stuff?

• 52:32Speaker 04

  No.

• 52:32Speaker 03

  Okay. Did you find that like after, cause we did, we've already done the one bout of braces and I've had to do a bunch of cavities at this point and stuff. After the first time that happens, like the very first cavity or, or after that braces, you got militant about their teeth?

• 52:45Speaker 04

  Oh yeah. No, that sounds terrifying.

• 52:46Speaker 03

  Like every single night I was like, girl, girl, did you, did you floss? You better floss. You flossing right now? Are you wearing your retainer? Did you, cause I felt like I had to protect that investment, right?

• 52:55Speaker 04

  Oh.

• 52:56Speaker 03

  It's not inexpensive, right?

• 52:57Speaker 04

  But yeah, it does get expensive.

• 52:59Speaker 03

  Do you find that you got that way or no?

• 53:01Brian Preston?

  No, I mean, realize I'm a person that's, y'all don't, I'm giving you way too much information.

• 53:06Speaker 04

  Oh.

• 53:06Brian Preston?

  Um, my wife has, she's blessed with great teeth, so she doesn't get cavities, all this stuff. I'm one of these people that I think if I just look at a, a piece of candy, a cavity starts forming.

• 53:17Speaker 03

  Just jumps out.

• 53:18Brian Preston?

  Cause I've just grown up, my dentist, when they, you know, you have deep wells in your teeth or something like that. So I've always, I've always been very meticulous with brushing my teeth and stuff. Cause as, as a kid, I had cavities and had a lot of feelings. Um, so I'm just over the top with flossing and everything else. So I'm kind of always been on the kids about brushing their teeth.

• 53:38Speaker 03

  Yeah.

• 53:38Brian Preston?

  Cause just because I know the struggles I had as a kid. Now my wife, and I think fortunately, knock on wood, my girls, um, they got their mom's teeth. So they, they could really, they could really, there are some of you out there who don't have to be militant about your dental care. And somehow you come out the other side perfectly fine. And then there's others, this is all it goes back to. If I was born in the wrong century, I would have probably died after childhood. Because I mean, I don't see well, I have horrible teeth. I mean, this is why it's, it's a blessing to be born in the, in the century that I'm born in. That somehow there's value in what I do versus what would have probably been valuable back in that, that, that century.

• 54:18Speaker 04

  Wow. So much, so much was there. So much ground covered.

• 54:22Speaker 03

  I'm also blown away by the science and technology of like teeth stuff. Like when they do like the palatal expand and they put the, like, I don't, I don't really understand how it works. How you can make all your teeth get fixed, but it was wild to watch. Like they, you know, they weren't straight and they were, it's mind blowing to me.

• 54:40Brian Preston?

  No, I mean, and I look, I've got, I mean, I've got one that's getting wisdom teeth cut out in the next two weeks. And I got another one that had surgery to get chains inserted because the tooth wasn't coming down. I mean, there's crazy things. So you're talking about the technology. I don't even know. I mean, once again, it's good to be in this, you know, to live in the time we live that they can do these things.

• 55:01Speaker 04

  Wild. Well, Matt C., I think we're saying that the investment in your child's braces is worth it.

• 55:07Speaker 03

  It's worth it.

• 55:08Speaker 04

  I just feel like I need to bring it back home to mention that.

• 55:11Brian Preston?

  But I will. It goes back to something.

• 55:13Speaker 04

  Appreciate you asking the question and being here.

• 55:15Brian Preston?

  There's nothing wrong with you asking if there are any discounts or

• 55:19Speaker 04

  Right.

• 55:19Brian Preston?

  you know, cost reductions or any, you know, go ahead and ask, you know, I know it sounds crazy, but it's worth at least.

• 55:25Speaker 04

  Hey, you don't know.

• 55:26Brian Preston?

  I do that on about everything. I probably drive people crazy.

• 55:28Speaker 03

  Medical, yeah, you do actively. I've watched it in real time. But yeah, like that kind of stuff, medical bills. Hey, I've got this bill come in. I'd love to go ahead and pay this in advance. Can we work something out? Or if I pay you today, it'll be this amount. And the second worst answer you can get is no. So you might as well ask.

• 55:45Speaker 04

  Well, ask.

• 55:46Brian Preston?

  Look, in the comment section, there might be somebody who works in that industry and tell you, yeah, we're just waiting for you to ask for a discount or no, your insurance is the only discount.

• 55:56Speaker 04

  Worth looking into. All right. I've got another question from Anthony F. It says, I'm a disabled veteran and utilize VA healthcare. I currently do not use health insurance offered by my employer. Should I enroll in a high deductible plan in order to open an HSA? And I think he's bringing up a great question because you love HSAs, but does everybody need an HSA? How do you think about this?

• 56:25Brian Preston?

  So, but you probably know this. So is he probably on TRICARE?

• 56:28Speaker 03

  That's what I'm guessing is most likely what's going on.

• 56:30Brian Preston?

  And that's going to be completely covered or heavily subsidized by the military and the government. So, I mean, that's, I'll let you give the answer because you don't want you to make a bad financial decision just because we love HSA.

• 56:42Speaker 03

  That's right. As much as we love HSAs and being able to take advantage, but one thing we all have to do, whether you're someone who has, you know, VA healthcare, TRICARE, or whatever, you have to assess, man, is the insurance that I currently have access to, maybe you all work for an employer who has a very solid Cadillac, highly subsidized plan, and I see the high deductible option. Option that would give me the HSA availability. But then I've got this other Cadillac option that's really, really good. That has low out of pockets, has copays and all these things. And it might make sense based on the type of medical consumer I am. I ought to take the better insurance and not be able to do the HSA. That's an okay assessment to make.

• 57:23Speaker 03

  It's an assessment that you ought to work through at least every year as you're working through open enrollment. To make sure you understand, okay, based on the next year that I'm going through, what is the best plan for me? What is the, if I add up, here's what I think my out of pocket is going to be. Here's what the premiums are going to be. Here's what the prescription is going to be. Here's what the tax benefit from the HSA would be. And I compare two columns. I want to select the one that's most optimal. And sometimes it'll be the high deductible HSA plan, but sometimes it'll be the other plan. And in this case, it sounds like there's a chance, Anthony, that the current insurance that you're on might be better than going to a high deductible plan. So you need to make that assessment based on your specific medical usage.

• 58:06Brian Preston?

  Well, I love it. And I think what Anthony's done is he's probably gone to moneyguy.com/resources, downloaded his own personal copy of FOO, the Financial Order of Operations. And he's thinking, hey, I see step five has Roth and HSA, so it must be so good that ought to do it. Well, it's no different than it's treated as a checklist. When you're looking at the Financial Order of Operations, you get to step two, employer match. If your employer doesn't offer a match in the 401K, you just kind of check it off and say, well, it's a great opportunity for most, but my plan doesn't really allow that. So I'm going to move on to high interest debt. Same thing, you get to step five and you say, yeah, I realize the HSA with that triple tax advantage is an incredible opportunity for many. But I get free or I get subsidized health insurance because of my disability.

• 58:51Brian Preston?

  I would be crazy not to take advantage of what is free or provided or prepaid for my benefit because of my service. So you just go check the box and go, it just doesn't work for me. And that's really what we're trying to get you to do with the Financial Order of Operations. Is that we just want you to make sure you put the personal in personal finance. But we're trying to, money is a tool and we've tried to create the better way for money. But it is very personal and you have to kind of go through. And then you have to now triage what's the best things for my situation to maximize this.

• 59:23Speaker 03

  Love it.

• 59:24Speaker 04

  Yeah, no, that's really great. Anthony F., thank you so much for the question and thank you for being here. You want to do one more?

• 59:32Brian Preston?

  Sure.

• 59:32Speaker 03

  Sure.

• 59:33Speaker 04

  Let's do it. Milkman please says, "Good morning, Money Guy team. My wife and I feel like we're on track for retirement, but are incredibly stressed as we enter family planning. Any advice to help us stay on track during this transition?"

• 59:49Brian Preston?

  Oh, Bo, I'll let you because you know me. I get all sentimental as a guy who's, you know, got older children now. I'm always like, "Just, just go have babies."

• 59:57Speaker 03

  I think a lot of financial-

• 1:00:00Speaker 04

  There you go.

• 1:00:00Speaker 03

  Can we make that a T-shirt? "Just go have babies." Brian Preston. I think a lot of financial mutants are in this place where they say, "Hey, man, I'm doing all this stuff and I'm saving 25% and I'm on track and I'm tracking my net worth and I'm doing it every year and everything is looking great." But, man, there's this big unknown unknown associated with starting a family. And there's going to be another human being that is going to be dependent upon me and I'm going to have to, it's going to affect the way that I might be able to work and it might affect career trajectory. It might affect income. It might affect savings. It might affect spending. And all these unknowns. And so they begin to get really, really stressed about that. It's one of the reasons why, when you listen to any of our content, especially for young folks in their twenties, thirties and forties, we say that when it comes to what you ought to be doing financially,

• 1:00:45Speaker 03

  your goal should be to save 25% of your gross income. And if you can save 25% of your gross income, you can remove that stress because odds are, if you're able to do that and you do that for your entire career, you're going to be able to write the ticket on the kind of future life that you want. And so the question that I would ask you, Milkman, is, are you at the place where, okay, I've been doing this stuff that I'm supposed to be doing. I'm a financial mutant. I'm moving the right trajectory. I'm going to have this family. I'm going to start a family. And even though there's some unknown unknowns, I feel pretty confident that I'm going to get back to, once things normalize, once things settle out, I'm going to start making financial decisions the way that I have traditionally always done that. I'm going to be a saver. I'm going to live on less than I make. I'm going to exercise discipline.

• 1:01:30Speaker 03

  So long as those things are true, you're likely going to be fine. It's not like what happens is all of a sudden, these two financial mutants decide to start a family and then they have a baby and immediately they're just getting all kinds of credit card debt and they start buying timeshares. They start making these horrible financial decisions. Who you are pre-family, at least from a financial standpoint, is likely going to be similar to who you are after, so long as you make sure you put controls in place to keep yourself in check. So I do not think that starting a family is a financial decision. It's a life decision, but it's a life decision you can go into confidently, understanding that if you start out as a financial mutant,

• 1:02:12Speaker 03

  odds are you're going to get back and stay a financial mutant even through the messy middle. Agree, disagree, wanna fight?

• 1:02:18Brian Preston?

  I'm glad we let you go first because I'm gonna blow this whole thing up.

• 1:02:20Speaker 03

  He's saying I have a different take.

• 1:02:22Brian Preston?

  Well, no, it's just that this question immediately made me think of a pop culture reference, and I'm gonna probably screw this up, content team will correct me. Is it Mike Judge and Idiocracy?

• 1:02:33Speaker 03

  Is that the guy? Yeah, that sounds right.

• 1:02:34Brian Preston?

  If you go watch the first 10 minutes, I'm not saying you have to go watch the whole movie, but you can probably find this on YouTube. If you watch the first 10 minutes, the whole plot of this movie is, is that really smart people overthink having children, and they keep putting it off, putting it off so they have success and other things. Meanwhile, people who aren't so smart just have babies, babies, babies. I mean, it makes this whole, and society just shifts because the people, they just quit having babies on this side and then the other side, and we end up with crocs and all these other things. You really just gotta go watch the first 10 minutes and you'll see what I'm talking about. And I think that sometimes I think about that pop culture reference to, sometimes as financial mutants, you're so determined to build your financial success.

• 1:03:17Brian Preston?

  And I'm all for, and I think it's great that you're disciplined, but also don't overlook that money's just, and your family is, take it from a guy who's in his 50s, children are getting much older, super sentimental. Life is so cruel because when you are more sentimental, your kids will become more independent, and it creates these all strange dynamics. And, you know, because it is special. I know there's a lot of people out there, even in our comments section, telling you marriage is not good, kids aren't good, and all this. And I'm telling you it's the opposite. I think that it's pretty awesome. And I even got a unique situation because, you know, I have a child on the spectrum, they'll probably never live on their own.

• 1:03:58Brian Preston?

  So even with those curveballs, I think there's a lot of good that comes from it. Maybe I shouldn't be so opinionated about it, but I'm just telling you from a 50-something-year-old sentimental guy, don't overthink it too much. I want you to do your homework, measure twice, cut once, but it's okay to have kids.

• 1:04:15Speaker 03

  I love it. And yes, what can I do to prepare? I think one of the things, just like anything else, are you following the financial order of operations? Do you have a fully funded emergency fund? If you don't, maybe as you enter into the season, whether it's going to be additional medical costs, and there's going to be additional stuff here near the house, maybe you need to bolster and beef up your cash position a little bit as you move through this transition, so that when the stress comes, because having babies is a stressful thing, you can rest assured, okay, I've got cash in the bank, I've got my emergency fund there, there's just one less thing I gotta think about. All I gotta think about right now is how warm is that milk supposed to be? Or how, what was the, how do I change the diaper? What's the, those are the things that you want to be able to focus on, not the financial stuff.

• 1:05:00Speaker 04

  Yeah, you still get to follow the foo even when you're in the messy middle. That's the point, right?

• 1:05:03Speaker 03

  That's it.

• 1:05:04Brian Preston?

  Did I get the movie right, by the way?

• 1:05:06Speaker 04

  I think you did. I was Googling it, yes.

• 1:05:08Speaker 03

  The content team was telling us.

• 1:05:10Brian Preston?

  Now, the content teams be like, don't say that. That's what, you know, because it's not exactly the, you know, cleanest movie.

• 1:05:16Speaker 04

  Good to know. I have not seen it, so.

• 1:05:19Brian Preston?

  I'm not saying you have to go watch the whole movie, but it is very interesting to watch the whole setup.

• 1:05:23Speaker 03

  I've never seen that movie before.

• 1:05:26Speaker 04

  We all learned something today.

• 1:05:27Brian Preston?

  Maybe, I know what we're going to watch in the content, the edited version. We need to find the Superstation version of it, because Bo and I have, let's say this just because I know we're coming to a close, Bo and I have a very similar background, the fact that we grew up in South Atlanta, and anybody who's from Atlanta knows Superstation, TBS.

• 1:05:44Speaker 03

  TBS.

• 1:05:45Brian Preston?

  Ted Turner's thing before, you know, AOL, Time Warner bought him out. Notorious for putting movies on there, and they were censored movies, though. So we have a lot of common, you know, talking about great movies.

• 1:05:58Speaker 03

  Hey, we watched this movie, that movie.

• 1:05:59Brian Preston?

  But you go watch these movies now through the streaming platforms, you realize they're a lot dirtier.

• 1:06:03Speaker 03

  I don't remember that part. That one.

• 1:06:04Brian Preston?

  So you gotta go find the TBS version of these movies when we mention them to you.

• 1:06:10Speaker 04

  Oh, love it. All right. Well, Milkman, please, thank you for being here. Thank you for the question. And if anybody watching or listening wants to continue this conversation, make sure you go to moneyguy.com/resources because we have tons of free downloads, free calculators for you to use to keep thinking about your personal financial situation, hopefully help you build confidence in what you're doing so that you can actually just focus on what really matters. That's the whole point. So thanks for joining us. Thanks for being here. We'll be back at 10 a.m. Central, live streaming next week.

• 1:06:43Brian Preston?

  There's a better way to do money. And look, a lot of you guys take advantage of all that free stuff that Rebby was talking about, but also a lot of you are super successful. And if you've gotten to that point that you need somebody to help you co-pilot the seven, maybe even multi-seven-figure success story you've created, we'll leave the porch light on for you. Consider fulfilling the abundance cycle. I'm your host, Brian Preston, Mr. Bo Hanson, Rebby and the rest of the content team in the wings, Money Guy, out.

• 1:07:10Speaker 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.

• 1:07:43Speaker 05

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