Are You Doing Better Than the Average American?

Are you doing better financially than the average American in 2026? We want to find out - and see how Financial Mutants compare. In this episode, we break down median financial asset data by age and share how you can take the Financial Mutant Survey at moneyguy.com/survey to anonymously share where you are on your financial journey. We’ll use the results to explore financial assets by age, savings, investing, retirement progress, net worth benchmarks, and how serious money optimizers stack up against their peers. Whether you feel ahead, behind, or unsure if you’re on track for retirement and financial independence, your experience can help shape future Money Guy episodes. The survey closes September 30, so make your voice count! 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. 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.

• 0:02Speaker 00

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• 1:05Brian Preston?

  Back in the saddle, guys. Are you doing better than the average American?

• 1:10Speaker 03

  Brian, I am so excited about this because we know that our folks, they don't like to compare themselves. They don't want, that's not what we do here, but it is great to just have an idea of where am I? Where are others? How do I stack up? How do I know if I am doing the same types of things that other financial mutants are doing? And today's show is all about figuring out how we are going to discern that.

• 1:37Brian Preston?

  Well, I mean, look, if we want to just have a baseline, what is the median financial assets of the typical American if you exclude home value? Look at this. I mean, this is, this is why if you were using comparison, the typical American is not who you want to compare anything to. So if you're trying to do any type of pace setting whatsoever, just to know if I'm doing the, the minimum, so I know if I'm ahead of the curve, behind the curve, right where I'm supposed to be, there needs to be a better way to know how to do money.

• 2:08Speaker 03

  Now, these, these financial assets, this is like checking, savings, retirement accounts, pension. It does not include vehicles, other types of assets, home equity, collectibles. So if you're just thinking about kind of like your liquid portfolio, you would look at this. And if you're a 35 year old, you say, hey, if I have a more than $37,000 in liquid assets between my retirement accounts and my cash and my checking, I'm probably doing okay. But we know that even as valuable as this data can be as a checkpoint, a lot of you, a lot of the financial mutants out there, you don't want to be the average American. That's not who you compare yourself to. That's not who you want to stack up against.

• 2:48Speaker 03

  So we decided that there's a better way. Rather than seeing how you stack up to the average American, we want to look at how do you stack up to other financial mutants?

• 3:00Brian Preston?

  And with that, we're introducing our annual survey. Look, look, no, no, no. This is, this is the thing. Look, I know I'm a little rusty. I've took two weeks off and I, and I know we're, we're sitting over there. We got, we got Rebi in the wings and she's about to jump in, but this is one of my favorite things. If, if I could give you the vision, you know, of what motivated me when I started this all out is that I had read The Millionaire Next Door and I loved how that book shed light on the fact that millionaires were different than what Robin Leach on Lifestyles of the Rich and Famous was sharing. So imagine my happiness that we have now reached a level of success, that we have enough viewers that we can every year, survey not only our millionaire clients,

• 3:43Brian Preston?

  but survey our audience. So we can create content and make something beautiful. That's what I get excited about because the educator, the heart of the educator that I have really does. And I would beg, I will plead that you guys, I know you've probably done it every other year we've done it. Please do it again because we use this for content.

• 4:03Speaker 03

  Yeah. I think what's so great is a lot of people, we're not, we don't, we're not just looking for, hey, who are the financial mutants out there that are killing it? Who are those people out there that are in step nine and crush? We want to know wherever you are, maybe you just found this and you're 45 years old and this is your very first interaction with the Money Guy Show and you're starting to make good decisions. We want to know about that. Maybe you're someone who's been a father for the decade and you're doing all the things right. We want to understand where you guys are. And the reason we want to do that is so that we can create valuable content that helps all of you live better financial lives. Those of you that are ahead of the curve, those of you that are behind the curve, and those of you that are right on the curve. We use this to figure out how

• 4:43Speaker 03

  we customize, create and curate content for your benefit. It's why we do it. So Rebi, if there are folks out there and they're like, all right, I want to do it. I want to participate. I want to get my data in there so that I can be represented. What do they need to do?

• 4:59Speaker 04

  Step one, just complete the survey. Go to moneyguy.com/survey. It only takes a few minutes to complete.

• 5:06Speaker 03

  What was that website again?

• 5:07Speaker 04

  Moneyguy.com/survey, Bo.

• 5:08Speaker 03

  One more time?

• 5:09Speaker 04

  Moneyguy.com/survey. Goodness, I'm going to say it more times.

• 5:13Speaker 03

  Well, they say whenever you want to learn somebody's name, like you meet someone like, hey, Brian, it's so great to meet you.

• 5:17Brian Preston?

  I feel like we just yelled Candyman in the mirror a few times.

• 5:20Speaker 04

  Moneyguy.com/survey. Go there. Step one, complete the survey. We're going to compile that data later for a cool snapshot for multiple episodes of the show.

• 5:28Brian Preston?

  Or Beetlejuice.

• 5:29Speaker 04

  And so that is step two. That's going to shape the show. We truly have at least two episodes, if not more, in the works. It's going to be based on this data. So we need everyone to show up for it. We have been so excited to see the participation, the engagement over the past couple of years. I love that this is now an annual tradition. So please show up and continue this annual tradition. Continue making it awesome and super valuable. That is what we're going to be doing. We're going to compare mutants to the average American, to maybe our abound clients, and break down more of this data to show you guys where everybody is in the audience and continue to create content off of that. And then lastly, step three, once you fill out the survey, we will notify you

• 6:13Speaker 04

  specifically when those episodes are live. Like, hey, the episode that you helped shape is now live. We will send you an email and let you know that. And don't worry, we're not going to spam you. I just want to throw that out there. We love to connect with you via email because that's where the algorithms don't matter, to be honest with you. It like actually just lets us connect with you. So our email newsletter, the money versus discord, that is a more direct, just like, hey, we're friends, we're connected. That's all that is. So we're not going to spam you. We're just going to notify you when, hey, you helped us do this. You took a few minutes of your time to help shape this show and it is now out here for you to see and enjoy and interact with, to share with your friends, all of these things. So like Bo said, go to moneyguy.com/survey to participate. We cannot wait to

• 6:58Speaker 04

  see the results and to share this content with you. We really appreciate you making this such a fun annual tradition.

• 7:04Speaker 03

  Can I, can I tell you one of the things I love about the survey?

• 7:06Speaker 04

  Yes.

• 7:07Speaker 03

  So we sit around as a team and obviously, you know, every year the survey has a lot of the same questions, right? Like, because we want to see like, how's that tracking through time? But every year we're like, hey, are there things that we didn't ask? Are there questions that we should add? Hey, are there things going on out there in the financial world that we want to see? What are our financial mutants? What's our audience doing? How are they using these things? How are they thinking about these things? And so every year we have new questions, new angles, new thoughts, new ideas, and this year's no different. So I'm super, super excited. Uh, once we get all the results back so that we can then dive into even some of that new stuff. I mean, the old stuff is great too. The, the, the annual stuff is so good, but I'm excited about some of the new questions on there this year.

• 7:46Speaker 04

  And this will only be open to take and participate in for a limited amount of time. Cause at some point we've got to shut it off and go compile the data and make the show. So be sure to get in on this. It's going to be open for a couple of weeks until September 30th. So make sure you get in on that sooner rather than later. Cause I would hate for you to miss out, uh, just because you didn't realize it was open for a limited, limited amount of time. And like Bo said, I want everyone to take this. I'm looking at you. If you're in step one, take it. If you're in step nine, take it. I want to know. I want to know where everybody is. There's not.

• 8:16Speaker 03

  Was that Shia LaBeouf? Was that your Shia?

• 8:18Speaker 04

  It was Shia LaBeouf. Oh, here we go. Here we go. Just do it. But truly, we really do want you to do it and go take out the survey.

• 8:28Speaker 03

  That's awesome. Awesome. Hey man, can I tell you, it's so good to have you back.

• 8:32Speaker 04

  It is so good to have you back.

• 8:34Speaker 03

  I think I can speak on behalf of me, Rebi, the Money Guy team and the millions of people in the live stream right now. We missed you.

• 8:41Brian Preston?

  Well, y'all probably noticed, fast forward, I go on vacation. You're like, I wonder if Brian misses this. And then about day six, day six of vacation, all of a sudden the love letters started coming through on the Slack thread. I was like, guys, I really miss you guys. I mean, I was in it. And then, you know, y'all gave me a few emojis. It was nice, but I was like, oh, I don't know if they're feeling the same way. So then I dropped another love letter in there. I really did about a week. Look, I love going on trips with my, you know, with my wife and we went with some dear friends over to Scotland and I love the, the Scottish people are the friendliest people on the planet. I really do believe that. They are, no, they are very, very friendly. I will say, you know, I have this

• 9:25Brian Preston?

  ability to where I can kind of interpret people's emotions a little bit. And this is just my opinion. They are the friendliest people, but there's a little bit under the surface of, I don't know if it's. Their history or what, but a little bit of unhappiness there though. I just could sit in that. It's also probably the weather. I mean, the weather is schizophrenic because you know, every 15 minutes it's sunny, clouds coming, it rains, it's sunny, cloud comes, it would.

• 9:52Speaker 03

  It's like an everyday thing?

• 9:53Brian Preston?

  Yeah, no, I had to literally, the only thing that they got right on the, because I should have brought shorts. I was hot everywhere because we over air conditioning in the south. They overheat every building in Europe. I mean, it is, because it's 60 degrees outside, but the buildings are all 80 degrees.

• 10:08Speaker 03

  Yeah.

• 10:09Brian Preston?

  And it's, um, so I was hot everywhere, but the best advice I got was to have waterproof shoes. And then, um, also I had a rain, like a Patagonia, um, like real thin raincoat. And I had a, an umbrella that could withstand some wind.

• 10:24Speaker 03

  Love that.

• 10:25Brian Preston?

  And that was needed. I had a little fanny, it wasn't, it was a, it was a shoulder. It wasn't a fanny pack. I've graduated past fanny packs. But you know, there's a cross body and I kept my passports.

• 10:35Speaker 03

  That's just a diagonal fanny pack is what a cross body is.

• 10:38Brian Preston?

  We've upgraded the fanny pack to cross body.

• 10:40Speaker 03

  It's no longer horizontal. Uh, well, man, we missed you and I'm so glad. Cause now that you're back, one of the things we get to do is the same thing that we get to do every Tuesday at 10 a.m. Central time, we get to load you up with the things that you care about. So if you have a question right now, if there's something you want to get our take on something in your life, you want us to speak to. We have the team out in the wings collecting your questions. So make sure you get them in the chat right now, because we believe that there is indeed a better way to do money. And we want to help you do money better. So with that, Creative Director Rebi, I'm going to throw it over to you.

• 11:17Speaker 04

  I'm ready. We're going to start it off with Epcot World Traveler 007.

• 11:21Brian Preston?

  I'm an Epcot fellow world traveler.

• 11:24Speaker 04

  It says, when calculating net worth and investable assets, how do I treat the current value of a fully vested defined benefit? Or cash balance pension plan with my current employer?

• 11:35Speaker 03

  Brian, we get this question all the time. Because obviously we have, we have our net worth template that you can get for free at moneyguy.com/resources. I have the tool you can go get it, learn dot moneyguy.com. And we love tracking net worth annually to understand where you are. And when you do it every single year, you get to track, okay, how far have I come? How am I progressing? How are my financial decisions impacting my life? And I think one of the things you even wrote about, uh, I think you, I think you touched on it in Millionaire Mission. I can't, yeah, you touched on it. A lot of people ask this question all the time. Hey, I've got this pension, I've got this defined benefit, I've got this thing. It's not exactly like a 401k or a 403B. How do I account for that on my net worth? So how do I look at it? How do I think about where it falls?

• 12:15Brian Preston?

  Well, it's a good thing this isn't part of the rapid fire, because this one is, it definitely depends. Is now, if you go log into your, your pension website, a lot of them nowadays will have options to where you not only get to choose, if you want to annuitize the pension, you know, when you retire, you know, you choose the survivor benefit. But a lot of them even have like a third option where it say, or you can just roll the balance over. Basically we get, remove the obligation off of our balance sheet. And we're going to let you roll a portion of these assets into your own IRA of choice. If you have that rollover option, they'll give you what the account's worth. You can put that on the net worth statement under retirement assets. I have no problem with that.

• 12:57Brian Preston?

  Now, the problem is a lot of, because it is a defined benefit program. Meaning that pensions are promises of future, um, income streams for your retirement. And a lot of websites are especially old school ones, they don't have a rollover option. They have just, it's a promise of what they're going to pay you in retirement. And for that, it's because it's a promise only, and it's not a rollover of the assets. I think it's more of what you put it on your footnotes as a disclosure of income streams you'll have in the future, just like you will have social security. And you use that as a planning technique where you'll lower how much money, you know, you figure out what you need in retirement. You'll subtract what you have coming in from pensions and social security.

• 13:43Brian Preston?

  And then whatever's left over is now what you'll be required to come up with from your own assets to providing your retirement. But it doesn't actually show up on your net worth statement because it's a promise for the future. Unless it has some value to be able to roll it over.

• 13:57Speaker 03

  Love that.

• 13:58Speaker 04

  Fantastic.

• 13:58Brian Preston?

  I didn't leave any meat on the bone for you?

• 14:00Speaker 03

  No, I thought you nailed it. I thought, you know, why, why do we not tell people, oh, well, just here's what you do. You do the mathematical calculation. Why don't you just calculate the present value of the future cash flows of that pension? Da, da, da, da. We want to be careful having too much of a false sense of confidence for some promise in the future that may or may not be there due to circumstances that are outside of your control. What are the things that you can control right now today? How much am I saving? How much am I building? How much am I putting away that I know is going to be there when I get there? And we don't hear about this as often, but in your career, there have been folks who were banking on, I'm going to have this pension, I'm going to have this guaranteed thing. And then something happens with that entity, organization, whatever.

• 14:41Speaker 03

  And all of a sudden that pension benefit they thought that was going to be there was changed and was different. And was not what they thought it would be. We want you to be careful from having a false sense of security. Rather, we would want you to take hold and have, uh, some ownership in your future financial stability.

• 14:59Brian Preston?

  This is just a one off for Epcot 007 here, Epcot Explorer.

• 15:05Brian Preston?

  Go look at your annual report from your pension. Just make sure, see how well funded it is. And then, you know, when, then from there, you can take that data and go to the Pension Benefit Guarantee Corporation. It's, it's essentially the, the, the government insurance, um, that, that they provide on, on many pensions. Not all pensions, by the way, that's the other thing you need to find out. Does my pension qualify for the Pension Benefit Guarantee Corporation's coverage? And then I would compare what you think you're going to get to what's guaranteed. And if it's over, what you're going, you think you'll receive is over what that guarantee amount is, the insured amount. You need to go make sure your, your pension's well funded, because that would probably then shape my decisions

• 15:49Brian Preston?

  on how I'm going to use that pension for my future retirement.

• 15:53Speaker 03

  Love that.

• 15:54Brian Preston?

  That's extra. That's what the financial planner typically does.

• 15:56Speaker 04

  Love it. Next question's from Kyle S. It says, good morning, Money Guy team. Would you, would like your thoughts on HELOC versus saving up for a new deck? Estimated cost is 50K, no savings currently above our emergency fund. We have a 250K income, auto loans and mortgage are within the foo, or Money Guy rules, it sounds like. So he wants a new deck, HELOC versus just saving up for it. How should he think about this?

• 16:25Speaker 03

  Okay, I want to, I want to be clear and Kyle, I really need to know the answer to this question. When you say no savings currently above emergency fund, is what you mean by that? I don't have excess cash above and beyond $50,000?

• 16:38Speaker 04

  That's what I took it as.

• 16:39Speaker 03

  It does not mean I don't have any investments, like I'm Brent, like I just, I don't have a 401k, an investment account, a Roth. I don't, because I would argue, if you were that early in your financial journey, we've got this great income, but you got this auto loans, these mortgages, but you haven't started saving yet and building. Doing something like adding a new deck? One, I would, I would want to have the question around the necessity of this. Is this a have to have or a need to have? And I never want to be presumptuous to just assume that it's a, or a have to have or a want to have. I never want to be presumptuous and say, oh, that sounds like a want, because maybe the deck is unsafe or whatever, right? But if you don't have anything else working for you, if, if all of the money that, uh, if all of the dollars you have

• 17:24Speaker 03

  are going towards providing for your current life, I'm going to argue that if this deck is a have to have, then perhaps the whole equity line of credit makes sense, because what it allows you to do is finance that cost, assuming that you get a fairly decent interest rate, but still get some money working for you elsewhere. Now, if you do have other investments, if you've got your 401k and your Roths and that sort of thing. One of the questions I want to figure out is, okay, well, how tight can you make your life on a $250,000 income? How long would it take you to be able to save up that $50,000 for that debt? And maybe it's a both and, maybe we're going to use the whole equity line of credit to do that.

• 18:04Speaker 03

  But instead of financing it for five, 10, 15 years, maybe we do the whole equity line of credit. We pay it off in 24 months or 18 months, so that it's a both and best of both worlds. Agree, disagree, want to fight?

• 18:17Brian Preston?

  You just, you started nibbling around what I immediately thought. First of all, mate, you make $250,000. This be something that you could definitely absorb into your lifestyle within hopefully a two to three year period. So I'm back to your original triage question. Where is this, if you're broke as a joke, and this is the first thing, this ain't, this is, if you haven't done backdoor Roth contributions and loading up your 401k, um, this is not the most important thing. But it is one of those things where I see people, and I know somebody who's, might be sitting in the room, who's used a home equity line to when they looked at their life and they said, hey, I think I can extinguish

• 18:59Brian Preston?

  this big upgrade I'm going to do on the house, probably within 18 to 24 months. But it sure would be nice if I could go ahead and start this. Um, right now, because I know I can pay this off because here's the other part that goes unsaid. A home equity line right now, mortgage rates, just typical mortgage rates right now are over 7% because weird things are going on with the 10-year treasuries and you're seeing mortgage rates reflect that. If you add stack on top that what they do with home equity lines is typically like 2% even more than, so you might be paying eight to 9% on this home equity line. This is not cheap money. So that's the first thing is that if I'm going to use this, it's because I value the time of using this resource of like a deck

• 19:44Brian Preston?

  or a pool in the backyard so much because maybe my kids are a certain age and I don't want to miss out on this window for three years. I'm going to give you the grace if it's if you have so many other good things going on, you're respecting the financial order of operations. Cause I just got an update that he does have over $200,000 invested. So I'm going to be okay if you go to the bank and you say, hey, what could you do a home equity line, assuming there's no cost. And then you figure out, maybe you need to save up 25 to 30,000 of the 50 and you do the, and you go ahead and get the process starting of the, the, of the, of the home equity line, just so you have it just in case. If you want to accelerate the implementation of getting this deck because it's needed in

• 20:29Brian Preston?

  life for the happiness of your, your spouse, your children, whatever the case may be. I'm okay. It's kind of the same way when we do the 23 eight on car purchases. People always are like, why do you treat luxury cars same as cash in 12 months? It's because I know a lot of you, I, in my own journey, you have bonuses, you have RSUs, or maybe you own a company and you get your year end distribution in December. That's the same as cash to me. And I always try to build, what would I do? So I have a no hypocrite policy in every one of my rules. And that's, that's the same thing with this home equity line is that I would let you do this as a tool as long as you could pay it off and

• 21:11Brian Preston?

  typically probably no more than two years because you're paying such a high premium on the interest rate. I'd rather you come up with 25 to 30 yourself and maybe you use 25 just to cut the corner off on the time.

• 21:24Speaker 03

  Well, and Kyle, I don't know how old you are. So you said, I've got $200,000 invested. If you're, you know, young in your twenties and thirties, because what I'm hearing is I got a $250,000 income. I have $200,000 invested. Just thinking through like rules of thumbs, that ought to put you somewhere in like your late twenties, early thirties, right?

• 21:42Brian Preston?

  Yeah. Cause if he's in his thirties, he ought to have more.

• 21:44Speaker 03

  If you're 45 or 40 plus, I would argue perhaps you're a little bit, little bit behind, behind where you ought to be unless this income was like a brand new thing. But I also saw on here, he said, he's one to two years away from this deck being a necessity. Okay, great. I've got a one to two year timeline. Are there ways that I can save like a banshee between now and then and finance as little of it as possible? One of the things I think, you know, I don't know what part of the country you live in, but we're kind of at the end. I mean, we're coming into fall, but we're kind of at the end of summer season. When you use a deck a whole lot, do I want to spend a ton on a back deck right now if I'm going to live somewhere that's going to be cold and wintry and icy and snowy? Or what I want to save for the rest of this year and the first part of next year, start construction

• 22:26Speaker 03

  in the spring, right at the time when I can get the deck done, get it built and be able to actually utilize it? Perhaps that gives you just like a little bit of time to build up that cash. Cause I think for these kinds of things, if the, the, the less you can finance, the better in this kind of search situation.

• 22:43Brian Preston?

  Well, I like what you just said, especially I know he has two years of, of grace here. With that big of an income, squeeze in your lifestyle because do you know how much more you'll enjoy that deck? If you actually took some sacrifice on little things, maybe it's eating out a little bit less, or you know, you're a little more picky on how you shop for groceries and stuff and you know, do things like that, or you donate a few things out of your closet, you know, or don't go shopping as much. You'll enjoy that deck that much more if you take the next two years. Cause you have the income where you, I think you could come up with probably the majority, if not all of it, um, just by being, you know, disciplined with your lifestyle.

• 23:23Speaker 03

  Yep.

• 23:26Brian Preston?

  Good question.

• 23:26Speaker 04

  I know. Very good question, Kyle. You got him talking. That's great. We appreciate you being here. Next question is from Kenzie. Hi, Money Guy team. Just completed step four and working to max step five before end of year.

• 23:40Brian Preston?

  Nice.

• 23:41Speaker 04

  Should I put anything over that towards my mortgage principal at 5.75% before end of year?

• 23:48Speaker 03

  I want to tell you two things, Kenzie.

• 23:50Speaker 04

  Brian's smiling.

• 23:52Speaker 03

  Here's the first one. I love that you're trying to max step five before the end of year. Brian, will you hold the thing up for me? Uh, step five is when we really start attacking and tackling those tax-free accounts, the Roth IRA and the health savings accounts. You know, one of the most beautiful things about step five though, it is one of the few steps in the financial order of operations, or it's a step in the financial order of operation that actually doesn't have a 1230 timeline, like some of the other steps, like maxing out.

• 24:20Brian Preston?

  1231.

• 24:21Speaker 03

  What'd I say?

• 24:22Brian Preston?

  There's actually, because you said 1230.

• 24:24Speaker 03

  Did I really say 1230? I like to be a day early. That's just, that's the way I like to do it. Um, doesn't have a 1231 deadline. You can actually fund your Roth IRAs or even your health savings accounts up until tax filing time next year. So I love the idea of you getting the HSA or the Roth IRA funded before 1231. But if for some reason that's not possible, you actually have all the way until April to do that. That wasn't the question you're asking. Just an I notice thing you should know. The second part of your question was, hey, should I start prepaying some on my mortgage? Brett, I want you to answer that one to see if then I can start fighting with you.

• 24:59Brian Preston?

  Here, here's the thing. No, the answer's no. But if your payments, let's just say your payments $2,340 a month.

• 25:10Speaker 03

  Okay.

• 25:11Brian Preston?

  If you want to pay $2,400 a month, I'm not going to fight you on that. Cause I was never a minimum payment on my mortgage. I rounded up to the next hundred dollars, you know, and then I got to the point where maybe I did the next thousand. But, but I would not get crazy trying to be a debt crusader because 5.75, I don't think, I don't know your age, but that's not going to probably qualify to be high interest. And you just have so much value by doing the Roth, the health savings accounts, your 401k at your employer. There, there's a reason we have the financial order of operations and I don't want you to get caught up in the feel-good moment of paying off the debt early when you have so much work to do on building your financial foundation.

• 25:54Speaker 03

  Yeah, I would, it, I would not pay extra on that mortgage.

• 25:58Brian Preston?

  Would you even do the rounding?

• 26:00Speaker 03

  No.

• 26:00Brian Preston?

  You wouldn't?

• 26:02Speaker 03

  That's not true. I've done, I don't want to be a hypocrite. Brian has a no hypocrisy problem, uh, policy. Not me. I don't have that policy at all. Um, but Brian has that.

• 26:10Brian Preston?

  Well, I'm just too honest. I have to tell you what I do with my finances.

• 26:13Speaker 03

  I have done that before, only just out of ease. So I could like mentally account for it. Hey, I'm going to round my mortgage up to this, da, da, da. And just so it was an even number every month. It just made the tracking, uh, back when I used to track a lot more meticulously, it made the tracking a little bit easier. So it was okay, I'm going to round up 17 bucks, whatever. It was easy for me to do middle math that way.

• 26:30Brian Preston?

  But I'm letting you nibble on the edges with the fringe, small part of this. The big, the heart of the answer is don't, don't do the mortgage first.

• 26:39Speaker 03

  Yep. 34, 32 is how old Kenzie is. Yeah. A 5.75 in my mind.

• 26:44Brian Preston?

  Yeah.

• 26:45Speaker 03

  Does not sound high interest.

• 26:47Brian Preston?

  We need to get that money in your army of dollar bills. You know, we're doing a show, um, in a little bit called the, the wealth window. Guys, I'm telling you, if you're 32 to 48, get in there and get the money working for you. You, there are more to come on that when you see this show.

• 27:01Speaker 04

  Respect the foo. Am I right? Am I right? If you want to know more about the foo and how to follow it, make sure you go to moneyguy.com. We have a huge ultimate guide that gives you all about all the steps. It's going to point you to all of our best resources about it. So be sure you go there and just search for financial order of operations on moneyguy.com and then we will hook you up. All right. Uh, I want to encourage everyone watching live to get your rapid fire questions in the chat starting now. Put RF at the beginning of your question and I will know and the team will know that that is for our rapid fire segment that's coming up.

• 27:35Speaker 03

  Are you going to be rusty, you think?

• 27:36Brian Preston?

  Yeah. I, I actually rolled over in bed this morning. I was like, honey, it's been, this is going to be like week three. I might not have forgot, I might've forgotten how to do all this.

• 27:43Speaker 04

  This sounds like an exciting rapid fire segment we're about to have. I can't wait.

• 27:47Brian Preston?

  Cause Bo was just telling me he had, felt like he had so much time last time.

• 27:51Speaker 04

  It was too much time.

• 27:52Brian Preston?

  Maybe I get 20 seconds and he only gets 10.

• 27:54Speaker 03

  Dude, 30 seconds, I could answer the question and eat breakfast.

• 27:56Brian Preston?

  It was wild. See? He just bragged. So it only gets 10, I get 20.

• 28:00Speaker 04

  No. Well, honestly, that's, you got, you get a combined 30? That is up to you guys to hash it out.

• 28:05Speaker 03

  A lot of times he does that anyways.

• 28:08Brian Preston?

  Cruel.

• 28:09Speaker 04

  Sick burn. All right. Well, get your rapid fire questions in.

• 28:15Brian Preston?

  I found out that when I'm not around, Bo likes to film content without a shirt on.

• 28:19Speaker 04

  I want to say that's.

• 28:20Brian Preston?

  I mean, even my wife was like, man, you leave town and these guys take some liberties.

• 28:24Speaker 03

  I want to, it was not my idea. Everyone was like, oh, this was Bo's idea. This was not Bo's idea. Bo was just a willing participant and I'm happy we did it.

• 28:32Brian Preston?

  Hey, raise your hand if you've been to a wedding where you took your shirt off. It was not me. Bo, you want to raise your hand on that?

• 28:41Speaker 04

  What a sheepish grin.

• 28:43Speaker 03

  What was that next question?

• 28:45Brian Preston?

  I mean, seriously, I can't even think of why you would do, you know, you know what, dudes? Let's take our shirts off.

• 28:50Speaker 03

  I don't know. I don't know what to tell you.

• 28:52Brian Preston?

  I don't know what to tell you.

• 28:54Speaker 04

  You can decide if that's a true story and what context that is in. We're going to move on to the next question.

• 29:00Brian Preston?

  I just don't, Bo, I, I've told Bo, I was like, we are, we were like, we are such close friends and I love traveling, hanging out with him, but on the weekend, it's like Jekyll and Hyde. It is like he is, he's this mild-mannered and then, you know, I find out like, I wouldn't be surprised. I took the boy out of conyers. I wouldn't be surprised. You know, if you grew up like we did in South Atlanta, it was not uncommon. You look over at the traffic light and you see a guy who's just riding around shirtless.

• 29:26Speaker 03

  Oh, I used to get that.

• 29:27Brian Preston?

  And you're like, yeah, I know. And you're like, what context would you get in your car?

• 29:32Speaker 03

  I think.

• 29:32Brian Preston?

  And you're like, you know what? I don't need a shirt on.

• 29:35Speaker 03

  That's a generational thing. Have y'all never done that? Like you drove home, you were like super sweaty from a workout or whatever. And you're like, I'm, I'm soaked.

• 29:42Speaker 04

  Looking around.

• 29:42Speaker 03

  I'm going to pop my top, tarp off and I'm going to drop.

• 29:44Brian Preston?

  Let's make the sweatiness permanent.

• 29:46Speaker 03

  No, you roll out, no, you roll down the window and you let, you let, you get air dry. Cause that shirt ain't going to dry. Uh, that's normal.

• 29:54Brian Preston?

  You can take the boy out of conyers, but can't get the conyers out of the boy.

• 29:57Speaker 03

  I'm going to fight you on that one. Now it's not weird. Driving with a shirt off is not weird if you just got no working out, right? Look, oh, the whole content team agrees with me. They're all nodding.

• 30:04Brian Preston?

  Would you ride around shirtless in your car?

• 30:09Brian Preston?

  There is nobody here. I don't, I think that's weird. I'm sorry. I'm gonna, that deserves shame. Shame.

• 30:18Speaker 04

  Wow.

• 30:19Brian Preston?

  Shame.

• 30:21Speaker 04

  That is harsh.

• 30:22Brian Preston?

  No shirt, no shoes.

• 30:23Speaker 04

  Let us know whose side you're on.

• 30:24Brian Preston?

  I ride, I take my flip flops off and ride around.

• 30:27Speaker 04

  Wait, you take your flip flops off to drive?

• 30:29Brian Preston?

  Yeah, cuz it's not safe to drive in flip flops.

• 30:31Speaker 03

  You know what's so funny?

• 30:31Brian Preston?

  It is not safe to drive in flip flops. If you've never had a near miss.

• 30:35Speaker 03

  You know what's so funny? Nobody.

• 30:37Speaker 04

  Can't drive barefoot. That's weird.

• 30:38Speaker 03

  Nobody cares about this.

• 30:40Speaker 04

  I think, is it illegal?

• 30:42Speaker 03

  Walking our shirt off totally all the time. It's just like a thing.

• 30:44Brian Preston?

  Hey, Matthew McConaughey did it too. Cuz if you look good with your shirt off, I would, even some of the comments said, hey, Bo looks so good with a shirt off, I would do the same thing.

• 30:52Speaker 03

  I do, I don't ever like to be barefoot though. Like I even like at my house, I even wear slippers. I've got like slides that I wear around the house cuz I just don't.

• 30:59Brian Preston?

  What is going on?

• 31:00Speaker 03

  I don't do barefoot.

• 31:01Speaker 04

  I don't know.

• 31:01Speaker 03

  So driving barefoot would be insane.

• 31:03Brian Preston?

  I blame the content team. Y'all are the ones filming the shirtless content.

• 31:10Speaker 00

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• 31:37Speaker 04

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• 31:40Speaker 01

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• 31:41Speaker 04

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• 31:47Speaker 05

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• 31:54Speaker 04

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• 32:11Speaker 04

  All right, let's go to Booknerd1997's question. It says, "Hi, Money Guy Show. What is included in the 25% rule for house buying? Mortgage, PMI, property taxes, insurance, utilities? I'm a single income, 28, 28 years old, female, asking this question. What do you think?" And you, maybe we should go over our 3525 home buying rules as well, cuz this is about that 25th part.

• 32:35Speaker 03

  Why don't you walk us through 3525? And I'll, I'll.

• 32:39Brian Preston?

  So look, we, we think already housing, this is something I'm very proud of. We didn't have to change our rules. A lot of other program, you know, people, because housing got complicated, they had to change their 20% down to, to the more modest 10%. And then I think they've even adjusted to 5%. I've always been 3% to 5%. And the reason is, is back to the no hypocrisy policy. And the fact that I, I looked around, I knew with my own first house, I think I put down 3%. I started asking other financial advisors here in the building, what did y'all put down? And I was like, holy cow, this is the dirty little secret. Nobody puts down 20% on their first house. They're putting down 3%, they're putting down 5%.

• 33:17Brian Preston?

  So we just went ahead and built that into our rules. Hey, when you're getting into your first home purchase, it's okay if you put down 3% to 5%. We want to make sure that you're also living this house at least five years. There's a lot of transaction costs that go into buying real estate, you know, between all the recording fees, the real estate agents and all those things. So you want to live in it long enough that you can recoup that. And this is not a short-term decision. And then we want to make sure that you just, you're not house-rich, life-poor. So we try to keep your housing expenses below 25% of your gross income.

• 33:52Speaker 03

  So the question therein is, okay, well, what's included in that 25%? And this is where we're gonna give you a little bit of latitude and a little bit of leeway. When we originally designed it, what we want that 25% to encompass is what I would call is the, is most people's, the average American's mortgage payment, which would be principal, interest, taxes, and insurance. So the principal and interest plus most people escrow. So you're gonna have your, your insurance coming out of that and your taxes. Whatever that monthly mortgage payment is, that's where we kind of have the 25% cap it. But there are some people that want to be a little more conservative of that, and you're not gonna get any fight from us on that.

• 34:28Speaker 03

  If you want to include the cost of your utilities, if you want to include, um, PMI is obviously normally part of the mortgage payment if you're someone who's paying PMI, so that would be in there. If you want to put some other quote-unquote "housing" costs in there to try to make sure you're staying super conservative, we're not gonna fight you on that. What we don't want you to do, we're doing is backing stuff out, where you're like, oh, well, if I only think about the principal, well, that's just 25%. Or oh, if I, if I don't include the escrow cost, that's something else. We want those to be in there cuz we don't want you to be in that situation where you are house-rich, life-poor, and you have no ability to create margin inside your financial life.

• 35:07Brian Preston?

  But look, I think it's usually not people trying to be more conservative. It's people need a little more grace cuz housing is so damn expensive.

• 35:13Speaker 03

  It's hard, hard.

• 35:13Brian Preston?

  So that's why I wouldn't put the pressure on utilities. And even when I, when I wrote Millionaire Mission, I even made a case study in there on if you live in some of these super high cost of living areas, like, you know, think about some of the major cities. There's even a case to be made that a lot of people who live like in these big city centers, they don't have car payments. And cars typically take up the other 8% of your income. So I made an argument that you could even give yourself grace to go up to 30% if you don't have car payments and other debts. But Bo's exactly right. This, we, we, I want our rules to give you some, where you know where the guardrails are, but they're not supposed to be so rigid that they can't reflect the real life you live in.

• 35:55Brian Preston?

  And I get right now, it is hard to buy a house. Housing is being completely distorted. And more to come on this because I don't, I'm keeping up with this. Do y'all realize that there are like 50% more sellers than there are buyers right now? We are setting up a buyer's market. It's just people are so just dug in on what they think their houses are worth that you haven't seen a complete collapse in home values yet. So in the, Bo, every area is different. This is, you can't, it's hard to talk about housing because location, location, location matters. But there's a lot going on under the surface when it comes to housing.

• 36:33Speaker 03

  Love that. Uh, if you are, um, if, so when you are thinking about buying a house, uh, Booknerd, I would encourage you, go out to moneyguy.com/resources. Check out our home buying calculator, check out our home buying checklist. We have tons.

• 36:47Brian Preston?

  We have like a whole hub.

• 36:48Speaker 03

  We have a whole, yeah, a whole hub there to help you make sure, cuz for most people, this is the single largest financial decision and transaction you will ever make. So you want to make sure that you make it as wisely as you can. That's why we have so many resources out on the website devoted to that, so that you can do it well.

• 37:05Brian Preston?

  Yeah, it's not the latte effect. It's the, it's the cars and the houses. So we want to help you have all the tools and resources.

• 37:10Speaker 03

  Love it.

• 37:11Speaker 04

  All right, let's do one more big question, then we'll get to our rapid fire questions.

• 37:15Brian Preston?

  Time's moving. This is fun.

• 37:16Speaker 04

  Time's moving.

• 37:17Brian Preston?

  I remember why we do this.

• 37:19Speaker 04

  That's great. I'm so glad you like doing this.

• 37:21Brian Preston?

  I'm never retiring.

• 37:24Speaker 03

  You heard it here first, ladies and gentlemen, never retiring.

• 37:26Speaker 04

  Question up next is from MVG Tube. It says, "How do I balance Roth versus traditional when on the edge of tax brackets? I make Roth IRA and I max Roth IRA and put 14% into traditional TSP plus the 5% match. I can switch to Roth TSP, but it will push some dollars from 12% to 22% and..." Plus pension, he says.

• 37:52Brian Preston?

  Does this person give their age too?

• 37:53Speaker 03

  That's, age would be helpful here.

• 37:55Speaker 04

  Age would be helpful. So if you're out there, please put that in the chat, MVG Tube.

• 37:57Brian Preston?

  But I have enough here just to give you some general guidance is that their tax rates, now we don't know their state income tax cuz that, if they're, if it does push it to 22, if they're in a high state income tax, this could push this over 25% marginal rate, federal and state. 25 to 30 is that gray zone where I need to know your age and ultimate goals of when you want to retire, or you go be part of the FIRE or FINE movement. Those things come into context. But if your income is squarely low enough to where you stay below 25%, we do love Roth because that tax-free growth is very powerful stuff.

• 38:35Brian Preston?

  But we need to know your age cuz if, the younger you are, the more it also pushes you into the Roth column because you have more time for compounding growth.

• 38:43Speaker 03

  I don't know how consistent and steady your income is, but if you're someone who you know and you can project with like very high certainty, your income, one of the little games you could play is say, you know what I'm gonna do? I'm gonna contribute just enough into the traditional part of the pre-tax or in the traditional part of the TSP to drive myself into the 12% bracket. And then I'm gonna put, or I'm gonna put enough Roth to get there. And then everything else, I'll do pre-tax. And then what you're essentially doing is you're maxing out that 12% bracket. You're allowing yourself not to trip into that 22, and you're still getting a ton of dollars going to Roth.

• 39:18Speaker 03

  That's if you want to get like real, real cute, real, real specific with it. But I agree with Brian. I think that based on the information we have, not knowing the state, Roth is gonna be super, super valuable for, even if you're paying 22% on those contributions for that money to go into Roth. I think historically, that's still pretty low. And not knowing your age, if you let those dollars compound for the next 20, 30, 40, 50 years even, that's a lot of tax-free growth you can be able to take advantage of.

• 39:47Speaker 04

  Wonderful. I'm excited to say it is now time for our "It Does Not Depend" rapid fire segment where Brian and Bo give a combined 30 seconds to give you an awesome answer to your financial question.

• 40:01Brian Preston?

  Cause I'm rusty.

• 40:02Speaker 04

  The catch is, they cannot say the words "it depends." Now, to make sure we get the best financial conversation out there, we will have a segment at the end called the "Maybe It Does Depend" segment where they will cover any bases they didn't get to cover in those 30 seconds, just in case. With that, let's get 30 seconds on the clock and let's get started.

• 40:25Speaker 04

  First question. 3525 rule is great for home ownership, but how could we adapt a similar rule for renting?

• 40:34Speaker 03

  Yeah, it's really hard because there's no down payment for renting. And most renting, you don't spend more than five years there. But I do think the 25% still applies. And I would actually like for it to be much less than that, especially for renting, cuz the lower you can get your rent, the more you'll have to save up for that future mortgage if that's in your plan.

• 40:50Brian Preston?

  No, I, I just think 25 is a good number for, for housing. I mean, so you can use that and you, you get the flexibility with rent that you can live wherever and you do things on your terms. So if you need flexibility in your life, there's nothing wrong with rent.

• 41:04Speaker 03

  I've got something to add to that at the end if I'm making notes.

• 41:06Speaker 04

  Noted. Next question. What percent of a raise do you invest, spend, and give?

• 41:14Speaker 03

  Um, so I would say that giving a super, uh, super unique and specialized to you, right? But I will tell you, when it comes, when you think about the amount that you don't give, because I'm of the opinion you give first, then what's left? I like if 60% goes to savings, 40% goes to lifestyle.

• 41:30Brian Preston?

  Yeah, I was gonna say, put the giving first and then do 60/40. 60% to savings, 40% to lifestyle. Until you get to 25%, then after you get to 25%, go hog wild.

• 41:42Speaker 04

  Brian said, I have six more seconds.

• 41:43Speaker 03

  I'm gonna put something in there.

• 41:45Brian Preston?

  Go ham.

• 41:46Speaker 04

  Next question. When is it no longer appropriate to use a target date fund or single index fund?

• 41:53Speaker 03

  Realistically, I think it's when your portfolio value hits somewhere around 400, 500,000. Those are sort of loose numbers because it depends on the account structure. But it's when the benefits of asset allocation and asset location can now be justified for the additional effort that it takes.

• 42:09Brian Preston?

  Yeah, it's when those, those big retirement accounts start getting large, the tax location matters, that this gets into, to game time to make big changes. And that's typically like Bo said, somewhere between 500 to 600,000. Man, this is 30, 30, 30, 30 seconds is a lot of time.

• 42:27Speaker 04

  It's like you never even went on vacation. Next question, what is the biggest thing Brian and Bo disagree on in finance?

• 42:36Brian Preston?

  I mean, it used to be debt payment because, you know, he was, he would bully me on why I shouldn't prepay my mortgage. That's a big part of it. I think when Bo came out, he was very conservative because he graduated college in 2008. But he's got now a little more aggressive. So we, we talk about that stuff, too.

• 42:55Speaker 03

  Yeah, it's, I don't know that we disagree on a ton, a whole lot anymore. I think we're pretty highly aligned in most things, financial. Some car decisions we like to pick on each other about, but I wouldn't say we disagree.

• 43:07Brian Preston?

  Paying back family loans.

• 43:08Speaker 04

  Okay, maybe we'll come back to that.

• 43:10Brian Preston?

  We got no fight on that.

• 43:13Speaker 04

  Next question, what's you and your clients' favorite time-saving expense?

• 43:18Brian Preston?

  Shirts on, shirts off.

• 43:20Speaker 03

  Huge disagreement on topless.

• 43:21Speaker 04

  Okay, we're on to the next question.

• 43:23Speaker 03

  One of us is very pro topless, the other is very anti-topless.

• 43:25Speaker 04

  You're ruining your chances of answering this question. What was your client's favorite time-saving expense? Landscaping, meals, cleaning service, vehicle maintenance, et cetera.

• 43:33Brian Preston?

  What was the question?

• 43:34Speaker 03

  What are your clients' favorite time-saving expenses? Like people, what do they buy their time back on? I'll go first.

• 43:39Brian Preston?

  I mean, it's landscaping and, and house cleaning.

• 43:42Speaker 03

  I think most often it's house cleaning because mo- very few people really enjoy the nitty gritty of that. Some people actually get utility and derive satisfaction from doing yard work. So they don't want to outsource that. But I think a lot of folks, when we see them buying by their time, it's those folks in the messy middle that can have someone else come in and clean their house so they can focus on the other important things in life that matter to them right now. How impressed are you?

• 44:04Speaker 04

  That was very good, right up to the second.

• 44:06Brian Preston?

  I'm just entertainment.

• 44:09Speaker 04

  Education and entertainment. You get both here. Counting unreimbursed HSA eligible costs towards emergency fund. What do you think of that?

• 44:20Brian Preston?

  I mean, it is a break glass, but I wouldn't. I think in the beginning of your journey, it's okay, we probably, we're gonna disagree on this because I, I want you to get to pass that and then get to Roth and it building assets. But it's, um, it's, it's, it'd be ideal if you have a true emergency fund.

• 44:38Speaker 03

  You said you have unreimbursed medical expense. That means the HSA dollars are likely still invested. If your dollars are invested, that's not an emergency fund. Emergency funds need to be in readily available cash sitting there for you. If it's in your, if you're in your HSA, that's fine.

• 44:51Brian Preston?

  You did better on the SAT than I did. So you're, you're, you're, you're reading comprehension is better than mine.

• 44:57Speaker 04

  But look at you now.

• 44:58Brian Preston?

  I didn't read, I didn't read the fine print like you did.

• 45:00Speaker 03

  We can come back to that one again, too.

• 45:02Speaker 04

  Okay. Got just a handful more. This one says, I'm 21 years old. I live at home with parents and work full-time and pay for school out of pocket. Should I pay off my truck debt at 6.9% first or open a taxable account first?

• 45:21Speaker 03

  26.9%.

• 45:23Brian Preston?

  How big is the loan?

• 45:24Speaker 03

  I'm going to assume that you're inside the confines of 23,800. If you're inside the confines of 23,800, I would argue that 6%, even though it feels high, is not incredibly high interest debt. I would work on building those dollars elsewhere.

• 45:38Brian Preston?

  Yeah, but I would, I'd definitely have the debt extinguished before you move out of the house. Just because you should be, I mean, if you're living at home, you should be saving like 60%.

• 45:47Speaker 03

  So you'd rather him pay off the truck than invest?

• 45:50Brian Preston?

  No. No, I'm not saying that. I'm just trying to get motivation. I'm just trying to get motivation.

• 45:55Speaker 04

  I feel like Brian gave an answer and then he gave the opposite.

• 45:58Brian Preston?

  When you live at home, maximize that.

• 45:59Speaker 03

  Let's, let's go back to 20, 21-year-old home guy.

• 46:02Speaker 04

  All right.

• 46:03Brian Preston?

  I'm rusty.

• 46:04Speaker 04

  Last but not least. According to the Know Your Number Calculator, we will have sufficient assets to retire, even if we stop contributing. Should we reduce our savings rate and divert funds towards abundance goals?

• 46:20Brian Preston?

  How old are they?

• 46:22Speaker 04

  They didn't say.

• 46:23Brian Preston?

  That's the only thing. If you're in your twenties or early thirties, I get nervous because you haven't had enough time to truly build the foundation. You can manipulate calculators. But if you are, you know, 40 beyond, then yeah, you probably can use this as now, because you probably truly are in step eight of the fine toward of operations.

• 46:40Speaker 03

  Okay, it sounds like you were describing coast fire. The Know Your Number Calculator is not a replacement for a financial advisor, someone actually stressed us to plan. Before you make such a gravitas.

• 46:49Speaker 04

  Oh, we gotta come back to that one. We gotta come back to that one.

• 46:52Brian Preston?

  By the way, I took 25 seconds of it. I gave you no time. I feel a little guilty on that one.

• 46:56Speaker 04

  And no, Know Your Number is a fantastic tool, but this is a very important thing to talk about.

• 47:01Brian Preston?

  I hosed you on that one. I did not mean to.

• 47:02Speaker 04

  All right, we are about to have a very exciting, maybe it does depend, segment. We have several questions to come back to.

• 47:07Brian Preston?

  I'm already forgotten every one of the questions.

• 47:09Speaker 04

  First one, we said we wanted to come back to.

• 47:11Speaker 03

  You're the goldfish of the Money Guy Show, just swimming around happy.

• 47:17Speaker 04

  There's some accuracy to that, it's okay.

• 47:19Brian Preston?

  Definitely, you know, Bo can't say that. The swimming part killed him.

• 47:24Speaker 03

  We now have video evidence, brother. You can't say it. Look at that. Brian, that is me just treading water, creating content.

• 47:33Brian Preston?

  He did admit that, I was like, man, you really acted like you, you played up that you can't swim.

• 47:36Speaker 03

  Look at that, Brian.

• 47:37Brian Preston?

  Because this was 50 seconds and you act almost drowned.

• 47:40Speaker 03

  Look at that. That's just, honestly?

• 47:44Brian Preston?

  He's not naked.

• 47:45Speaker 03

  It's like a team guy right there.

• 47:47Speaker 04

  Love it, love it, love it. All right.

• 47:49Brian Preston?

  This is what happens when I go on vacation.

• 47:51Speaker 04

  Let's dive back into some of these questions and the nuance around it. First one was the 3525 rule is great for homeownership, but could we adapt a similar rule for renting?

• 48:00Speaker 03

  Oh, this is just a, uh, this is a piece of advice. You can write this in pencil because it's my opinion. Uh, when it comes to renting, I'd be careful allowing yourself to go all the way up to 25% to rent if there are lower cost options out there available. Me and you navigated this when I first moved to Tennessee. Uh, there was a really nice apartment complex. Me and my wife, we sold our house in Atlanta. We're gonna move up here, move into an apartment. And we had these options. There was a really nice apartment complex, would have still fit inside the 25%, but it was expensive, like not in today's dollars, but like back then, it was very, very costly. There was another apartment complex that was significantly less. It was like 60 or 70% less expensive and still very nice.

• 48:40Speaker 03

  Looking back on it, I'm so glad I did not pay that premium to be in the nicer apartment with the higher rent, even though it still fit inside of the affordability, creating that margin, allowing me to save up to be able to fund other goals. If you're buying a house, I think 25% is great. But when it comes to strictly renting, I'd be careful going up to the max just because you can, because I, you're just.

• 49:03Speaker 04

  Can I give a counter though?

• 49:04Speaker 03

  You're just renting.

• 49:05Speaker 04

  If you're renting for a family, if you're renting for a family in an average or high-cost living area, you're gonna need the 25% though, right?

• 49:12Speaker 03

  Here's the. 100% it's okay to go to a apartment.

• 49:15Speaker 04

  Okay, I don't know, because I like what you're saying, but then I was like, is it realistic?

• 49:18Brian Preston?

  Bo assumes everybody makes a gazillion dollars on this. So I, I think it's, that's why I'm trying to go on the other side of grace.

• 49:25Speaker 04

  Like, I love that.

• 49:26Brian Preston?

  You're probably, and these time with housing is so expensive, you, most people are gonna fill up to 25%. But Bo does have a point in the fact that, because look, that apartment complex he was considering up here.

• 49:36Speaker 03

  It was swanky.

• 49:37Brian Preston?

  They had like granite countertops. They had like, I can't remember those 10-foot tall door frames. They had all this stuff they're bragging about. And Bo, he showed me this place and I was like, dude, what are you doing? Are you trying to impress people with this apartment? I mean, it's, this, this doesn't seem like a good use of money. But I do think in this day and time, because this is a little different now, um, people, most people need a little more grace in their housing allowance because the 25% gets eaten up really quick.

• 50:03Speaker 03

  If it's what you need, if it's what your fa- like, don't, don't put a family of four inside of one bedroom.

• 50:08Brian Preston?

  Have you down by the river under a bridge, living in a van.

• 50:11Speaker 04

  That was my bias.

• 50:13Speaker 03

  On your Venn diagram of your, of your, of your, uh, needs and your wants, just make sure when it comes to housing, you are very, very clear on that because I need to be safe. I'm gonna concede that all the time. I may want granite countertops. I think those are different and you need to be true to yourself. If you have other financial goals, you're gonna try to be building towards.

• 50:34Speaker 04

  Right.

• 50:35Brian Preston?

  By the way, the other reason Bo and I didn't choose that.

• 50:37Speaker 03

  Don't tell the story.

• 50:38Brian Preston?

  Don't tell that story.

• 50:39Speaker 03

  Don't tell that story. This story, hey, what, next time we, next time we have some, some, some little private thing for a book thing or a speaking tour, we'll tell you that story, but not, uh-uh, that one.

• 50:49Speaker 04

  All right, good carrot. Do I know this story?

• 50:52Speaker 03

  I'm sure you do.

• 50:54Brian Preston?

  Let's just say, there's a reason they're charging so much rent at this place. They had, they had some extra, the staff had extra time.

• 51:01Speaker 03

  Yeah, we learned, yeah, we learned some lessons. Learned some lessons, Rebecca.

• 51:07Speaker 04

  Okay, Bo, Hanson?

• 51:10Brian Preston?

  You hang out with each other long enough, all kind of funny stories out there behind the surface.

• 51:14Speaker 04

  Oh, man, and again, I wasn't disagreeing with you. I, all my friends have families and like, we live in a higher-ish cost of living area. So it's just, I don't know.

• 51:25Speaker 03

  But there's not.

• 51:26Speaker 04

  Just wanted to give the counter, like 25% is still a good guideline.

• 51:29Speaker 03

  There's not a cheaper option unless you, unless you're an hour and a half away.

• 51:32Speaker 04

  Right.

• 51:32Speaker 03

  Right? Like that, that, I would argue, shorter commute time in the community in which you're gonna live, that's more of a need than a want.

• 51:38Brian Preston?

  There's only one of us here that goes to like parties on the weekend where you have to wear a mask and, you know, and they have, you know, and you take your shirts off.

• 51:45Speaker 04

  A mask?

• 51:45Brian Preston?

  Things like that, the high-end rich people.

• 51:48Speaker 03

  There were no masks, I want to be very clear.

• 51:50Speaker 04

  Like a masquerade or like a, we're in a pandemic.

• 51:53Brian Preston?

  People in the conference know what I'm talking about.

• 51:56Speaker 04

  Okay, we're gonna move on. Next question, because I do want to get to this. We said, somebody asked, what's the biggest thing you disagree on in finance? And you started the 30 seconds, like, we don't disagree on anything. And then at the very end, you listed like three things.

• 52:08Brian Preston?

  We had a clip recently go off because, um, Bo felt like, you know, if you live at home and you borrow money from your parents, treat it like it's a lender. And I was like, no, family money, you probably should pay back.

• 52:22Speaker 03

  Depends on the parent circumstances, was my opinion.

• 52:24Brian Preston?

  Yeah.

• 52:25Speaker 04

  Okay, that was all.

• 52:27Brian Preston?

  So here, here's what I learned from that. You can lend Brian money because he's gonna, it's gonna ache his soul until he pays you back. Bo might keep your money for a while.

• 52:36Speaker 03

  Yeah, if you're in a gray situation, right? Like, you know what I mean?

• 52:40Speaker 04

  It's probably true.

• 52:41Speaker 03

  If you have like-

• 52:42Speaker 04

  Accurate. That's what I learned.

• 52:43Speaker 03

  You know what I mean? Yeah.

• 52:46Speaker 04

  All right. The next one you said you wanted to come back to was about counting unreimbursed HSA eligible costs towards your emergency fund. Brian, you said a lot. Beau, you-

• 52:57Speaker 03

  Yeah, what I wanted to communicate there-

• 52:59Brian Preston?

  I think Beau corrected me.

• 53:00Speaker 03

  Is if your HSA dollars are sitting in cash and they are, then that's okay. You can consider that part of it. But most people, when you have unreimbursed expenses, that means that you have the other HSA dollars. They're out there working, growing for you. If you have money invested, working, growing, that's not an emergency fund, even though you can go get to a tax-free, you cannot necessarily get to it loss-free in fourth quarter of 2018, in 2022, in 2008, fill in the blank. Those are moments when the market is down. If you had to get to those dollars, you're going to have to sell at depressed prices to go get them out. If it's in cash, you can do it, but if it's invested, it's no good.

• 53:38Brian Preston?

  This is one of those hacks when I was, I think about my early journey where you're broke is a joke, but you're still trying to get money in those very small restricted contribution accounts, like your Roth IRAs, your health savings accounts. If you get to a point somewhere between January and April, and you have the ability that you could put the money in those accounts to get credit for making it and keep them in cash for a little bit of that time, and then you're hoping you backfill-

• 54:04Speaker 03

  That's right.

• 54:05Brian Preston?

  -your emergency reserves. So then you can actually go invest the health savings account. You can go invest the Roth IRA. I'm okay if people do that because I've been there, done that-

• 54:14Speaker 03

  Yep.

• 54:15Brian Preston?

  -to where you're like, okay, I have until April to fund these accounts. Let's put it in there, keep it in cash. So it's still, because if I got in a really bad pickle, I could always get my initial contribution out of the Roth. I can get my HSA money reimbursement out. That's okay. And that's what I meant. But you were right. If the money's invested, it's not really cash.

• 54:33Speaker 03

  That's not emergency reserves.

• 54:34Brian Preston?

  That's a good clarifier.

• 54:37Speaker 04

  Next one to come back to was the 21-year-old living at home who had the 6.99% truck debt, or his other option to him was opening a taxable account.

• 54:46Speaker 03

  And again, assuming it falls inside of 23,8, I'm going to argue, pay it off on the 23,8 timeline and get those dollars working for you because you're 21 years old. You had made sort of this throwaway comment, well, yeah, but I want the truck paid off before it leaves the house.

• 55:00Brian Preston?

  Here's why I say that, is because when you live at home, you might have a savings rate of 50, 60%. And when you get to a 50, 60% savings rate, I know that, but you might, after you're doing 25, 30% for saving for the future, you might say, what would be the harm in just going ahead and extinguishing this debt? That's the only reason I said that you might have that debt paid off even sooner.

• 55:24Speaker 03

  Sure. And once you get above 25% savings rate, you get to fast forward in the financial order of operating. You get to do what you want with your money. You're saving above 25%. You want to pay off low-interest debt and like be mathematically suboptimal? That's totally fine. There's no issue with that. It's for folks who are not at that stage. You need to be a little bit more careful about it.

• 55:46Speaker 04

  And then last but not least, the Know Your Number Calculator. If you don't know what we're talking about yet, go to moneyguy.com/resources. It's a brand-new retirement calculator, free for you to go play with, learn from. Go check it out if you haven't. But this person said it told them that they could retire with the numbers they put in.

• 56:06Brian Preston?

  Did they give us age?

• 56:07Speaker 04

  I don't think we saw age from the chat. Team can tell me if I'm wrong, but I did not see it come through.

• 56:12Speaker 03

  I don't care if they're 25 years old or if they're 55 years old.

• 56:15Brian Preston?

  Okay.

• 56:15Speaker 03

  Or 65. The Know Your Number tool is incredibly helpful. It's supposed to give you an idea of where you are and where you should be, but I would never tell someone, hey, based on the output this gives you, design your life around that, because it's not a full financial plan. It does not, it is not stress-tested. It's not looked at your specific, you know, one of the gripes we get is, and not gripes, it's just feedback. Hey, guys, why didn't you include this? Why didn't you include this? You wouldn't believe all the different things we get about like, why didn't you include it? And the answer is because there's 100,000 different things that we could have included, because that's what goes into a financial plan. Before you make the decision to do something huge, like leave the workforce, or stop saving, or really back down your savings, you better

• 56:58Speaker 03

  make sure that you've stress-tested it and you've measured two, three, four, five, six times before you do that. We did a Making a Millionaire episode with Danielle where she had, she had arrived at this conclusion that I'm going to be able to coast fire. I'm going to back down my savings rate and I'm going to be fine. And when we actually did the financial advisor work of back-testing it, stress-testing it, what we determined is, yeah, she had done enough work to cover the bridge at the first part of fire, but she did not get to the second part of fire. She had not saved enough and she was taking her foot off the gas too early. If you go through the Know Your Number course and it tells you can do that, that's a good indication for you. Okay, now I need to do the second step. Maybe that second step is getting a financial advisor. Maybe that second step is getting a second set of eyes. Maybe that second step is just me figuring out, how

• 57:43Speaker 03

  do I do Monte Carlo simulations? How do I model out what our vacation's going to look like? What healthcare is going to look like? How often are we going to replace cars? What sort of gifts are we going to do for kids? How are we going to pay for weddings? All of these things that can change, you want to have that stuff fairly granularly figured out before you make a huge decision like cutting your savings rate, especially if you live inside the wealth window and you're doing it.

• 58:04Brian Preston?

  Well, I think you, look, you're exactly right, but I do think if your age does have a determining factor, if you're 25 to 35 years of age-

• 58:13Speaker 04

  They are 36 and 32, by the way.

• 58:15Brian Preston?

  Okay, so they are getting on, they're getting, they're still young in my eyes.

• 58:18Speaker 03

  Don't say they're getting on up there. That's young.

• 58:20Speaker 04

  That is, that's young.

• 58:20Speaker 03

  Don't say they're getting on up there.

• 58:22Brian Preston?

  They're still young in my eyes, but it is one of those things where it's early enough that you can get some false readings by just your age, because that's why, they're 36, so it's not necessarily for them, but if a 28-year-old does this and does a wealth multiplier calculation with, you know, 30 years of growth, you can get to some distortions just because the time and the return are doing, the compounding growth is doing all the heavy lifting. But somebody who's 36, it starts to take shape and then definitely post 40, definitely post 45, you're getting to the point where you really should probably get a second opinion on that.

• 58:58Speaker 04

  Know Your Number tool is a great signal.

• 59:02Brian Preston?

  It's a signal.

• 59:03Speaker 04

  Like, that's how I see it. Like, it's a very valuable signal. So, like, to the couple that asked this question, all right, that's signaling that you're doing something right. And so like Beau said, those are some next steps that you can consider. That's what I would say. Like, so I, yeah, I think it's super important just to specify that just one calculator isn't a full financial plan.

• 59:23Brian Preston?

  Hey, I don't want this to end. Can you give us one more question?

• 59:26Speaker 04

  He's having so much fun.

• 59:28Speaker 03

  You know, give a few more rapid fires. Just throw some more.

• 59:31Speaker 04

  You get five seconds.

• 59:32Brian Preston?

  Let's do something a little more fun than that.

• 59:33Speaker 04

  We can do one more question. Let's do it.

• 59:35Speaker 03

  Okay.

• 59:36Speaker 04

  All right. Let's see. We've got one from Ally up next. It says, I'm 28, and when I started investing in my Roth IRA, I bought bonds that make up 7% of my Roth portfolio. Now, I realize I'm probably too young to be investing this high in bonds. Should I sell even if at a loss?

• 59:57Speaker 03

  Yes. So a lot of times, um, okay.

• 1:00:01Speaker 04

  We can't give specific investment advice.

• 1:00:04Brian Preston?

  Roth, you realize how you're precious. You are Gollum going, my precious with your Roth. And look, we are actually the people telling people to buy bonds, but not in the Roth IRA. This is, this is, we lost the plot on that a little bit.

• 1:00:20Speaker 03

  And maybe not a ton of them when you're 28 years old. Again, we don't know your unique risk profile, risk capacity, all the different variables that go into that. But the analogy I always give when someone has an investment that's at a loss, they bought something, whether it's a stock, bond, mutual fund, index, whatever, they always ask the question, well, hey, what if it's a loss? Should I sell it? I've always heard I don't actually lose money unless I sell. And that's not exactly true. The analogy I give is imagine you were riding through a valley, right? You're riding a bicycle through a valley and you get down to the bottom of the valley and one of your tires goes flat. Before, here's what you would not do. You probably wouldn't ride that bike with a flat tire back up the hill before you change it and put a better tire on there.

• 1:01:02Brian Preston?

  It might very well be impossible.

• 1:01:04Speaker 03

  Right. What you're going to probably do is you're going to figure, okay, even though I'm at the bottom of this valley and I've got this flat tire, I'm going to get something in there. So I'm going to replace it with something that's going to give me a more effective, more efficient, higher likelihood, higher probability of getting out of this valley in a very effective manner. And that's what we do when we look at portfolios. A lot of us subscribe to this sunk cost fallacy. Oh, well, I've ridden this thing all the way down. I got to wait for it to come back and then I can change. If bonds, fixed income, whatever investment is in your Roth is not what makes the most sense for you right now, one of the great things about selling inside a Roth is there are no tax consequences. It's really easy. It's a low-cost transaction to do. You might want to go ahead and right

• 1:01:46Speaker 03

  that ship today so that you have a better, more fitting portfolio for where you want to go and where you want to be in the future.

• 1:01:52Brian Preston?

  By the way, Ally, you're obviously welcomed, welcome to this wonderful, wonderful world of finance, because I can tell just the fact that you opened a Roth is very powerful, but the thing you put bonds in, it shows you still got, you're on the learning side of things. I want to go and prepare you for the next thing that's going to happen because you're going to listen to this show. You're probably going to take action, go buy an index fund or an index target retirement fund if you don't want to make the decision of how to invest it. But the market's going to have some volatility in the next few years. Keep staying the course, because that's the part that breaks my heart when brand-new investors start investing and then they maybe lose 10, 15, 20, 25% because the market goes

• 1:02:33Brian Preston?

  down. Just grin and bear it and even invest more on top of that same Roth account. And I promise you, your future self, what feels risky in the short term and the long term can be a tremendous wealth builder. And what feels safe in the short term can actually work really against you in the long term. And that's what I always feel so sad for new investors. And I've had, you know, friends and neighbors who are new to the country and they figure out about investing and then they reach some volatility and they quit.

• 1:03:02Speaker 03

  Yep.

• 1:03:03Brian Preston?

  And that the compounding growth doesn't work unless you can stick with it 10, 15, 20-plus years. And a lot of, for a lot of new investors, they quit before the good stuff comes just because of the volatility. That's the, the test of discipline that comes. It's that fear and greed battle that all of us humans encompass every, every year that we're investing. And that's the part of you have to endure the risk so you can get the long-term reward. And I know that wasn't part of your question, Ally, but I just want you to be, you know, educated on that so you can bear it when it comes your way, because it will happen. You'll remember that I had this conversation with you.

• 1:03:44Speaker 04

  Good stuff. Don't forget, go to moneyguy.com/survey. Take part in our survey. Shape the show. Tell us exactly where you are in your financial life, because that is only going to help us make better content, answer even more of your questions, speak to you, where you are, your pain points. We can only do that to the best of our ability if you tell us about it. And that's what this survey is all about. Go to moneyguy.com/survey, share where you are in your financial journey. We would love for you to be a part of that.

• 1:04:13Brian Preston?

  So it's fun having the whole band here together. It's awesome. This is a lot of fun. We got a full day of recording. I woke up, matter of fact, I had a little time, had a little trouble sleeping last night. Because you were so excited? So it's like Christmas, you know, like, is Santa gonna come? You know, that's what I was feeling that way myself. So thank you all for showing up. I mean, I am so thankful that we get to do this with you guys every week. I hope you can tell, you know, the passion that started this show in 2006 literally was always wanting to be a school teacher. And you guys have let this grow so far beyond that because we reach millions of you each month. And we don't take it for granted. So thank you for the respite of taking vacation, making memories with my family and friends. But man, oh, man, do we love creating this

• 1:04:58Brian Preston?

  content so you can be better with money. I'm your host, Brian, joined by Mr. Bo, Rebby, and the rest of the crew. Money Guy team, out.

• 1:05:05Speaker 04

  The Money Guy Show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities laws and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss.

• 1:05:41Speaker 06

  Hey, Bo's here. On your next track, listen for the decisions. Distortion on the bass, the vocal right up front. Every choice deliberate. With Bo's, you'll hear it all. Your music deserves Bo's.

• 1:05:57Speaker 07

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