The Truth About Early Retirement: What You Need To Know

'Tis the season! In this festive Q&A, we share our thoughts about early retirement, starting with insight for aspiring FIRE (Financial Independence, Retire Early) and FINE (Financial Independence, Next Endeavor) followers. Then we turn our attention to your financial questions from investing mindsets to emergency funds to home buying. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠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

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• 1:06Speaker 02

  The truth about early retirement. What you need to know. Oh, oh, oh. Brent, I am so excited that we get to sit in the spot. We get to talk about things like early retirement. We get to talk about things that you care about. It's why every Tuesday at 10 a.m. we want to load you up and answer your questions about how you can start doing money better. And today is no different. So with that, Creative Director Abhi, I'm going to throw it over to you.

• 1:35Speaker 03

  Yeah, we're going to kick it off with a question from Roshan. He says, "I am 35 with $1 million invested and want to retire early, before 50. How should my assumptions about assumed rates of return, wealth multiplier, and withdrawal rates change?" I think it's a great question, because we talk a lot about retiring at a more... Normal 65 type age. What about retiring early?

• 1:59Speaker 02

  Well, first of all, Roshan, I want to start with you're 35 years old with $1 million invested.

• 2:04Speaker 03

  I know. Flossed over that one.

• 2:05Speaker 02

  That is absolutely insane. I hope you know how far out ahead of the curve objectively, you are from your peers. But the question you have to answer, okay, is $1 million enough for you? Does that put you on the curve, behind the curve, or ahead of the curve? And only you can define that. And the way that you define that is by working through some of the variables that could change. And those are the ones you listed out. How should I think about my rate of return? How should I think about my wealth multiplier? How should I think about my withdrawal rate? If I'm going to exit the workforce early. And Brian, we have this conversation all the time. We talk to folks that are part of the FIRE movement, that are part of the FINE movement. We say, okay, if you're gonna have a longer than normal retirement timeline,

• 2:49Speaker 02

  you probably ought to think about thinking through things a little bit differently.

• 2:53Brian Preston?

  Yeah, no doubt. Roshan, by the way, I'm with Bo, I'm with Rebi. You're crushing it, being way ahead of schedule. I do think this is a kind of, you need to understand, when you have a destination as big as you want to retire early and you're decades out from this, you're not even gonna be able to see it in the distance. So you really need to be thinking about savings rates.

• 3:21Brian Preston?

  Maybe that's what the elves are supposed to be doing, is helping with that. But savings rate is gonna be one thing. But then, as you, so you're gonna be very broad. But as you bring the plane in for the landing, you're gonna switch from rules of thumb, like withdrawal rates and basic rates of returns to actually doing Monte Carlo simulations and other things. But that's probably a great place to start, is like the Know Your Number course. So you know if you're ahead of the curve, behind the curve, or right where you're supposed to be. Also use very conservative assumptions. One of the things we do when we find out people are super... Part of the fine or fire movement will say, look, if you're retiring above 55, you can use that traditional 4% withdrawal rate.

• 4:02Brian Preston?

  But if you're somebody who's driving, you know, retiring between 4, 45, it's hard to read through the wig, 45 and 55, it's 3.5%. And if you're trying to retire like a wild person before you're even age 45, you probably want to go super conservative with maybe even a 3% safe withdrawal rate.

• 4:22Speaker 02

  Then again, those safe withdrawal rates are sort of like back of the napkin planning. That's what you use to figure out, okay, what's the horizon line I'm going to work towards? But when it actually becomes time to truly retire, to truly step away from the workforce and begin living off your army of dollar bills, it's exactly what Brian says. You have to do an actual retirement plan where you do an actual Monte Carlo analysis and you actually factor in, okay, what do I expect my life to look like from age 50 all the way out until expiration, if that's age 90, 95, 100, whatever that may be. It's only after you've done that work, done that stress test, run it through the different iterations, that you can have security actually going into retirement and actually going into your next endeavor.

• 5:03Speaker 02

  If all you're doing is using a safe withdrawal rate factor like a 3% or 4%, I would argue you've not appropriately and accurately done enough homework to know if you're there yet.

• 5:13Brian Preston?

  Well, and also because it doesn't take into account what happens with kids, what happens with life goals, what happens with health. There's a lot of things that get very personalized and nuanced as we get through. Don't you know probably these wig things? I'm sure they're tested in a lab to make sure they're okay for ingestion, right? Don't you think?

• 5:30Speaker 02

  I sure hope so.

• 5:31Brian Preston?

  Otherwise, I have probably taken some, this gag has probably cost some years off the life because I'm sure that factory in China really focused on making sure it was, you know, good for humans consumption.

• 5:46Brian Preston?

  Did we give Rashawn enough?

• 5:50Brian Preston?

  I can't do it anymore.

• 5:51Speaker 03

  Because this episode is coming out just a little before Christmas, we are having a little fun. If you're listening on audio, Brian was wearing a full Santa wig that entire time. And I looked over while Bo was starting to answer the question and Brian, he had the wig, it was almost covering his eyes. He had the beard almost up all the way over his nose. And the hat was like draping down over his face.

• 6:13Speaker 02

  Did you not notice the ball bouncing in front of you?

• 6:15Speaker 03

  I could not see your face at the beginning and I started laughing.

• 6:18Brian Preston?

  And nobody helped me with the hat. So that was just whatever I flung it on my head before we hit action. That's what we were left with.

• 6:27Speaker 03

  That was quite funny.

• 6:28Speaker 02

  That is hilarious.

• 6:29Brian Preston?

  So I hope that Rashawn got something out of that because it was just, it was, there was a big distraction. I felt like we did a game show where you asked me a serious question while I was running a, you know, like an obstacle.

• 6:41Speaker 03

  Yeah, we've discussed having like challenges for you while you answer these questions.

• 6:46Speaker 02

  I think we just saw how well that would go.

• 6:47Speaker 03

  I think we saw how that would go.

• 6:48Speaker 02

  Old hot ones for Brian and Bo might not turn out real great is what I'm seeing right there.

• 6:53Speaker 03

  Oh, man.

• 6:54Speaker 02

  But you know, it is so interesting. This is, this is, what an amazing time of year this is, right? Obviously, we have the holidays, we have end of the year. Brian, you recently just had a birthday. December is the month in which you were born and it is annual net worth statement month. And in this month, we could do a net worth. So there's a lot of stuff to celebrate, a lot of stuff to be very, very excited about this time of year. And that's why we want to have a little bit of fun with today's Q and A.

• 7:22Speaker 03

  Absolutely. And because the Q and A, I've got another question pulled up here from CM. It says, is there ever a time that you, ever a time you all recommend 0% financing that can be paid within a short timeframe instead of pulling from emergency reserves? He gives the example of medical bills. What do you think?

• 7:44Speaker 02

  So I like the short-term little caveat you put on there because a lot of times we get asked this question like, "Guys, if someone offers me 0% financing, why wouldn't I take advantage of it? Why wouldn't I take advantage of it?" And I think about this the same way that I talk with my middle daughter. Now, I've got three kids. I've got a 10-year-old, I've got an eight-year-old, I've got a two-and-a-half-year-old. And my middle one is the one that always wants to like, just kind of, ah, play with the rules. She wants to test the bounds. She's like, "Dad, why do I need to put on my seatbelt? Why, Dad, do I have to wear my seatbelt? Why can't..." And I say, "Sweetheart, look, here's the thing. Odds are, if you don't put on your seatbelt, you're gonna be fine. Odds are, we're gonna make it to our destination and you will have been okay.

• 8:27Speaker 02

  However, in the event that something happens that was not thought of ahead of time, that we did not prepare for, the outcome that could come from that could be incredibly negative and incredibly bad. And I think about 0% financing as the same thing. A lot of folks get really excited, "Oh, I can go borrow this two years, same as cash, three years, same as cash, 0%. But if you miss one payment, or one thing doesn't go through, or there's one glitch, or whatever that thing may be, it can be a very, very, very negative outcome. And so the question to have is, is it worth it? Is the arbitrage game you're trying to play worth it? So that's why, generally speaking, I am not a fan of 0% financing. However, CM did say this was like for a short-term thing, like a medical bill.

• 9:11Speaker 02

  Like, "Hey, okay, should I take advantage of this if I can pay this over the next three months, four months, five months with 0%? And that gives me a little bit of reprieve instead of my emergency fund." I do think that's a little bit of a different scenario.

• 9:23Brian Preston?

  Well, it all depends on what goes into it, too. Because the problem is with a lot of these deals, I mean, you're gonna have to go through the formal credit process. You're going to have to unfreeze your credit, you're going to have to apply, you're gonna have to ding your credit. There's just a lot of friction that's going to occur. And then you just mentioned all the fine print issues. Look, I have no problem with if you just...

• 9:50Brian Preston?

  Treated it same as cash or whatever, like if a, if a medical provider was saying, hey, you know, we can, um, oh, look, I do this with my daughter's private school. You know, if you think about the fact that, you know, my, my youngest daughter goes to a very unique school for, for alternative learners and it's expensive. And I know every year when I signed the contract that I could either pay it in a lump sum, but they've also to try, make it more digestible. I can pay it in two or, or three payments and it's the same thing. I just divided it by three. Well, I'm like, okay, yeah, then that's fine. I'll just, I'll, I'll Time value of money. Time value of money. Plus it's just easier to digest this and over two or three. It's not buy now, pay later type stuff. This is just a basic agreement I have with the school.

• 10:32Brian Preston?

  And that's why if a medical provider was willing to say, hey, um, we know this is a, your deductible is a big bill on this. If you want to pay it over the next three months, but that's not usually, it's not that loose. It's usually much more formal. There's much more fine print. There's much more built into the transaction that is scarier, riskier. And it's that type of stuff. It's the unintended consequences of the unintended risk that freak me out. Plus it's, it's the, you know, I will pull this forward into the, the new behavior that's in society with this buy now, pay later is the deferral of everything. And I just, I don't want it to interfere with your discipline muscle. That's, that's the big thing is if there are a lot of stuff now, one off like a medical bill, cause that's not something, it's not like we go down the street and we're looking

• 11:17Brian Preston?

  for medical bills to, to kind of pop up. But that's the stuff that happens on a Tuesday or Wednesday, or, you know, emergency happens. So I'm, I'm willing to give a lot more grace on that, but I am struggling with when people are trying to use 0% for consumption. Um, because I feel like it's, it's working against the, the behavioral aspects of discipline. And then once you take into account the unintended and the complications of the contracts that you're signing to make this stuff happen, it's just not worth it to me. And that's why we have a policy in my house forever. My wife was opening up some credit cards at stores and, um, but I wouldn't know about it. And so that whatever that 10 to 15% discount that she was getting wasn't really getting

• 12:00Brian Preston?

  us that much of a discount when the first month's bill wasn't getting paid and we got a penalties and all kinds of other issues. So we just went to a zero. Store credit card policy so that we never had to deal with that again.

• 12:13Speaker 02

  Did I tell you my, we have this conversation around my hack of how to prevent that? Cause I remember-

• 12:20Brian Preston?

  If you freeze your credit, it kind of shuts it down.

• 12:22Speaker 02

  We, the other day, my wife, this is a few months ago, and she was at somewhere and they're like, hey, if you do the store credit card, she was buying school clothes for the kids or something, you know, very noble cause. Hey, if you sign up for the store credit card, you can pay it off immediately, but da, da, da, you'll save whatever. And she went to do it, but because our credit was frozen, she couldn't open it up. So I got a notification. I was like, babe, did you try to? She's like, oh, yeah, yeah, I did try to open that up. So that's another way to kind of keep yourself protected and that way you can tell the store folks, I can't open this credit card anyways.

• 12:51Brian Preston?

  Yeah. I mean, that's something I will tell you, I'm a big fan of freezing your credit because I think the crooks want to use your credit way more than a good financial mutant user.

• 12:58Speaker 02

  That's right.

• 12:59Speaker 03

  Well, CM, I hope that helps you think through your question and thanks for asking it.

• 13:04Speaker 03

  Jorge B. is up next. It says, what should we look out for when a financial advisor advises to scale back on 401k investing? And instead put money into an annuity and whole life insurance?

• 13:20Brian Preston?

  Now I see why the financial advisor is in quotes.

• 13:22Speaker 03

  It's in quotations. Yes, I should have said quote unquote financial advisor.

• 13:25Brian Preston?

  The legal, the legal aspect of financial advisor is really, there's no legal. Anybody can really call themselves-

• 13:33Speaker 02

  Hang a shingle and do it, yeah.

• 13:34Brian Preston?

  Just hang a shingle. That's why we always talk about the certifications, the CPA, the CFP, you know, the fiduciary standard. These are the things that actually bear weight versus just somebody saying, I'm a financial advisor, I'm a financial planner. Without the, the heft behind them or the legal requirements behind them. I think you got yourself a life insurance agent who has decided to co-brand this as a financial advisor as well.

• 14:01Speaker 02

  Yeah. What should you look for? You should look for the exit, right? Because that should be an immediate red flag. We're like, uh oh, what's going on? Now, I want to be careful because we don't know all the variables. We don't know all the circumstantial evidence that could suggest this recommendation. Cause there have been cases in our experience, Brian, where because of one reason or the other, we recommend a client back down their 401k savings. Especially like in years leading up to or in year of retirement for some other purpose, most often to build up liquidity and sort of cash reserves. However, this does not sound like that. And I believe that Jorge said he was 51,

• 14:36Speaker 03

  With 700K in his 401K.

• 14:39Speaker 02

  Yeah, so it seems unlikely that's probably what's going on here. So what I would encourage you to do is if you go to moneyguide.com/resources, we have a tool that has eight questions to ask your financial advisor. And while you're not considering hiring this advisor, it sounds like you already work with him. There are some questions on there that are worth asking, one of which is, hey, okay, if I do this, if I back down my 401K and I put money into this whole life, or I put money into this annuity, how does that benefit you? What, what, what's your compensation around that decision? Is there a conflict of interest that exists here? And they'll have to disclose to you, okay, yeah, I get paid this, others. And then you ask, okay, well, why does this make sense? Why am I choosing to do this as opposed to funding my 401K?

• 15:22Speaker 02

  And they ought to be able to answer that question well. And I think if they really dive into it, they're probably going to have a pretty difficult time justifying funding whole life insurance or some sort of annuity type product in lieu of your employer sponsored retirement account. And then what you can always do is you can always get a second opinion. If you have some unbiased third party that you can call, maybe it's another financial advisor, maybe it is your accountant, maybe it's someone else who you trust with how they make financial decisions. Say, hey, I have an advisor making this recommendation. Does this pass the sniff test for you? And if it doesn't pass the sniff test, then I think your spidey senses should perhaps start going off.

• 16:00Brian Preston?

  Yeah, I mean, even for, I'm not going to, because he, those are two broad things, annuities, whole life insurance. I know annuity people forever, the things that pushed the legal or the right way to use an annuity is after you've maxed out all the tax favored accounts, if you're still looking for a way to grow your investments in a tax, you know, tax deferred nature, annuities can be that answer. But the fact that you haven't even maxed out your 401K and this person's trying to put you into an annuity or a whole life policy? I don't know all the variables, but that just, there's already some red flags that I would need to work past to understand. And that's why.

• 16:41Brian Preston?

  You know, look, we've given thoughts on insurance and other things, but we don't sell those products.

• 16:47Speaker 02

  That's right.

• 16:48Brian Preston?

  But even we have conflicts of interest, by the way. That's one of the things, anybody who's working in the financial field is going to have conflicts of interest. That's why we give you those eight questions to ask. So even if you're talking to somebody like us, who's a fee only fiduciary advisor, you might have a question like, hey, wouldn't your fee go down if I paid off my house? And I'm like, yeah, that's why you better understand my philosophy and how I handle these type of decisions. So that it's, you know, we can work through any conflicts that might be built into the structure of how we get compensated. So there's nothing that needs to be pushed away from, or even concerned that, yes, people who do professional services are going to get paid. You just want to make sure it's transparent and, you know, price is what you pay, value is what you receive.

• 17:33Brian Preston?

  And you want to make sure there's some type of connection between those two things.

• 17:36Speaker 02

  And it's not an uncomfortable conversation. Literally before we recorded today, I had a prospect call with a potential client. And he asked me the very question, he said, hey, explain to me how your conflicts of interest work. What does that look like? And I was like, that's an amazing question because frankly, we don't get asked that a ton. And I walked into it exactly, I said, hey, if I tell you to not pay off your mortgage and put money in your portfolio, that's better for us, it works out better. Even with that conflict existing, I still believe if you have a two and a half percent mortgage and you're 34 years old and you're building for the future, it doesn't make sense to prepay that mortgage. And so, so long as you're willing to have those conversations, they shouldn't be uncomfortable, they shouldn't be awkward. And the way they answer it should make sense to you. You should have a level of confidence coming out of that conversation that you feel okay moving forward.

• 18:21Speaker 02

  You're looking at all my fuzzies. I can see you looking at the fuzz.

• 18:24Brian Preston?

  I'm sitting here.

• 18:25Speaker 02

  There's a bunch of fuzzies flying around.

• 18:27Brian Preston?

  Well, it's that, but also the audience doesn't know. I'm kind of saddened a little bit. Beau showed up today, not in this. He actually showed up in, I think he took it off.

• 18:38Speaker 02

  They told me to take it off.

• 18:40Brian Preston?

  See, they screwed you up because I wanted you to do a big unveiling of taking off the Santa wear. And showing everybody the cosplay outfit that you showed up in. Because Bo showed up today, I kid you not, looking like Han Bolo. With, I mean, and by the way, I went and asked a few employees, because we had a birthday celebration today. And I walked around and I said, hey, I'm not going to give you any prompt on this, but I want you to look at Bo. And you tell me from a cosplay perspective, who does he look like? And 100% they said Han Solo.

• 19:13Speaker 03

  It was pretty accurate, I have to say.

• 19:15Brian Preston?

  You could actually.

• 19:16Speaker 03

  Cause he had on like the vest and the boots. The boots really sold it. Yeah.

• 19:21Brian Preston?

  They would make, you might have a small living there.

• 19:24Speaker 02

  You know what, Brian? I'll take that as a compliment.

• 19:26Brian Preston?

  Galactic Star Cruiser? I would have said, Bo, I need to borrow your outfit so I can go on the Galactic Star Cruiser this weekend.

• 19:33Speaker 02

  From what I understand about Star Wars, Han Solo was a beloved character who was a lot of people's favorites. So I'll consider that to be a compliment, Brian. Thank you so much.

• 19:43Brian Preston?

  So I'm trying to figure out if I'm Chabrika, what was it? Bri Chaka?

• 19:48Speaker 03

  Chew Brian was thrown out there. That's what Luca said. I was like, that's the one. That's the one.

• 19:54Brian Preston?

  This is why I work with a bunch of creative. Chew Brian.

• 19:59Speaker 03

  Well, they just get Santa Bo today for the live stream.

• 20:03Speaker 02

  No, but this is really hot. I'm gonna take it off.

• 20:07Speaker 02

  I'm gonna do a magic.

• 20:08Speaker 03

  And it wears the vest.

• 20:09Brian Preston?

  The vest is right there. I see it. We need to get you.

• 20:11Speaker 02

  No, we're gonna do a, we're gonna do a magic thing. When you ask the next question, I'm gonna pop up, grab it. They're gonna change the cameras. You are not gonna be none the wiser. I'm gonna be back.

• 20:18Brian Preston?

  And we're gonna still get to see Han Bolo.

• 20:21Speaker 03

  Okay, we'll see if the editors choose to do that. Let's go to Evan's question next. But really, Evan does have a question. He says, when trying to reach the goal of saving 25% of income, is Roth contributions or pre-tax contributions weighted at all? Saving 25% post-tax seems like a much larger savings rate compared to pre-tax. What would you say to Evan?

• 20:48Speaker 02

  So this is a pretty common question we get all the time because people recognize.

• 20:51Speaker 03

  The best is on now. The best is on.

• 20:54Speaker 02

  Because people recognize that, okay, a dollar in Roth is not the same as a dollar in pre-tax. If I have a dollar pre-tax, I'm actually having a dollar plus my tax savings. So if I'm in a 22% tax bracket, I have $1 plus 22 cents of tax savings. $1 and 22 cents pre-tax is equal to $1 Roth. So they are in fact not equivalent. And so we have a lot of financial mutants that want to really like get in the nitty gritty of the math on here and ask, okay, do we weight this difference? Should I think about this different? My simple answer is no.

• 21:25Brian Preston?

  Because I told you so.

• 21:27Speaker 02

  No, it's not because I told you so.

• 21:29Brian Preston?

  That's what you do. Don't you know when you, a kid's ask a parent a difficult question, it's like, no.

• 21:34Speaker 02

  Because that's the way I said to do it. No. Because what we want you focusing on is 25% of your gross income. If you want to know why, go to moneyguy.com/resources. We have a deliverable. How much should you save? This is how powerful 25% could be. Now, if you're doing this the way that you want to do it, because a lot of people are trying to think about, okay, am I optimizing? Am I in the right place? If you're following the financial order of operations, Brian, will you hold that thing up for me? The financial order of operations is the thing that will lead you down the course of how should I do this? Okay, I'm going to do employer match. That's likely going to be pre-tax, maybe Roth. Then I'm going to get to step five. I'm going to be doing Roth, doing Roth. I'm going to get to step six. I'm going to be maxing out retirement. And I'm going to add up all of those. And so long as I'm following the financial order of operations and I'm saving 25% of my gross income,

• 22:19Speaker 02

  I don't think you have to get any more complicated than that. And if you're doing that well, over the course of a career, what you're going to happen, what's going to happen is when you get to financial independence, when you get to retirement, you're going to likely have these three distinct tax buckets that you've been able to fill up. Where when that really matters is when you go to begin distributing and pulling your assets out. So I don't think you should waste a lot of mental calories in the front end thinking about the differences. Because where it really manifests in value is in the back end when you start to pull those assets out.

• 22:49Brian Preston?

  Well, look, I'm going to make you feel much better about this oven and the fact that. When you're younger, realize we've also built in the grace of that you get to count your employer match when your income's under a hundred thousand for a single individual, two hundred thousand for a married couple. That's going to, because most people who are in a lower tax situation, who are counting their employer match, you're going to do the Roth contribution. It's the most tax favored, it's the better one. It's only the people who are in super high income situations, probably making over two hundred thousand dollars for a married couple, that they're going to choose because they're going to be in the greater than thirty plus percent marginal tax rate, that are going to choose the pre-tax. And you're spot on.

• 23:29Brian Preston?

  The Roth is so much more valuable, but that's also the pressure that that pre-tax contributor's going to have to put more in because they don't even get to count the employer match anymore. So you see how this works out in the wash? That's why we can tell you, focus on the behaviors you can control. We've already created the system that takes all of this into account. You'll be like, holy cow, this kind of, it's amazing. It's like a jigsaw puzzle. You start putting it together and you're like, oh, that's where those three pieces go. And it's like, because the system was designed to be very tax favored, but also to bring in the behaviors, we've already built this in. That's why when people write and say, why do y'all even have that hundred, two hundred thousand dollar rule? We understand how the social safety net, we understand how tax policies, we've tried

• 24:14Brian Preston?

  to build the better mousetrap and take advantage of it.

• 24:17Speaker 02

  Love that.

• 24:18Speaker 03

  Love it. Evan, thank you for the question. Do you feel better now that you're back to being hombolo?

• 24:24Speaker 02

  Honestly, I feel like the temperature dropped by at least twenty degrees over here.

• 24:29Brian Preston?

  I gotta practice.

• 24:31Speaker 03

  Oh.

• 24:33Brian Preston?

  What do you think? Pretty good?

• 24:36Speaker 03

  Merry Christmas to me. That was amazing.

• 24:41Speaker 02

  That was for you guys. That was for you guys.

• 24:47Brian Preston?

  Not known for a Chewbacca, but I was like, you know,

• 24:49Speaker 02

  You are now.

• 24:50Brian Preston?

  You are now.

• 24:52Speaker 03

  All right, to Brian.

• 24:54Brian Preston?

  That outfit is so good, Bo. It really is. It makes me want to put a Chewbacca head on.

• 24:58Speaker 03

  Clearly, it does.

• 25:02Speaker 02

  Don't say that too loud. Literally, our production team will go out and get a Chewbacca head.

• 25:06Speaker 03

  Anyway, all right.

• 25:09Speaker 03

  Let's go on to the next question now. Tony G. He says, can it make sense to put a car sinking fund into mutual funds instead of a high-yield savings account or money market account if you own your cars for seven plus years?

• 25:27Speaker 02

  Yes, and here's why. My opinion, for sinking funds on shorter-term purchases, like what I'm going to call an automobile, I don't think a sinking fund should likely extend much past five years. We always say that if you're going to need some capital, need money inside of 60 months, you want that to stay in cash, and that's generally where a sinking fund would come. If you have an expenditure that's going to happen nearly a decade out in the future, I don't really think that you would consider that part of a sinking fund. I think you would consider that just part of your total investment portfolio that you're building inside of that after-tax account. So I do think it'd be okay for that money to go into low-cost index funds, part of your portfolio, because I don't think that

• 26:11Speaker 02

  a goal seven years out, absent it being like a home or a big renovation or something like that, would fall into sinking fund category.

• 26:18Brian Preston?

  You were spot on, but I want to tell you where the danger zone is, so you can avoid it, is if you're driving a car for beyond seven years, you know when you start getting nervous, like, oh, boy.

• 26:31Speaker 02

  Hope it cranks up, it cranks up, it cranks.

• 26:33Brian Preston?

  I hope Betsy cranks up this morning. It's cold outside. And then you start, and look, if you've got kids, and you've got a spouse, and you know, you're like, oh, gosh, I hope she's not calling because they broke down, and Betsy, because Betsy didn't, wasn't reliable anymore. When you're getting within a year, two years, don't get cute with keeping your stuff. Cause what you don't want to have, when it rains, it pours, meaning that bad news comes in in multitude. I don't want you to get in a situation where the stock market's getting its teeth kicked in. You lose your job and the car breaks down and you, you sound like a country song at that point. Because you, you got really cute trying to, to get as much gain as possible.

• 27:16Brian Preston?

  I want you to kind of understand and be honest with yourself is if you're getting into that halo period of a year, two years, even up to three years, you know, like, hey, there's a chance the market's in a great place right now. Probably got to replace this car in the next two years. I probably ought to come up with a strategy to start turning some of these investments into cash. Because I don't want to run this thing where literally one day wakes up and it doesn't crank anymore. I love that.

• 27:40Speaker 03

  Yeah. Well, Tony G, really good question. Thanks for asking it and I hope that helps.

• 27:46Speaker 03

  Next question is from Bags. It says, I am 39, have been steadily saving for many years. I have amassed 740K.

• 27:56Brian Preston?

  Let's go.

• 27:57Speaker 03

  Really great. However, only 150K of that is invested. The rest.

• 28:04Brian Preston?

  Unlets go.

• 28:05Speaker 03

  The rest is in a high yield savings account and money market account. How should I invest at this point? Okay. So he's asking the right questions now, but talk about, talk about where he's at and what he should be doing next.

• 28:18Brian Preston?

  I mean, we, we got, look, we, Bags, we got you hooked up. We're even going to show you a resource here in a minute that's going to help you out. But I need to know more context here is I'd love to know where did the money come from? Is this one of those things where like he has an employer plan? That's where the 150,000 invested is because that was forced upon him to save and invest. And then the 740, there's two things that could have happened. Either this person didn't feel comfortable saving and investing. So they just kind of in a miserly way, just built up a bunch of cash in the background. Or they've come into a windfall. I just, I don't know how we ended up here Bags. But either way, there's, you've, we've got to address that part. How did we get here? And then.

• 28:58Speaker 03

  Did say he's been steadily saving for many years. So I think that's at least a little bit of a cue.

• 29:04Brian Preston?

  So, but I think that's probably with 150 is like an employer of a forced employer.

• 29:08Speaker 03

  Okay, so you're saying that could have been fair enough. Yeah.

• 29:10Brian Preston?

  You know, so it's like, because those things typically make you get invested.

• 29:13Speaker 03

  Right.

• 29:13Brian Preston?

  Because you know, because they have a fiduciary on them. They have a, you know, employee education meetings. So you know, but that pushed his hand. But then, you know, the taxable account over here that's just got a bunch of cash in it. It sounds like that just built up over time.

• 29:28Speaker 02

  Yeah. And so I think what you have to do is you have to, the first question I would ask you, Bags, is why? Why do you have this much in cash? Absent an answer like this, oh, I'm saving up for a house or I have, I'm buying in.

• 29:41Brian Preston?

  Starting a new business.

• 29:42Speaker 02

  I'm starting a bit, whatever. If that money is not accounted for, for a short-term goal, but rather this is part of your long-term financial independence building. I would argue you probably have a little bit of a problem because I want you to go to moneyguy.com/resources and check out our wealth multiplier. Because the wealth multiplier for a 39-year-old is going to be a little over seven times. Meaning every dollar that you save at 39 can turn over more than seven times by the time that you get to age 65. So that money.

• 30:11Brian Preston?

  8.16.

• 30:13Speaker 02

  8.16. So that money, just sitting in a high-yield savings account on the money market is not working as hard for you as it could be. We want that money to be working effectively and efficiently towards your financial independence. So I think there's a really good chance that a big chunk of that $600,000 you have in cash ought to be invested. So then the question becomes, well, how do I do it? Now, maybe you've been waiting for a downturn and maybe you've been scared of the market. Maybe you thought there was political or economic or global unrest and that had some sort of apprehension inside of you that made you not invest that. What I would say is let's remove the emotion from this. And if I know that I have $600,000 of excess, or let's just say 500,000, because maybe you need to have 100,000 in cash for some reason.

• 30:57Speaker 02

  How can I systematically work this into the market over some period of time? Maybe it's $50,000 over 10 months. Maybe it's $25,000 over 20 months. I'm making up numbers here.

• 31:09Brian Preston?

  You mean monthly, those are sums of money.

• 31:11Speaker 02

  Yeah, you would invest that much every month so that that way, if the market does go down from this point, that's great. You're buying in at lower and lower and lower, lower levels. But if the market goes up, that's also great because last month's contribution is making money and the month before and the month before. It's literally a win-win situation that allows you to get your money invested and get your money to start working. Cause right now you have a lot of wealth sitting on the sidelines that could be doing a lot of very heavy lifting for you.

• 31:40Brian Preston?

  So can the content team pull up the Goldilocks rule on dollar cost averaging?

• 31:47Speaker 02

  I bet they can because our content team is second to none. But here's what I'm going to tell you, Brian, this one.

• 31:53Brian Preston?

  There it is.

• 31:53Speaker 03

  There it is. I was going to say, we just pulled it up recently.

• 31:55Brian Preston?

  So here's, here's the, the Cliff Notes of understanding this, Bags, is that you're, obviously your amount unvested, now figure out how much you need in cash reserves. We want to cord that off and we want to protect it. But after you figure out what the, the difference is between what's emergency reserves and what needs to be considered invested, you could say, wow, that's going to be, that's substantially bigger than what my total invested assets currently are. So then you can take into account, okay, based upon the Goldilocks rule, is this going to be a four-month corrective measure? Or is this going to be a 10-month or 12-month? We're going to hook you up. So go download this, moneyguy.com/resources.

• 32:34Speaker 03

  That's great. Moneyguy.com/resources, Bags, thank you for your question.

• 32:40Speaker 03

  Next up, we have Dan, you thinking about something?

• 32:43Speaker 02

  I was.

• 32:44Brian Preston?

  What?

• 32:45Speaker 03

  He looked deep in thought.

• 32:47Speaker 02

  Is our Goldilocks rule a resource?

• 32:48Speaker 03

  Oh, it's not a resource.

• 32:49Speaker 02

  It's not a resource. I just don't, Bags, I don't want to send you into wild goose chase.

• 32:53Speaker 03

  No, you're so right. I just, I was looking for the next question and just went with what Brian said.

• 32:57Speaker 02

  It's one of our Money Guy rules, but it's not actually a resource.

• 33:00Speaker 03

  You can't go download it.

• 33:00Speaker 02

  So there's nothing to go down. However, there is a show that we recently did that walked through all of them.

• 33:05Brian Preston?

  We don't have that out there?

• 33:06Speaker 02

  It's not a resource, it's a rule.

• 33:08Speaker 03

  Not yet.

• 33:09Brian Preston?

  Well, you know, add this to the Bo Hanson Library Wing, the Money Guy Show, that whole diagram that we were coming up with, decision matrix.

• 33:19Speaker 02

  Uh huh, uh huh.

• 33:20Brian Preston?

  We also need to add the Goldilocks rule. We're building this library one brick at a time at this point.

• 33:25Speaker 02

  I'm not so sure.

• 33:26Speaker 03

  I do think some more things are coming for 2026.

• 33:28Speaker 02

  I'm not so sure that what the resource should be is the Money Guy Rulebook. And what it is, it's a compilation of all of ours. We actually just did a great show. I can't remember the name of the show, but it just came out.

• 33:39Speaker 03

  11 Money Rules, something like that. It's 11 rules.

• 33:42Speaker 02

  11 Money Rules That You Should Know To Change Your Financial Life, just came out. And it kind of walked through, one of which was the Goldilocks rule. We should make a deliverable, the Money Guy Rulebook, and we should have that out there. Bags, thank you for the recommendation.

• 33:54Brian Preston?

  Well, I'm glad, well, look, I'm glad you corrected it. I would have felt horrible if they went out there, the Money Guy Call Slash Resources, and where's Goldilocks? Because all you gotta do, I would go, if I was doing this, I'd go do on the search bar, type in Goldilocks, and be like, these son of a guns, what's he talking about? And now, maybe if you wrote Goldilocks, our search parameters might be so good that it shows up that 11 Rules show. I wonder if it will.

• 34:16Speaker 03

  It's possible. I'm gonna go test it. We've actually been working on improving that. It's not, I want to know. All right. Well, I'm glad you caught that. I'm glad you caught that, Bo. But I was looking at the questions.

• 34:25Speaker 02

  There's another show, Bags, that you could go check out, too, that would help. And I think the name of that show was The Truth About Dollar Cost Averaging That Most Investors Miss. It's another great one. If you're thinking about how to get this money to work, how to get it working for you, that'd be another great episode to go check out. He just noticed it.

• 34:45Speaker 03

  He just noticed all the Christmas decorations.

• 34:47Brian Preston?

  The logo's different. Holy cow.

• 34:50Speaker 02

  Did you notice we have a wreath?

• 34:51Speaker 03

  Oh, that was delightful.

• 34:53Brian Preston?

  Here's actually what happened. On the right side over here, I see our YouTube button, and I'm like, why didn't we get rid of the YouTube button? And I was like, where was that thing? And the thing is, I'm so bad on where Waldo is, is I couldn't remember where it was on the set, so I started looking around. And I was like, oh, my gosh, they customize. I knew the trees. I knew the trees were here. I saw the trees.

• 35:17Speaker 03

  Christmas trees, yeah.

• 35:18Brian Preston?

  Well done, well done. But that I had not seen.

• 35:22Speaker 03

  Christmas money guy.

• 35:24Speaker 02

  It was.

• 35:24Brian Preston?

  It's been there. I guess the Santa Claus.

• 35:26Speaker 02

  Been there the whole time.

• 35:27Brian Preston?

  The Santa Claus face and hat got me so distracted.

• 35:31Speaker 03

  He was distracted by the beard and the hat, yeah.

• 35:33Brian Preston?

  Also didn't notice, you know, they had put stuff in the lobby, some Christmas stuff in the lobby and some other specialized stuff this morning. And they're like, hey, what do you think? And I had to go do a double take. So I just don't think I'm that observant.

• 35:45Speaker 02

  It's so funny. He says that, that he's not that observant, but I happen to know this to be true because he has a skill set that I have. If he walks into his house, and this is true, and he sees something out of place that's not where it's supposed to be, like, oh, hey, there's my keys or my spouse's keys. He just archives away. That thing is out of place. I'm gonna remember that later. So that later, if someone comes and asks, say, hey, have you sweetheart, have you seen my keys? You know where it's at. You notice that kind of stuff all the time.

• 36:10Brian Preston?

  But that's a different use of the brain. I can be, I can be unobservant of everything, but if I know there's something that is valuable that my wife is going to need, I will take a mental note when I see important things.

• 36:24Speaker 03

  I'm the same way. No, I get it. I'm blind to things I don't actually have a use for today.

• 36:30Brian Preston?

  I've learned that there's a value to paying attention to valuable things that are out of place. Um, because it is many times, because in the house, I am known as the finder. And I'm not really a finder. If you know me, I'm disorganized. But, um, but what I am is I am, I have learned if I see something out of place, take a mental note and then file it away. And then when they say, hey, I can't find this, I'll be like, here you go. I know where it is.

• 36:56Speaker 03

  That's pretty good.

• 36:57Speaker 02

  We are very, I literally notice when my stapler's been moved. I can.

• 37:00Brian Preston?

  You've got some, you've got some.

• 37:02Speaker 03

  You're a different, you're a different one.

• 37:04Brian Preston?

  This is why we're a good team.

• 37:05Speaker 03

  Yeah.

• 37:05Brian Preston?

  You're a little more wound, a little tighter on some of that stuff than I am. There's a reason why when you look at my phone and you see how many unanswered emails.

• 37:14Speaker 03

  I don't like that one, yeah.

• 37:15Brian Preston?

  I lose no sleep over that. I know you learn, you lose.

• 37:18Speaker 02

  Honestly, I lose sleep over yours. I lose sleep thinking about your phone.

• 37:21Brian Preston?

  It's okay. If it was really important, they'd reach back out.

• 37:25Speaker 03

  Yeah, that, that stresses me out. Even though I am a little more disorganized than Bo, that one, mm mm. I don't go that far.

• 37:32Brian Preston?

  Should've said that part out loud.

• 37:35Speaker 03

  That's why they can reach out to other people here. It's all good. Okay, uh, next question. Are you ready for it?

• 37:43Brian Preston?

  Mm-hmm.

• 37:43Speaker 03

  It's from Dan 4244. It says, "I'm saving a lot each month into a high-yield savings account for a down payment on a house."

• 37:51Brian Preston?

  Nice.

• 37:52Speaker 03

  Which is great. "Do I get to count this money towards the 25% savings goal since it will go to an appreciating asset?"

• 38:02Speaker 02

  Nope.

• 38:02Speaker 03

  Next question.

• 38:03Speaker 02

  Uh, here's what-

• 38:05Speaker 03

  That was a good one. I loved it.

• 38:06Brian Preston?

  I didn't plan for us to synchronize that, but it's true.

• 38:09Speaker 03

  He was trying really hard because he was like, "This is gonna go to an appreciating asset," and I get it. I get it.

• 38:13Speaker 02

  Does this-

• 38:14Speaker 03

  Tell them why.

• 38:14Speaker 02

  Does this count as discipline? Yes. Does this count as deferred gratification? Yes. Does this count on living on less than you make? Yes. Is this a wonderful thing to do if homeownership is a goal of yours? Yes. What is the 25% for? 25% is saving for your future financial independence. Saving for a down payment on a home is saving for a current year, current time use asset. Those are two different goals. So, saving for the down payment for the home, while it may eat up some of what you would've had going to 25%, it does not count towards that. What actually happens is, you have 10% going to this goal, and if you had to decrease your savings rate, you only have 15% going

• 38:56Speaker 02

  towards that future financial independence. This is the number, that 15% is what you need to get back up to 25. We do that on purpose because we want you to attack short-term, intermediate-term goals ferociously so that you can get to them, solve them, and then get back to the long-term goal, not rest assured, "Okay, I'm doing the 25, I'm doing the 25," because that 25% is not actively going towards your future financial independence self.

• 39:21Brian Preston?

  Yeah, I see this as, um, as somebody like Dan, when he's trying to come up with a house down payment, it's not part of the emergency reserves, but it's, it's like a ta- it's like a bolt-on strategy to your emergency reserves, because what will happen is you'll have your three to six months, but then you might have this, this sinking fund for a down payment. But it is, and I'm glad you said it the way you did, is that you should be troubled that every month that you're saving, it's a very noble cause to do the down payment, but it is keeping you from hitting 25%, and that timer should be ticking in the background because you've gone to the wealth multiplier. You know what compounding interest can do for you. So that way, you feel the pressure to get back on track as fast as possible.

• 40:04Speaker 02

  Love that.

• 40:06Speaker 00

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• 40:36Speaker 05

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• 41:06Speaker 03

  Great stuff.

• 41:08Speaker 02

  Do we answer all that?

• 41:09Speaker 03

  I loved your, I think you did.

• 41:11Speaker 02

  Okay, yeah.

• 41:11Speaker 03

  And I mean, the main point was, no.

• 41:15Speaker 02

  And, and look.

• 41:17Speaker 03

  You explained why very well.

• 41:18Speaker 02

  You mentioned this, and I want to, this is just a brief aside. You said, well, hey, does it count as this? Because it's going towards an appreciating asset. And while it is true that your house can appreciate, and while it is true that your house can add to your long-term wealth, we would encourage you not to think about it that way. We want you to think about your primary residence as a used asset, as a thing that I am using and consuming today to put a roof over my head, to shelter me. I don't want you to think about, oh, this is how I'm building wealth. Because I have some good, some like very good buddies, like, oh dude, I'm just, oh, the way I'm building wealth is just my house. I buy a house, it goes up in value, I roll it all into the next one, I buy another one, I roll it into the next one. And while that can work, I don't know that's the most efficient way to build towards financial

• 42:03Speaker 02

  independence, and I would not bank my financial independence on that. Whether the house goes up or down, it provides shelter, and that's what matters for you? If it just happens to go up and happens to help you build wealth, I would consider that a cherry on top.

• 42:17Brian Preston?

  I had a conversation, it was kind of an odd conversation, because somebody I know who lives in a nice house already, and was there like, Brian, I've been thinking about selling and moving because I just think... This price point is probably capped out.

• 42:32Speaker 02

  Man, I can't go any higher.

• 42:34Brian Preston?

  People, well, we live in a neighborhood with a certain size lot. People aren't just aren't going to pay too much more. Whereas I was told by somebody in real estate that I could go buy this plot of land. I could put a really big house on it and it's so inefficiently priced. This could be worth three million, four million, five. And, and I had to remind them that no matter how much it goes up to, it's a use asset. Yes, it's, it's something you could sell, but I, I'm surprised. And we live in a very high cost of living part of America. And as I see it all over social media where people will show a new house going in Brentwood or Northern Franklin and these, these castle looking houses. And it is amazing to me that people are buying homes that essentially is a full retirement

• 43:19Brian Preston?

  for most people. You're spending more than $3 million on a house. That is most people in America's full retirement. Meaning if you had that money working for you, it can provide a very nice living perpetually. Versus if you just have it in the house, it's just there. Now it's, uh, you know, so just be careful how you look at the house. I mean, there's nothing wrong if you're at the level of success is this is your step eight and, and abundance goals that you say, you know, this is we entertain, we raise money for charities, we want to host things, we want to do things. So I'm going to have a $5 million home or six million, because we have clients that are like that. And I think it's all, but, but it's secondary to having.

• 43:57Speaker 02

  It's after you've built the wall.

• 43:58Brian Preston?

  Financial foundation and their financial assets outside, investable assets have to be built up. You don't want to have a balance sheet that is house rich, life poor and retirement asset poor. You just, just be careful of that because there's some weird mentality because of how much real estate ran up during the pandemic and a little bit after the pandemic with all the inflation, that there's some recency bias that I think people haven't really understood how these are distortions, that it might not, just what happened a few years ago might not be the thing that is the way you go build your wealth going forward.

• 44:33Speaker 02

  That's right.

• 44:34Speaker 03

  Yeah, no, that's good stuff. Dan 4244, thank you for the question. Uh, we get where you're coming from and we hope that helps you think about this house decision and your savings rate moving forward. Um, I'm really happy to report if you go on moneyguy.com and search Goldilocks Rule, all those shows pop up. I just needed to say, I'm like, I'm, you know, part of working on all that. So I'm like very proud.

• 44:56Speaker 02

  I was about to say, it's because you have been working so hard on getting our website.

• 45:00Speaker 03

  So, and more to come. But yeah, if you go to moneyguy.com and search what you're looking for, it is getting better and better and better. It's all about trying to make it super findable. Like all of the episodes, all the resources we've done. So just in case anybody did want, it's not, it's not an official resource, but you can go search it on moneyguy.com. They could find it.

• 45:19Brian Preston?

  They could find it. Oh, that goofy Brian. He just doesn't remember what's a resource and what's in that episode.

• 45:27Speaker 03

  All right. Um, next question is from Jared N. It says, my emergency fund is running low and I have been having trouble refilling that bucket. Should I cash out after tax assets? I could likely do so at 0%. I am the sole earner and we have three young children. There's a lot there. What do you think about this?

• 45:48Brian Preston?

  He's talking about taking, so their income is low enough that they can do with capital gains at 0%?

• 45:53Speaker 02

  Or maybe they have loss positions or something like that. Now, here's what I, here's what I would really want to know, Jared. It sounds like things are pretty tight. Uh, things, the reason I say that is you said it's been really hard to rebuild up the emergency fund. What I want to know is how lean is your emergency fund? Cause if you're a single income, single income household and you have three young children, I'm going to bet that the need for an emergency fund for you is probably going to be six months of living expenses. Well, if things are already pretty tight month to month, and when you need six months, say you only have like two months, three months, if something bad were to happen, job loss, sickness, you know, car goes out, whatever those things are, it could put you in a very

• 46:35Speaker 02

  bad spot very, very quickly. And you have a lot of people sounding like sole earner, meaning you have a spouse, three young children, meaning you have some dependents. There's a lot depending on you. I do think this is one of those unique circumstances where you have to triage and say, okay, if the you know what hit the fan. How quickly would things get bad? If your emergency fund should be six months, but you've got four and a half, maybe not that dire. If it should be six months, you've only got one month, then yeah, maybe you should take advantage of those 0% capital gains rates, potentially sell some of those taxable assets right now. The market's in a good spot and get that emergency fund beefed up and bolstered up. Agree, disagree, want to fight?

• 47:14Brian Preston?

  No, I agree. I mean, I would definitely, especially if you have after-tax assets, I would, I would, because you've got to have emergency reserves. But then here's phase two of this triage moment in time for you and your family. You need to ask yourself, is this a season or is this just the way things are? Because if it's a season, I'm going to give you grace on the fact that, because if you're going to sell assets that were, you know, invested for the long term and you're having to go backwards in the financial order of operations to boost up the cash reserves, I'm okay in a season for you to kind of do that to build the bridge so you can make sure you're okay, especially when markets are at really good places financially. Go get that money and boost up the cash reserves.

• 47:57Brian Preston?

  But if this is just the way it is, it's not a season, there's a bigger problem lurking under the surface here is that y'all are spending everything that's coming in and you've got to figure out, how do we fix that? Because that's a, that's a bigger, long-term problem. Because right now, if you're spending every dollar that comes in, every dollar, you know, you make money, it goes right out the door. None of it lands on the net worth statement. None of it's going for long-term savings. None of it's going to the cash reserves.

• 48:26Speaker 02

  That's a problem.

• 48:26Brian Preston?

  How do you, I mean, you're just going to keep bleeding out all your assets until before long, you're just, you can't catch back up. So that's why you have to be honest with yourself. Is this a season or is this just the way it is? If it's just the way it is, you've got a bigger problem. And that's when you have to start making big decisions like looking at your job. You have to look at the cars you drive, look at the house you live, look at where you live and figure out, make, you know, activities, schools, all the things just to make sure that your lifestyle reflects where you really are in the, in your financial world.

• 49:00Speaker 02

  Yep.

• 49:01Speaker 03

  That's great. Thank you for the question, Jarrett.

• 49:06Speaker 02

  Rebi, since it is, since it is, you know, Christmas season, we're here at the end of the year. Any big Christmas wants in the, in the Rebi household? Anything big that people, like either your kids, or you, or John, like what, anything like, man, this is a big, it's a big ask this year. Honestly, no. My kids are too little for it. Ah. So, talk to me in a few years. How about you? There's really not. Like, we're just kinda excited about the Christmas spirit. Oh, yeah. We're in that nice, uh, pure of heart phase, yeah. Sweet spot. Uh, no, my 10-year-old is asking for a cellphone, which we will not get. We are not doing, and that's not happening, at least until she's 16.

• 49:49Speaker 02

  You can mark that down, cuz I am very much against that for my 10-year-old. And I don't know why. Why, I don't know why. I think just cuz she heard that other kids older than her are starting to get that. Yeah, she's just seeing other kids having it, yeah. Absolutely not. 100% hard pass on that. And my 8-year-old wants a hoverboard. I didn't even know they made those. That sounds cool. Is that a thing? I mean, is that just one of those ones with the single wheel? No.

• 50:12Brian Preston?

  Like, half the videos are people falling off.

• 50:14Speaker 02

  Yeah. Well, I think, I think she's confused. Is a hoverboard and a Segway, those are different things, right?

• 50:18Brian Preston?

  It's, it's the two wheels that you kind of ride in.

• 50:20Speaker 02

  And so, there's no handle on it, though. It's a Segway, right?

• 50:23Brian Preston?

  No, it's not.

• 50:24Speaker 02

  No, it's different.

• 50:25Brian Preston?

  I mean, I'm sure Segway makes like a fancy one.

• 50:26Speaker 02

  Oh, you're talking about the one that looks like a skateboard with two wheels on the end? That's what she's talking about? I think so. No, I'm about to Google it. Is that what she said? It looks like a little skateboard, but it's got things in it?

• 50:35Brian Preston?

  It's, it's something that you should just stay, if you're over the age of 30, do not get on this.

• 50:40Speaker 02

  There are the things with the two wheels on the side, no handles, you just stand on it.

• 50:44Brian Preston?

  So, but, don't get on it.

• 50:45Speaker 02

  And yeah, there's lots of wipeout videos. I won't get on a skateboard, bro, are you kidding me?

• 50:48Brian Preston?

  If you do, film it. Cuz I think they've gone beyond $10,000, based upon the last episode.

• 50:54Speaker 02

  He has no faith in you. But I don't think we're gonna get that either.

• 50:57Brian Preston?

  Yeah.

• 50:58Speaker 02

  Oh, wow. Yeah, there it is. Thank you. That looks, no way. My kid's eight. Is that, is that, what, what's the age? I wish you probably could do it. What's the age, uh, what's the age range for that? When are you supposed to get one of those? I'm not doing it for an 8-year-old. What about you? Anything in the Preston household?

• 51:13Brian Preston?

  I don't, I, I, I told, you know, cause Thanksgiving, I had a lot of family down to the Preston South location. And I, and I, I loved it. I loved that I got to cook a lot of breakfasts and I got to, you know, entertain people, make coffees. And so I want time more than I want stuff.

• 51:32Speaker 02

  Look at that.

• 51:32Brian Preston?

  So I like, um, I like memories and we're, we're doing that for Christmas. I, in fact, I even showed you some text messages, um, you know, from when families coming in town and it's gonna be really great.

• 51:43Speaker 02

  If, uh, if we were going to dine in the Preston household and the money guy himself were making breakfast for us, what's he making?

• 51:52Brian Preston?

  No, we do breakfast casseroles.

• 51:53Speaker 02

  Okay.

• 51:54Brian Preston?

  Um, and then we do some type of-

• 51:55Speaker 02

  Like eggs and sausage and that kind of stuff?

• 51:58Brian Preston?

  Yeah, you put a lower layer of bread on the, the bottom of the casserole dish. You mix up the eggs with-

• 52:02Speaker 03

  And you're making all this?

• 52:03Brian Preston?

  Spicy sausage.

• 52:04Speaker 03

  You're cooking it up?

• 52:05Brian Preston?

  I mean, we do it as a family, cause you do this part of it the night before.

• 52:08Speaker 03

  Okay.

• 52:08Brian Preston?

  That part's the day before. The day of is when you're just coordinating the logistics. Primarily you're hanging out, you're making coffee for everybody and then you gotta preheat the ovens, get the, you know, get the sweet rolls kind of rolled out and made, you know, and then, and then you put the casseroles in and you're kind of more of a logistics partner than you are a chef, cause you're just making sure everything comes out of the oven at the same time.

• 52:32Speaker 02

  You heard it first here. Money Guy Cookbook coming out in 2020.

• 52:35Brian Preston?

  That's, we'll leave that for Caleb.

• 52:36Speaker 03

  All breakfast casseroles.

• 52:38Brian Preston?

  Does Caleb have a cookbook? Caleb Hammer has a cookbook?

• 52:40Speaker 02

  Does he have a cookbook?

• 52:41Speaker 03

  Oh, I think he does, actually.

• 52:42Brian Preston?

  We're not doing cookbooks. We'll leave that for him.

• 52:44Speaker 02

  That's awesome.

• 52:45Speaker 03

  That's really funny.

• 52:46Speaker 02

  Super funny.

• 52:47Speaker 03

  Wanna do another question?

• 52:49Speaker 02

  Sure.

• 52:49Speaker 03

  All right. We've got one from Brad B. 1791 and it says, "Do you have any tips or recommendations on how to rebalance your asset allocation across multiple accounts, 401K, traditional, and Roth IRA for my spouse and I? For context, we're at 325K investable assets."

• 53:09Speaker 02

  So here's what makes, for most accumulators, here's what makes rebalancing a little bit difficult. A lot of the accounts that you house, like a 401K, or 403B, or 457, you don't have unrestricted investment assets, access. Rather, you have to love the one you're with. You have a stable of investment options available to you that you have to choose from. And sometimes, plans are really robust and really good and have a lot of diverse options. And sometimes, they don't. And they're not great, and they do make it difficult. And so, I don't know a ton about your unique and individual circumstance, Brad, but I imagine that's where some of the angst aligns. Man, okay, I've got this 401K, I've got these accounts that I have limited options, but then I have this traditional in Roth where I have more

• 53:53Speaker 02

  options. How should I think about this? And there are ways to do that, and different types of assets are taxed in different types of ways. But what I'm sort of caught by Brian here is not knowing Brad's specifics, just knowing that he has about 325,000. I would even wonder, is he at the point, in your opinion, that it makes sense to go from like a generic, generalized asset allocation to a more specific allocation? Meaning, I don't think it's crazy for Brad to think about a solution like a target retirement index fund, or something along those lines.

• 54:26Brian Preston?

  Yeah, even if it was like a three or four fund strategy, I wouldn't do things. At that level, I wouldn't do anything too fancy. Don't do what you think rich people do. You know, dance with the one that brought you there, and that's where index funds and that. I was, I do think there's some value, though, to what, when you look at different assets, or different investments in each of your different pots, you kind of hit on something. Like, you look at your 401K, you might have a bunch of high-cost mutual funds in there, and then you have one, kind of like an index fund. It's, they labeled it something different, but it's, you know, all the other funds are like 1% or higher internal expenses. And then

• 55:08Brian Preston?

  you got this one that's like 0.4%. Now, you know that index funds are basically free at 0.01, 0.02, but somehow in your 401K, the cheapest one is 0.4%, 0.4%.

• 55:22Brian Preston?

  Then you're probably going to want to go, you know, make the most of what is the best investment in that fund. And then the, if you're peeling, going out to the outer layers, what's the best location? You know, because different asset classes do better in taxable accounts versus tax deferred versus tax free and Roth. I would kind of look at those things if I was getting into it, but I think that that's, those are all complexities that you might not have to get into unless you really feel like, you know, this is a skill set that you want to kind of invest in. I would rather you focus on the savings rate is so much more valuable and a three to four fund strategy can work while you focus on getting

• 56:07Brian Preston?

  more money into those accounts that much faster.

• 56:10Speaker 02

  Agreed.

• 56:12Speaker 03

  Brad B. 1791, thank you so much for the question. All right. Let's do one more from Cato. It says, if there, is there ever a bad time to buy index funds? PE ratios are all time highs and basic business fundamentals aren't being followed by many firms, while a few firms make up a huge percentage of the S and P.

• 56:37Speaker 02

  I'm going to steal a quote from Nick Murray, Cato, and this is what Nick Murray said. He says, Cato, if you think the market's overvalued right now, if you think the market's high right now, wait till you see it in a decade. And the idea is that if you are an index fund investor, even if you invested the world's worst time, I'd invest at the top of 2007, or I invest right before COVID, or I invest right before the dot com bubble burst, or right at the end of 2021, whatever that is, if you give yourself a long enough time horizon and you allow the money to work and you're consistently saving and investing. I don't think you have to worry about what is the price today, what's my entry point today,

• 57:19Speaker 02

  but rather, am I saving in the correct way moving into the future? Because even if I'm overpaying now, and even if PE is high now, and even if S and P is highly concentrated now, odds are, traditionally historical, the way the markets work, that five years from now, seven, eight, 10 years from now, it's likely going to be higher because it is an ever-expanding pizza pie, where innovation is continuing to happen, business and enterprise are continuing to take place, that likely, even if you're entering into it now, you're still going to be rewarded as a long-term investor. So in my opinion, I don't think there is a bad time to buy index funds because that's why we always say, always be buying.

• 58:03Brian Preston?

  Hey, look, we have a new show coming out. I don't know, I don't have the editorial calendar in front of me, so I don't know the release schedule. But it's financial rules that should be broken. And this ties into buy low, sell high. And we answered that, when should you break this rule? We say always is because, I want to play this a different way, Kato. What if you're right? What if we're at bad PE ratios? What if, you know, yes, a lot of the money on the index funds is layered market cap wise towards a lot of the AI companies? What if you're right in the fact that that is the way things are right now? What are you going to do? Are you just going to start stacking cash in the background?

• 58:47Brian Preston?

  Are you going to go to a real estate, which is very non-passive? It's very active management. You know, and it's going to require leverage too. So what's the alternative? That's what I always ask people when they give me doomsday or they tell me why things are so bad. I'm always like, well, give me the counter. Tell, let's, let's, let's work this out from the reverse engineered way. And usually you come to the point of, and it gets back to the same branch of the tree of where Bo was, is that In the long term, especially with an always be buying strategy, if you're buying in every month, this is all noise. And that's why when you heard Uncle Warren Buffett when his Berkshire Hathaway, he's used so many different examples. He's talked about farms. He's talked about, he's

• 59:31Brian Preston?

  basically talking about inefficiency and prices, pricing, and why you have to just not let that noise throw you off with the, with the purpose of what you're doing is. And for most people, especially with an index fund with, you're not trying to beat the market, you're trying to be the market, because that's actually where the success is, is where we're going and the innovation and all the other things that Bo just said. I wouldn't get caught up in that. When people come to me with all this overvaluation and other things, I'm like, what are you doing? Every year's going to have a 14% entry year, you know, switch. But even with that knowledge, I don't try to time it and catch it. I just ride the wave of always be buying. This is why I went from investing

• 1:00:15Brian Preston?

  monthly to now investing weekly is because I'm like, well, heck, if I'm going to at least catch the wave every week. Yeah. So that's how I've countered this because I really have taken always be buying to the nth degree and it's served me very well. And then, you know, I just saw a report and I don't know anything, just like, you know, it's what be careful who you get in your head, because when it comes to investing, there's a lot of people who act very confident, but they don't know anything either. But I saw somebody saying that did publish a whole key report that markets not overvalued in the, all these AI stocks is because if you keep seeing the earnings from Nvidia and some of these others, you're like, holy cow, these guys keep making,

• 1:00:56Brian Preston?

  I mean, is it overvalued when they keep expanding and making more money? And this is where the world seems to keep pushing? We don't know. And that's why I like index funds is because we don't have to know. That's right. We just control what we control, which is our behavior. And yes, be aware, be worldly, be mindful of what's coming, but also know what you can control. And behaviorally, this is something that I think that you're going to be better served by just being consistent than trying to be perfect in your timing.

• 1:01:28Speaker 03

  That's great. Thank you so much for asking these questions. Every Tuesday here on the Money Guy Show at 10 a.m. Central, we will be here to talk personal finance. And in the meantime, be sure to check out moneyguy.com and moneyguy.com/resources in particular has tons of great calculators and downloads to help you continue the conversation. And like Brian pointed out, if there's a topic that you want to know about or an episode you want to look up, go ahead and search for it. And you should be able to find what you're looking for. And we are continuing to just improve that process and hopefully make your financial life just that much easier. So be sure to check out moneyguy.com.

• 1:02:04Brian Preston?

  So you guys, I've tried to figure out how many different ways I can say we are so appreciative for how much you give us. I feel like is agape love, where it's undeserved love of, you know, and I feel like that's our audience. Definitely you load us up with more than we deserve. And we hopefully we try to pay it forward. We really do. I mean, this, this, this show started with a pure heart to be an educator. I mean, I didn't even realize this was a business idea when we originally started doing episodes. I just wanted to be a school teacher and help people. And then we've, this thing has taken on a life of its own. And we don't take any of that for granted. And it just means the world

• 1:02:44Brian Preston?

  to us that the platform keeps growing upon itself. More of you guys keep showing up. And we just, we're along for the ride and we're going to keep sharing our heart, keep sharing our knowledge. So you can understand that there is a better way to do money. And hopefully it's making your life better, making your family's life better. And we're hopeful and, and, and very happy to see 2026 come through the threshold any day now. I mean, we're so close, but thank you. Thank you for all the support. And I'm wishing you and your family a prosperous new year. Money Guy team, out.

• 1:03:20Speaker 02

  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.