Experts Predict MASSIVE Stock Market Drop (Should You Sell?)

Headlines are suggesting a market crash may be in store - should you be worried? We walk through what you can control (FOO, diversification, and dollar-cost averaging) and where you can channel all of your financial worries. Plus live Q&A on Roth timing, 15- vs 30-year mortgages (and that 50-year chatter), totaled cars, high-cost-area retirements, and emergency home repairs. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠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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• 0:26Speaker 01

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• 0:59Brian Preston?

  Did you hear? The experts are saying the market's going to collapse. What should you do?

• 1:04Speaker 03

  Brent, I am so excited about this because inevitably, this happens. There is always someone out there saying, okay, the next crash is coming, the next downturn is coming. You need to be afraid, you need to beware. And this happens even more as we start tracing new all-time highs. As we start seeing new movement in the market, people say, hey, wait, hey, hold on, hey, wait. And if you don't believe us, look at the headlines that we're seeing right now. You can see, here's one from October 27th. "Will the Stock Market Crash in 2025 for Risk Factors?" Well, little did I know, you know, back in April, it crashed like 19%. We've already seen that. How about this one from The Motley Fool? This is as of November 10th.

• 1:46Speaker 03

  "Is the Mother of All Stock Market Crashes on the Horizon?" Or this one also from November 10th. "Is a Stock Market Crash Coming in 2026?" A lot of people worried about what's going to happen with the markets moving forward.

• 2:00Brian Preston?

  I'm so glad the content team put these headlines there because when I saw that this is what we were talking about, I was like, are there really people? I guess you could probably, any day in time, we could go and... And just say, what are people saying? Because this is why you have to be careful who you letting your head is because yes, there's always going to be people trying to whisper in your ear on why you should be concerned about investing and, and we've done so much content on this. I think it's important. First, though, but we'll level set. I think it's give context. What are the top concerns? I think we have a CFA on staff, you know, right here, sitting at the desk with me. Maybe you can add some sanity to the, to the concerns that people are even saying we should be paying attention to.

• 2:39Speaker 03

  Well, there's some economic realities that exist. I mean, right now there is and has been a slowing job market and inflation was sort of a wild concern coming out of the pandemic and it's still been lingering. It's still a concern there. And I think what has really got a lot of people uneven is that generally speaking, the solutions that are implemented to combat these two forces are in opposition of one of one another. Oftentimes, okay, if there's a slowing job market, we're going to lower interest rates so that we can stimulate the economy. But if there is lingering inflation, we want to raise interest rates to try to slow that down. So even the solutions are in conflict with one another. And people are saying, man, something,

• 3:20Speaker 03

  something seems awry, something doesn't seem right. And I think just anecdotally, people are seeing how well the markets have done. They've seen that, oh, they hear all time new highs. And whenever we hear all time new highs, that must mean that the other shoe was about to drop.

• 3:35Brian Preston?

  Well, it's, it's all, like, I was a kid that, I mean, the pre-computers and all the Mad Libs were, you know, you pass time on road trips. And I feel like a lot of times headlines these days are just modern Mad Libs where they say, okay, inflation, you know, last year, jobs, you know, they throw all these words together and come up with these headlines because you can cherry pick the data on inflation multiple ways. Yes, there are some very troubling or concerning inflation data points, but there's also other things that are as a counterweight coming down in price. So it just, it feels like this is something you can't necessarily control. You can watch, but it's not something that I'd be setting my plan off of. How about?

• 4:19Brian Preston?

  You, you hear all the headlines, taxes are changing, trade.

• 4:24Brian Preston?

  Tariffs, what's the CFA take on all that stuff?

• 4:27Speaker 03

  Yeah, so we talked a lot about this. We did a mini show, kind of looking at the state of the economy. So if you want to just go do sort of like a deeper dive, you can go look at this mini show, the state of the economy in 2025, we're kind of dive into that. But we know that in 2025, there have been a bunch of headlines about what's going to happen with tax policy and what's going to happen with international trade and how are tariffs going to be imposed? And what are the implications of that going to be so much so that we already alluded to this? In April of this year, between March and April, we saw the S and P 500 drop 19%. So this is not new news. These aren't new things we're hearing about, but we still haven't heard how all of this is going to resolve.

• 5:08Speaker 03

  And what the ultimate long-term implications of some of the decisions right now being made are going to be. And again, whenever there's uncertainty and we don't know exactly how things are going to shake, shake out. I think investors in the market in general start to get a little uncomfortable.

• 5:23Brian Preston?

  Well, I'll do one more and then I want to talk about actually pivot and say, what does this mean for you? Cause I like people come to us and look for guidance and we want to kind of help you know how to navigate all this. But the, the third one is this AI bubble.

• 5:36Speaker 03

  Oh, yeah.

• 5:36Brian Preston?

  Now, look, this is one because realize I've told, I've been very confessional and I'll, I'll make sure I send this clip to my buddies right afterwards. Cause it's kind of my way of, of paying it forward that, that I didn't let them do it. Is I was at spring training three years ago, three or four years ago. And one of my buddies is like, hey, should I, should I go and put $10,000 in, in video? And you know, what I tell them, no, go buy the S and P 500. Cause that's what I, you know, if you ask me today, I'm going to tell you the same thing.

• 6:04Speaker 03

  And I bet he's so happy about that advice.

• 6:05Brian Preston?

  Well, he brings it up to me constantly. He's like, you realize that $10,000 would now be worth $97,000. And who's keeping track though? But it's, um, it is one of those things where, but it's back to, are we at a bubble? And this is the part, I'll just throw in my opinion there. I'll get the CFA take. We don't know. I keep talking about this concept of law of accelerating returns is that technology is expanding at such a speed that it's hard to keep up with, that you don't know what is the new dominant disruptive technology. And AI very much, there is a race going on right now to see who can, can get in the forefront and dominate this. That's why I still stand by, I love the S and P 500 because it's going to, it's really going to

• 6:48Brian Preston?

  cut through all the noise. But that doesn't mean, I mean, if you got Nvidia and you bought it in, at spring training four years ago, you're probably going to be okay.

• 6:57Speaker 03

  Well, I think, I think back to the dot com bubble bursting. And if you were someone who put all of your money and you were so excited that you went and bought, was it grocery.com or grocerystores.com? It didn't?

• 7:07Brian Preston?

  It was like web grocers.

• 7:08Speaker 03

  Yeah, like it did not play out well for you. But if you were someone who was further along in your career and maybe had a risk tolerance that was slightly inside the spectrum, and you had a well diversified portfolio, not concentrated singularly in tech stocks, not concentrated singularly in just S and P 500, but you were well diversified and the dot com bubble burst happened. Yeah, you're going to go down, your portfolio is going to go down, but it's not something that's going to leave you destitute because we know that when the market goes down, there's often a V shaped recovery. We saw that after the dot com bubble burst in 2003. We saw that during 2009 after the great recession. We saw it in the midst of COVID and we even saw it after 2022 with 2023 being a fantastic

• 7:52Speaker 03

  market year. So if you're in a well diversified portfolio, even if some of the AI companies, whatever name you want to throw out there are perhaps overly valued right now, or there's a little too much excitement, that's one of the reasons why we like a broadly diversified basket of goods, not just across the single asset class like US large cap, but across the entire equity and fixed income universe. If you design that well, I don't think you have to be worried necessarily about an AI bubble because your portfolio will be structured to be able to weather that.

• 8:25Brian Preston?

  Well, we went, look, we went into specifics here, but the real question that our audience is going to say, should you be worried? And we'd argue the answer is no.

• 8:36Speaker 03

  Nope.

• 8:37Brian Preston?

  And what do we mean by that? Is, and look, there's always going to be something that is going to scare you financially. I mean, I've lived long enough, I'm about to sneeze fighting.

• 8:50Brian Preston?

  Oh, did you see the elbow? Oh my goodness. See how good form on the sneeze? Did you see how considerate that was? Okay, carry on. Oh my God. I think that might be the first on air sneeze we've ever had.

• 9:02Speaker 03

  20 years of broadcasting.

• 9:04Brian Preston?

  First on air sneeze.

• 9:05Speaker 03

  First time I've seen them sneeze on air.

• 9:06Brian Preston?

  I need to wipe the nose. Okay, hang on. Oh yeah, did that on air. Here we go. Let's keep this thing rolling. Okay, what should you do? We have to live show.

• 9:18Brian Preston?

  The Financial Order of Operations is your backbone. Of course, let me, let me touch it with my sneeze hands.

• 9:24Brian Preston?

  There you go. I'm so sorry. Wait, wait, all these content writers write all this great content and then I show up.

• 9:32Speaker 03

  Yeah. So, okay. So what should you do? How should you prepare? Why do we say that you should not be worried? Because if you have a plan, then you likely don't need to have the same level of anxiety as someone who does not have the plan. Unfortunately for you, we've built a plan for you. It is the Financial Order of Operations and you can have your very own copy. If you want to go to moneyguy.com, you want the thing up for me?

• 9:52Brian Preston?

  Oh yeah.

• 9:52Speaker 03

  Moneyguy.com/resources. It will show you step by step, what should I do with my next dollar depending on where I am? Well, if you are concerned right now, if you're trying to figure out, am I making the right decisions? Am I worried about what's going on? Have I actually followed the Financial Order of Operations? And one of the things that you'll arrive at, you'll say, okay, I don't have any high interest debt. Okay, that's great. I've got a fully funded emergency fund. Okay, that's great. All right, I'm putting money in my Roth IRA and I'm not going to touch that until I'm at least 59. And okay, I'm putting money in my 401k. I don't need to get to that money either for a decade. Okay. And it will reframe your mind to think, okay, I have a plan. I'm putting my money in the right places and I'm doing the things that I'm supposed to be doing.

• 10:34Speaker 03

  So what if the market has volatility or ups and downs in the short term? Because right now for me where I'm at, I don't have to worry about what my dollars are doing in the short term.

• 10:45Brian Preston?

  Look, I look at the volatility as more of a feature than something you should react to. So this is why I stand by always be buying, baby. Is if you're just automatically setting up the behavior that you're saving consistently, you're, you're respecting, you know, diversification and all that good stuff. No matter what happens through the volatility and other things, the financial mutant side of you is going to see the good in it. And then you're going to be better for it. Remember, we have done so much content on. If you invested during the Great Depression, yes, it was a 25-year period that the market went from this high, took 25 years to get back to that same high. But if you were buying every year, you annualized the rate of return of around 11%. The same thing happened with the last decade.

• 11:30Brian Preston?

  Everybody talks about how scary it was. I actually was managing money. I was investing money during those times. And once again, and it's amazing how it's pretty close. I think if you were buying every year, it also annualizes close to 9 to 11%. So these are the things, you see how the behavior, don't let the emotional side of stuff keep you from actually doing good behavior. Because if your plan was good before, it's going to be good during, and it's going to be good after. Just make sure you're creating a plan of action and not just flopping around out there based upon what the media tells you, or what you're putting in your head, what your relatives are telling you at these upcoming holidays, actually have something that reflects what money can and cannot do for you.

• 12:13Speaker 03

  And if you are someone who is in the accumulation stage, and you are a financial mutant, it is possible, whether we see a downturn or not, that you can reframe your mentality to get kind of excited when those things happen. If you have your always be buying set on autopilot, and you're putting money in your 401k, and you're putting money in your HSA, and you're putting money in your Roth IRA, and you start to see the market kind of start to go down, you start to get a little excited thinking, holy cow, I'm getting a great deal right now. And you even start thinking, man, is there a way I could just increase my savings by 1%? I'm putting 5% in my 401k, but the market's freaking out, ooh, is there a way I can really kind of squeeze, tighten the belt, and maybe put 6% in?

• 12:55Speaker 03

  And it's those kinds of folks who come out of the, on the other side of market downturns, and the other side of volatility, saying, man, that was an amazing opportunity. I think it's Warren, it's very bittersweet right now. Warren said in one of his

• 13:12Brian Preston?

  You're talking about Warren G?

• 13:13Speaker 03

  Yeah, Warren G. and Nate Dogg, obviously. The two that we often talk about.

• 13:19Brian Preston?

  Warren Buffett, of course.

• 13:20Speaker 03

  He said, "When it's raining opportunity, reach for a wash tub, not a thimble." Well, when the market has volatility, when there are downturns, if you are someone who is in the accumulation phase, that's the way that you should think about it. And if you're not in the accumulation phase, you are near retirement, you are near financial independence, then you should be thinking, okay, is my portfolio appropriate for where I am? Does my risk tolerance match my risk capacity? And can I weather whatever storm may come my way? And so long as you've followed the Financial Order of Operations and done the things that you're supposed to do, you can likely answer that in the affirmative. What do you think about that?

• 13:56Brian Preston?

  I think it's

• 13:57Speaker 03

  I can't believe you sneezed. It's wild. It was pretty impressive. It's

• 14:01Brian Preston?

  Well, I only have to sneeze.

• 14:03Speaker 03

  You know what I mean?

• 14:03Brian Preston?

  I only have to sneeze every 20 years of on air is because you saw I clean those ducks out really strong when I go.

• 14:12Speaker 03

  What a gross thought.

• 14:15Brian Preston?

  Well, I mean, haven't you ever seen people? Like, I watch people sneeze.

• 14:18Speaker 03

  You're talking about the tiny sneezers?

• 14:19Brian Preston?

  Well, I'm worried that they hurt them. They're blowing, your seals are not designed to hold that stuff in. So you're just, you know, I just, I let it rip.

• 14:28Speaker 03

  That's what we do here at the Money Guy Show. We let it rip. And one of the things we love to do is we love to let it rip by answering your questions every Tuesday morning at 10 a.m. Central Time because we really do believe there's a better way to do money. So if you're curious and want to get our take on something, you have a question for us, we want you right now to get your question in the chat. We have the team, a much larger team today, out in the wings, collecting your questions. So with that, Crave, your director, Rebe, I'm gonna throw it over to you.

• 14:58Speaker 04

  Yeah, we're gonna kick it off with Mason P.'s question. I like all the guidance you guys just gave. So this is kind of a, let's apply it to Mason's question. It says, "I just started my investing journey. I have a lump sum set aside to max out both mine and my wife's Roth IRAs," which is great. Should I wait to invest that if the market is just expected to go down? What do you think? What would you say to Mason just starting his investment journey?

• 15:25Speaker 03

  Well, it's really interesting how you how you frame that if the market is expected to go down. Cause here's the question I'd ask you, is the market going to go down? Yes, that's the way the market works. At some point it will go down. Is the market going to go up? Answer that question is also yes. So when I think about young people that are investing and trying to put their money to work, uh, whether you put the money in right now and invested that, or whether you put it in, uh, let's say six months in the future and the market's at a different place. When we fast forward 10, 15, 20, 30 years into the future, will the entry point of that singular Roth contribution likely have made a difference?

• 16:08Speaker 03

  And I think the answer is no. I think even if you look at a portfolio today, if you maxed out your Roth at the beginning of 2008 versus the end of 2008, there's a really good chance that right now at this point in time, the difference in what you would have made on that singular contribution is inconsequential relative to your whole portfolio, if you've been saving and investing. So I tell young people, don't get too cute with it. If you have the money right now, I would love to see you put together a strategy to begin dollar cost averaging, or maybe get it to work in the market depending on the size of your portfolio, and go ahead and do that today. Cause we don't know what tomorrow is going to hold, but more often than not, the market goes up rather than goes down.

• 16:48Brian Preston?

  What I wrote down as soon as I saw Mason's question, um, was know thyself is because what I worry about, I think you're spot on, is that if we look back on this 10 years in the future, the decision of when to buy it right now in one lump sum or dollar cost average it over the year, is just going to be very minimal on your long-term success. However, from a behavioral standpoint, you said it yourself, I just started investing. What breaks my heart, and I've told stories about neighbors and others where I have neighbors very successful. They come from other countries and they hear me talk about investing. They're like, hey, I'd like to get in on that. And then when I helped them set up their first accounts, but then They experience that first 14, 15% intra-year volatility and they're like, oh, this seems risky.

• 17:32Brian Preston?

  And they immediately shut down the behavior. That breaks my heart.

• 17:36Speaker 03

  Yep.

• 17:37Brian Preston?

  So you're right. 10 years in the future, this will not have an impact, but in this moment in time, what do we have to get you over that behavioral speed bump? For me, that is, if you're worried, Mason, that you would be devastated if you invested all of your Roth and all of your wife's Roth, and then you watched the market go down 15%, that you would probably have a reaction to that, then definitely set up a dollar cost averaging structure. So then it also makes it automatic. What is not the right answer is what I see a lot of people do is they just, they go to full stop and they say, I'm just gonna wait until, you know, essentially I get a,

• 18:13Brian Preston?

  a sign from the Lord that I should be investing.

• 18:16Speaker 03

  Now's the time to buy.

• 18:16Brian Preston?

  This is the perfect time to be investing and there's just never going to be, there's always going to be something that scares you. There's always going to be something. So doing something is better than full stop. Now, if you're a person, you're kind of a cowboy, you're already risking, you know, because you're young enough. There's nothing wrong and that's why we did try to, I don't, I don't know if the content team's going to be able to pull it up because we have, we've done shows on all the money guy rules. We have like a Goldilocks investing. When you're trying to figure out if you're lump sum versus dollar cost averaging, it all is tied to what is this level of money to your total net worth of investable assets? Now, since you're brand new at the beginning, this might be all you've got. But I still like the thought of you setting up a monthly investment allocation

• 18:59Brian Preston?

  so that you and your spouse actually carry this behavior into next year, into two years in the future, into five years in the future. You are going to make it happen, no matter what's going on in the market with volatility.

• 19:13Speaker 03

  As you're talking, I thought about, we have a dear client, Brian, that you and I worked with, and you're going to know exactly who she is for a long, long, long time, 15, 20 years now. And she told us one time, she's like, guys, I'm really nervous about the market being high right now. And I've got some cash and I want to put it to work, but I'm so nervous, I'm so scared, I'm so uncomfortable. I'm just gonna wait until, I'm just gonna wait till the market goes down a little bit. And this is what you said to her. You said, her name, Mrs. You said, "You mean to tell me that right now, while the market is making money and everything's happy and everybody's green, you're nervous to invest. But when things start getting scary,

• 19:56Speaker 03

  and the market starts going down, and people are getting uncomfortable, and all the headlines are telling you how scary things are gonna be, that's when you're gonna be willing to like, enter in and begin investing?" And she was like, "Oh, no, no, no, that doesn't sound right either." And that's why we love dollar-cost averaging, because it removes the emotion of having to make a hard decision, either at the top or at the bottom. All you have to do is make the decision, "To get my money working now." So I think a lot of people are sitting there thinking today, "Oh, I'm just gonna wait until it looks a little bit more attractive." The absolute best time to invest is when it is the absolute scariest. So if you're scared right now, there's a really good chance you're gonna be really, really scared then.

• 20:37Brian Preston?

  Yeah, no, that's why you just always be buying. It cuts right through that. It's kind of like, you know, back to Days of Thunder, you just drive through it.

• 20:46Speaker 04

  Drive through it, that's right.

• 20:47Speaker 03

  Do you even know that movie, Ruby?

• 20:50Speaker 04

  Only because of you two.

• 20:53Brian Preston?

  Well, you know, I felt like things would come full circle. You could, you guys, you know, Brad Pitt had his Formula One movie. You could then go watch Tom Cruise in Days of Thunder, and you get the full story arc of auto racing there.

• 21:05Speaker 04

  I've only seen clips of it, to be perfectly clear.

• 21:10Speaker 04

  All right. Mason P., thank you for the question. Next question is from Barkleydale3551. It says, "Would a 15-year loan at a lower rate on a first home be mathematically optimal compared to a 30-year loan if you're planning on staying for a minimum of seven years, since more money goes to the principal to roll into a down payment on a second home?"

• 21:34Speaker 03

  It depends.

• 21:36Brian Preston?

  Look, I, all I can do is tell you my story is, cause I was, look, I've traded in my tight wide card, but I, I love that when I did a 15 year mortgage on my second house, when I, cause I had my starter home and then me and my wife relocated, you know, and still in the same community, but we just went down like 10 minutes south to a, to a nicer house. And, and I'll never forget, I did a 15 year loan and I was, I was so proud because I saved half a percent on that. Fast forward to when I needed to move to the third house, when I moved to Tennessee, I couldn't sell the house in Georgia because it just, market was horrible in South Atlanta

• 22:18Brian Preston?

  at the time. So I ended up having to rent it out for two or three years before I actually sold it to get the proceeds out of it. Cause I, all I did was I prepaid all the negative equity because the house lost a tremendous amount of value during this period. But um, I, I ended up, it was that 15 year mortgage kind of bit me a little bit is because I felt like from a cash flow perspective, I had to carry both homes for a period of time. Whereas we had this kind of conversation. I mean, and I'm not trying to bring it up indirectly, but there was this whole talk about 50 year mortgages. And I know that that's controversial,

• 22:52Speaker 03

  window is coming.

• 22:53Brian Preston?

  Well, no, but I, but I think that, look, for a lot of you, I think if we all went in doubt, zoom out on just life, a lot of life is unfair in the fact that your, your resources, when you're young in the messy middle is unfair because you're fighting and you think about it in your twenties and thirties, you got all these things happening in your career, in your family, and you're not in your peak earning years, but yet you're expected to get it all to happen right now. It's, it's back to that analogy I keep, because I'm loving this. I'm trying to figure out how to build it into our content is you are definitely putting 10 biscuits in that five can package of biscuits. I mean, this is, I'm loving this thing because it's everything southern about me that I love. And that's what, that's life

• 23:35Brian Preston?

  for every one of you guys. So if we could figure out some way to help you navigate that inefficiency of your income structure to when you get older, like when you get in your forties and you start Getting into those peak earning years and also the kids. Yes, they're getting more expensive in the fact that maybe they're going to college, but they also get scholarships and all these other things. You're gonna find out all of a sudden, look, money's not as hard as it was when I was in my 30s. I just need to find a solution that helps me build the bridge over that, but still lets me continue to invest, continue to live life to the fullest. And that's why I like the flexibility of the 30 year mortgage because looking back with wisdom.

• 24:15Brian Preston?

  Yes, I saved a half a percent on that, but man, oh, man, did I cause myself some tightness of margin because those those payments were substantially larger on the 15 year mortgage than they were on that 30 year. And sometimes I just had inefficiency, especially being self-employed, being a business owner who had started a company. There were months where, man, oh, man, I wish I'd had a little more flexibility in how my cash flow was laid out.

• 24:39Speaker 03

  Yeah, I think, you know, one of the questions I would answer or ask is where are you in the financial order of operations? Because 15 year mortgages are not inherently bad. Don't mishear what he just said by us saying we don't like 15 year mortgages. Nor do we dislike 30 year mortgages. There is a time and a place for each one. I just, I have a really reliable resource. I just Googled this to look at where rates are right now. It's like 30 year rates are at 6.25. And 15 years are at 5.6. That's not like a huge spread. I mean, it's, it's okay, but it's not like a huge spread between those. And so if I'm making the decision between a 15 year and a 30 year, I'm going to ask my question. Okay. Well, what have I been doing from a wealth building standpoint up to this point?

• 25:21Speaker 03

  And if, just like you said, if I'm early on in my journey and I'm not maxing out my Roth IRA, I'm not doing the HSA, I'm not putting money to work for me. I understand what my wealth multiplier is, then yeah, maybe I think about doing that 30 year mortgage. But if I'm someone who's got a decent size portfolio and I've been doing the things and I've been in step seven, been in step eight. And I decide that I'm going to, you know, move to my second home or whatever, and I want to be on a path to pay that debt off. If that's one of your goals, we're not going to fight you on a 15 year. But I think it's much more dependent on your individual and specific situation than, oh, well, which one is the always mathematically the best one? Cause it changes and it varies depending on your circumstances.

• 26:04Brian Preston?

  It's that whole arc I was just talking about is that where I've, where I ran afoul of this rule is that I was in the make wealth phase.

• 26:11Speaker 03

  Early part.

• 26:12Brian Preston?

  Is that I had. Income coming in, but it wasn't my peak earning years. I had lots of things pulling on that with life, with family, with, you know, trying to save and be responsible for the future. I needed something that gave me the margin to so, to allow me to invest. Now, when I got to the maintain wealth, like I said, in your 40s, all of a sudden it seemed easy. Now I could de-risk by paying down the debt. And that's, that's my own journey that I've experienced is, is that, you know, you see the stat, I'll never forget when I read Everyday Millionaires, it talked about how millionaires pay off their mortgages in 10 years. And you, you read that stat and you're like, well, gosh, that means that I should probably pay off my mortgage, you know, in 10 years. Well, if you're in your

• 26:56Brian Preston?

  30s, no, you shouldn't because you're not going to be, you're not going to have the cash flow coming in to do that. That, that stat is flawed in the fact that for the majority of millionaires, when's the average millionaire get minted? It's age 47. So if you think about it, yes, what is my rule? Once you're over 45, you're more than likely in that maintain wealth phase, you should go pay off. I resemble, because my third house, y'all know, I paid it off. I didn't live in that house. I was, you know, for 10 years. So I, I once again resemble the stat that was given, but I have the additional context is this was my third home. It wasn't my first house. It was my third house that I was, you know, now I had, my income had gotten to a point. And that's why I just don't want you guys to extrapolate that, to put the pressure on yourself when you're already

• 27:39Brian Preston?

  limited on your resources. You're in the messy middle and you got your kids pulling on you, you got your career, you got your community pulling on you. And then yes, you're supposed to max out your Roth IRA, your 401K, and you're like, I can't do it all. I'm like, there's a time and a place. So you need to know where you are. Are you in the make wealth? Are you in the maintain wealth? There's a time and a place for all these things. And that's why we wrote the Financial Order of Operations. So you don't have to try to figure out how to do it. We've already built this for you so that you cannot feel like you're working against yourself.

• 28:09Speaker 03

  Love that.

• 28:09Speaker 04

  That's great. Well, Barclay Dale, thank you for your question and thanks for being here.

• 28:17Speaker 00

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• 28:42Speaker 01

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• 29:10Speaker 04

  Nathan.

• 29:10Speaker 03

  Should we talk?

• 29:12Speaker 04

  What?

• 29:13Speaker 03

  Uh oh. Well, a lot of people are asking for it. I was just gonna... That's fine, let's keep going.

• 29:18Speaker 04

  What are you referring to?

• 29:19Speaker 03

  No, no, you ask another question.

• 29:21Speaker 04

  Because there was a question I was thinking about asking, and I didn't know if you wanted to talk about it. So is it the same thing?

• 29:27Speaker 03

  I don't know. Ask the next question, and I'll decide if we're gonna answer that question.

• 29:32Speaker 04

  Sounds good.

• 29:32Speaker 03

  As we go.

• 29:33Speaker 04

  Well, the next question's a good one.

• 29:34Brian Preston?

  We all know, we don't let Brian, distracted Brian, see any question. So I'm just sitting over here going, I don't know what's going on.

• 29:41Speaker 04

  Nathan C.'s question is up next. It says, "Hi Money Guy team. I am 27 and have just gotten into a car accident. All are okay, though, so that's good. That's the most important part."

• 29:52Speaker 03

  Car accidents are the worst, though.

• 29:53Speaker 04

  But, I know, right? "But the damage to my 2011 Corolla may have it totaled. I'm saving 38% of my salary. Is it time for a new car or repair out of pocket?"

• 30:07Speaker 03

  Man, this is one where we gotta ask a bunch of questions. How many miles are on the Corolla? Right? What was the... How's your maintenance been on the Corolla? What... How dependable of a car is it now? Now, here's what's likely happening.

• 30:18Brian Preston?

  Well, he's not gonna get to choose that. If the car's totaled, they're just gonna send him a check.

• 30:22Speaker 03

  Well, that's what he's saying. But, or, right? He can repair it out of pocket. Isn't that his question? I can repair this out of pocket.

• 30:29Brian Preston?

  So you go drive around a salvage titled car?

• 30:32Speaker 03

  Well, that's, that's, that's kind of where I was going with my line of questioning. Is the car, like when you actually look at the value of the automobile, is the money you're going to put into it actually more than what the car would be worth right now? If the insurance comes out and said, hey, we're going to total this. It's not worth us fixing it. So it's likely not going to be worth you fixing it. But that's a decision you'll have to make for yourself. It certainly seems to me like this may be time for a new car territory. Agreed?

• 30:58Brian Preston?

  Yeah, I mean, but there's nothing that says that you can't, you know, because when you're dealing with your insurance company, it's, it's kind of a somewhat of a negotiation of the fact that you go out there and you look at the market and you say, hey, well, there's no really 2011s for sale at this price that were, had this level mileage, but I found this 2013 that's very similar and there's only a, you know, $1,500 price difference. You can, you can negotiate with your insurance or the, you know, if the person, if somebody hits you specifically, go advocate for yourself for sure. I mean, that's what, don't let this, this is what I always tell people, you have to advocate for yourself, especially if you're not at fault. And I'm dealing with this right now, too. I had somebody rear end me and believe me, there's going to be content coming from this

• 31:42Brian Preston?

  because, um, you know, they're just giving me fits on like rental cars and other things and I'm documenting and I'm going to, I'm going to make sure I come out on the other end of this, okay? But it's because you have to know what your rights are. You have to advocate and realize these insurance companies don't want you filing complaints with the state insurance commissioner. So you have options, you have rights. You just need to go make sure you're advocating for yourself. So I'm not saying, now what I don't want Nathan to do is to use this bad situation to then turn into a worse situation by going out there and running up a bunch of debt. Because look, we always say, think Corolla, not Land Cruiser. And here he's on, Nathan's already, and he's already saving, by the way, 38% of his salary.

• 32:24Brian Preston?

  So we are doing full on financial mutant wear here. So that means there's probably some margin, you just have to figure out, this is where the depends comes in. Do you do, use this as an opportunity to stay right where you are? Are on the vehicle or maybe, I mean, do you have a growing family? Do you have things where maybe this is the moment in time to where you, you, you are changing the vehicle that you're driving? I don't know that without more details.

• 32:48Speaker 03

  And I just, I want to, I want to encourage you because 27, you're still young. Oftentimes we see people that are so tight or tight has a negative connotation. They're so frugal, they often become penny wise.

• 33:02Brian Preston?

  Has a good connotation?

• 33:03Speaker 03

  Yeah, frugal is, that's a compliment, right team? Oh, look, the team, did you see that unanimous thumbs up from the entire team saying absolutely frugal is a compliment? It's better than tight wad. Here's where I'm going with that.

• 33:14Brian Preston?

  We should have been frugal fanatics instead of tight wad nation then.

• 33:17Speaker 03

  That would have been better, right? The, man, you made me lose my train of thought.

• 33:21Brian Preston?

  I'm so, I'm so sorry.

• 33:22Speaker 03

  What I'm saying, 27 years old, oftentimes you see people that are so frugal, they become penny wise and pound foolish, say, I'm gonna, I'm gonna go buy this beater and I'm gonna drive this car and I'm just gonna, I'm gonna really, really focus on how much I'm paying to buy and acquire this car. And they don't think about, oh man, it's in the shop every eight months and I gotta, gotta get this fixed and I gotta get this fixed and I gotta get this. And slowly this car becomes something that it's $200, $400, $200, $300, over and over and over and over and over again, where there's a good chance you might have been better off buying a slightly more expensive car that you have to put less into for maintenance. Whenever you think about car ownership, we want you to not just think about acquisition costs, but we want you to think about lifetime total car cost.

• 34:04Speaker 03

  And oftentimes the car with the lowest purchase price does not mean it's going to have the lowest lifetime total cost. Brands also factor in there with depreciation, but it's something that should go into the calculus that you're doing.

• 34:19Speaker 04

  That's great. Nathan C, thank you for the question.

• 34:21Brian Preston?

  No, it's fine.

• 34:23Speaker 03

  Hey, quick poll, is frugal, can, do we have a poll, do we have a poll?

• 34:26Brian Preston?

  No, I mean, without a doubt, everybody who's tight is going to shoot, call themselves frugal.

• 34:32Speaker 03

  But like if someone, if someone referred to you as frugal, would that be like, oh, how dare you?

• 34:37Brian Preston?

  It's definitely for the first 20 years out of college, I would say yes.

• 34:41Speaker 03

  Really? I'm, Ruby, is that offensive to you if someone were to call you frugal?

• 34:45Brian Preston?

  I don't think fru, I mean, I'm just, I don't know. I resembled it.

• 34:49Speaker 04

  Maybe it depends on the context for me.

• 34:51Speaker 03

  Hey, Ruby, you're frugal.

• 34:54Speaker 04

  Okay, I guess I take that as a compliment.

• 34:55Brian Preston?

  You know what that is? No, you know what that is? That is no different than a southerner saying, "Bless your heart."

• 35:00Speaker 03

  Oh, okay. Well, alright.

• 35:02Speaker 04

  Well, no, but from you guys, it is kind of a compliment. Cause you want people to be good with money.

• 35:06Speaker 03

  I thought, that's way better than, like, tightwad is like, "I don't want to hang out with a tightwad."

• 35:10Brian Preston?

  Context matters.

• 35:10Speaker 03

  But I'll hang out with a frugal person. Right?

• 35:14Speaker 04

  Okay. Alright, alright. Alright, ready for the next question?

• 35:20Speaker 04

  It says, it's from T R Hakala? I'm gonna just go with that. It says, "Hi, Money Guy team. My wife, who's 35, and I, who's 37, live in a high cost, high housing cost area. Most retirement calculations include a paid-off home. That isn't possible within the 25% rule. How do you adjust retirement targets?"

• 35:48Brian Preston?

  Most retirement calculations include a paid-off home.

• 35:52Speaker 04

  So, do you have to have a paid-off home in your retirement?

• 35:54Speaker 03

  That's what, one of the-

• 35:55Brian Preston?

  Are they retiring at 40?

• 35:56Speaker 04

  And, yeah, they're 35 and 37, so I am-

• 35:59Brian Preston?

  We're decades from retiring still.

• 36:01Speaker 04

  Wondering what the mortgage looks like in that case, too.

• 36:03Speaker 03

  And I want to be very clear, our desire, our preference would be, when you get into retirement, when you get into financial independence, we want you to be completely debt-free. Mortgage included. Like, that, that is the, like, prototype that we're shooting for and aiming for for retirement. But, Brown, we see this, and we see this with a number of our clients, that doesn't always happen. That's not always a certainty that that's going to happen. So, I hate them thinking, "Oh, man, I'm super discouraged, because I live in a high cost of living area, and that's gonna be one of the goals that we're gonna have to have even post-financial independence." But I think a goal should be to have the house paid off, but I don't think that's gonna be one of the things that's gonna substantiate whether or not I could actually retire. You agree, disagree, or want to fight on that?

• 36:47Brian Preston?

  Well, I need more context, because, I mean, if they're retiring 55, 60, I mean, we are, we are two decades in the future, and that's just, there's gonna be so much that happens, that I think everything should be still a variable of, what's the savings rate? Where are you going to retire? Because how many people do we know that made all their money out in California in the technology areas, but as soon as they retire with their big pot of money, they typically go relocate somewhere else in the country.

• 37:17Speaker 03

  At much lower cost of living.

• 37:18Brian Preston?

  And take advantage of an arbitrage situation with how much their income has grown versus what their purchasing power is somewhere else. So it's just, there's too many variables. But I do think unless they're planning on retiring at 40, you don't have to think in terms of paying it off. And I look, I do have, this is where personal finance is very personal. I have clients that when we get in, like when we look at their cash flow, I want them to be debt free. But when you see that they have a three and a quarter mortgage and you know, they're down to owing, you know, this much money and but their cash flow is very clean this way, we're going to be realistic with, we're not going to blow up the plan

• 38:00Brian Preston?

  just so we can check the box on a rule if it doesn't actually fit into what's the ideal, you know, maximization opportunity for them, even risk adjusted.

• 38:10Speaker 03

  Love it.

• 38:11Speaker 04

  T R Hakala, thank you for the question. So we did poll our audience and so far, 88% of people say that frugal is a positive term. So they're with you.

• 38:23Speaker 03

  I'm sorry, what percent?

• 38:25Speaker 04

  Eighty-eight percent.

• 38:26Speaker 03

  I'm sorry, say that percent one more time for me.

• 38:27Speaker 04

  Brian is so offended. He's like, what is this?

• 38:28Brian Preston?

  I'm not offended. Of course, this is, this is, but we're all, we resemble this. Everybody in here, you're all watching financial content.

• 38:37Speaker 03

  That's true.

• 38:37Brian Preston?

  We need to go ask your relatives. Let's go Thanksgiving in two weeks, go home and ask Thanksgiving, is frugal a good term? Or are y'all, you know, saying bless my heart?

• 38:47Speaker 03

  Don't even ask, just call them frugal, see what happens. Say, hey, cousin Jimmy, you're looking awfully frugal today. And I bet he's going to be like, yeah, I've been working on it.

• 38:56Speaker 04

  No, that sounds bad.

• 38:57Brian Preston?

  See?

• 38:58Speaker 04

  See, I was going to defend you, but not in that context. Because it's true, like something like cheap or penny pincher, like those are like different, those are negative to me, right? But maybe frugal is just like, that's fine.

• 39:13Brian Preston?

  We should, um, frugal fanatics.

• 39:16Speaker 04

  Instead of financial mutants. I think.

• 39:21Speaker 03

  Um.

• 39:21Speaker 04

  No.

• 39:22Speaker 03

  I kinda wanna throw, I wanna throw a question out there.

• 39:24Brian Preston?

  Okay.

• 39:24Speaker 04

  All right.

• 39:26Speaker 03

  But, or do we wanna talk about it? It's something, it's all over the news right now.

• 39:29Speaker 04

  I think we should talk about it.

• 39:30Speaker 03

  And it's all over the chat, but here's what I wanna do. Uh, cuz I think our audience has us pegged pretty good. I wanna do one more poll, if my team, my poll team ever can do that. Uh, cuz there's a lot of questions coming out about this 50-year mortgage thing, right? Like, is it, you know, duh, duh, duh, duh, duh, right? A lot of this stuff coming out there. I just would like to do a quick poll as we answer the next question. Are Brian and Bo gonna be pro 50-year mortgage or con 50-year mortgage?

• 39:54Speaker 04

  I like that.

• 39:55Speaker 03

  What's the money guys take? Is it gonna be, uh, pro it or con it? And, but before, don't answer yet, because I'll do a poll, we're gonna answer a question, then we'll come back and answer that one.

• 40:02Speaker 04

  Option.

• 40:03Speaker 03

  Deal?

• 40:03Brian Preston?

  Now, here's the only thing, cuz the only, only exposure I've had to this entire thing.

• 40:08Speaker 03

  Give them the context after. I just wanna, cuz our audience, our chat is so, they're lively about it. I wanna know what they think, and then we'll give them the disclaimer, and then we'll kinda chat some of the conversations you and I've had around this.

• 40:19Brian Preston?

  Okay, I'm a cowboy.

• 40:21Speaker 03

  Let's do it.

• 40:21Speaker 04

  I mean, it's a new thing anyway, so we're just gonna.

• 40:25Brian Preston?

  I'm so unprepared for, for, cuz I asked, I even in the content team, I said, hey, bring up where all this is coming from, and, okay, we'll do it cold.

• 40:34Speaker 03

  We'll go.

• 40:36Speaker 04

  You wanna do one more question, then we'll come back to this, right?

• 40:38Speaker 03

  I wanna do a poll, right? Make that poll, and then while they're answering that, we're gonna answer another question.

• 40:43Speaker 04

  All right. Jared N. has a question. It says, where do home repairs fall in the financial order of operations? We are in the messy middle and need drainage repairs on the outside of the home. Should we sell investments, get a loan, or stop investing to save up?

• 41:00Speaker 03

  Well, so sell investments.

• 41:02Speaker 04

  I think you're not gonna like any of those.

• 41:04Brian Preston?

  No, but, but here's the thing.

• 41:05Speaker 04

  But you can give some good context here for Jared.

• 41:08Brian Preston?

  You know what your, your worst nightmare is with homeownership is water.

• 41:12Speaker 03

  Mm-hmm.

• 41:13Brian Preston?

  Water is, I mean, pipes bursting, water coming in underneath the basement, air, I mean, in your crawl space. Water is your least favorite thing, and guess what? This is not a place where deferring. You know, deferred gratification doesn't work with water damage. Problems that are bad today only get worse because what happens when you leave water damage? You know, you either get, you know, deteriorates, it creates mold. You know, there's all kind of horrible things. So this is a, this is a no brainer. If you have, if you have water stuff going on at your house, this is an emergency reserves type thing. Cause we can't really push this off. It's just like, all of a sudden, if your house starts leaking,

• 41:54Brian Preston?

  the roof starts leaking, you're only going to keep the, the blue tarp on there for a few days. I would hope, you know, we need to be, we need to be working on something that's a little more long-term. So I would address this as an emergency reserve.

• 42:07Speaker 03

  Yeah. It's interesting. That was the way that you interpreted the question because it said, you know, I've got some drainage issues going on the outside of my house. I was not thinking about water, like draining into the house. I was thinking this is like,

• 42:16Brian Preston?

  Oh, this is like a swampy backyard.

• 42:18Speaker 03

  Yeah, that kind of stuff. And so, so I think that's a great, some great context. Maybe not as urgent. It depends on, when it comes to homeownership, you as a homeowner have to be sort of an advocate for yourself. What are the things that fall into the emergency realm? And I would argue water in or near the house, absolutely an emergency. But if this is another type of home repair, that's maybe not something that's a necessity.

• 42:38Brian Preston?

  It's just killing the trees.

• 42:39Speaker 03

  Yeah. Maybe it's, it's, it's water runoff, or maybe it's something like, oh man, it's really, we need to update the windows, we need to repair it, like those sort of things. Where does that fall into the financial order of operations? I do think it is something that falls in the like emergency fund, saving up as a sinking fund, in addition for those things that are coming. But you have to assess that because if it is an emergent thing, oh my goodness, I have a hole in my roof, or I have water damage in my house, then yeah, maybe I need to sell investments to do that. Maybe I need to take out a loan to pay for that. I need to pull my emergency fund. I may, I need to find some way to do that. But if it's a home renovation that is a convenience thing, then it's like an improvement to the home. Like, oh man, we really want to add a back deck so that we can enjoy it next spring.

• 43:23Speaker 03

  Well, I'm probably not going to sell investments for that. And I'm probably not going to go take out a bunch of debt for that. I'm probably going to figure out, how can I systematically save for this over time to be able to do the repairs? So I think you have to triage. House of like, we're gonna do, what's the little window called? Oh my gosh, I should be able to think of the name of it. You got, it's important, not important, urgent, not urgent.

• 43:45Brian Preston?

  It's fast, expensive, or good.

• 43:48Speaker 03

  Well, no, no, no, no.

• 43:49Speaker 04

  I think there's two different matrices.

• 43:50Speaker 03

  Yeah, we're doing, we just decided to do a matrix.

• 43:52Brian Preston?

  Okay, we did two different matrix.

• 43:53Speaker 03

  Yeah, so you have, you have this sort of this quadrants, right? And you have stuff that's highly important and stuff that's not important. You have stuff that's highly urgent, not urgent. Well, if it is very important and it's very urgent, you gotta do whatever you can to solve that. If it's important but not urgent, you have time to get there. If it's not that important and it's not that urgent, you got a bunch of time to get there. So you have to kind of map out where it falls on that little four painted grid and make a financial assessment based on that. You're talking about you can have things done three ways. It can be fast, it can be cheaper, it can be good.

• 44:26Brian Preston?

  You can only get two of the three.

• 44:27Speaker 03

  You can't ever have all three.

• 44:27Brian Preston?

  You don't get all three, you get two of the three. That was a Bernie Mac.

• 44:30Speaker 03

  That was a Bernie Mac.

• 44:31Brian Preston?

  So, I'm not, I'm sure, I'm sure Bernie's not the one that came up with it, but his, is his show that introduced it to my life.

• 44:39Speaker 03

  That's hilarious.

• 44:40Brian Preston?

  No, I, I agree. I think you have to triage, whereas as I immediately jumped to, cause look, I've had a traumatic experience where pipes burst when I lived in Georgia and my wife couldn't figure out how to cut off the water. So I had to drive 15 minutes home to, and you know, water's just spilling into that from the, you know, all over the house and it's just, so I, I have a natural reaction to, to water in houses. That's why when people tell me, you know, when I watch social media, we live in also a high cost of living area, but these people are building monsters. You know, I guess, I guess if you're moving from California or Chicago, you feel like you need an 8,000, 10,000 square foot house. And I always think about how many pipes are in the walls? How many pipes, it's just, I don't want, I don't need that big of a house.

• 45:23Speaker 03

  Mm-hmm.

• 45:24Speaker 04

  Understandable. Understandable.

• 45:26Brian Preston?

  That's just more junk that's causing water damage and stressed me out.

• 45:30Speaker 03

  More junk to break.

• 45:31Brian Preston?

  I turn into my dad every day.

• 45:32Speaker 03

  I love it, I love it.

• 45:34Speaker 04

  More money, more problems, right?

• 45:36Brian Preston?

  Oh, I want it, look at, look at Rebe pulling out some.

• 45:39Speaker 04

  I've been hanging out with you for a long time.

• 45:41Brian Preston?

  Biggie.

• 45:43Speaker 04

  Okay, I have the results of the poll.

• 45:45Speaker 03

  Okay.

• 45:46Speaker 04

  Are you ready?

• 45:47Speaker 03

  I'm ready.

• 45:47Speaker 04

  We said, what do you think the money guys take on a 50-year mortgage will be? And 83% said against it.

• 45:55Speaker 03

  83% against it? How many said for it?

• 45:59Speaker 04

  9% or 8% said for it, 9% said not sure.

• 46:03Speaker 03

  So our people are certain, Brian, they are certain that we would be opposed to 50-year mortgages. Now, before we talk about this, and we sort of postulate and hypothesize here, I want to be very clear. We don't know anything about 50-year mortgages. We have no idea about what they are, or how they're structured, or where it's coming from, or what it's gonna look like, or anything around there. But conceptually, I think that we can talk about it, because we've talked a lot, Brian.

• 46:31Brian Preston?

  Well, can I ask some, I need some context, because here's my context. Last night, I had some business owners who sent me Babylon Bee, because Babylon Bee posted something where Dave was on life support because of 50-year mortgages.

• 46:46Brian Preston?

  That is my only exposure, is just people asking me, you know, reactions, and I haven't seen, so was this a, was this a tweet? Was this a press conference? What's the context that made all this happen?

• 47:00Speaker 03

  I don't actually, to be honest, again, we haven't done any research on this.

• 47:04Brian Preston?

  This is a President Trump thing, but I don't know if, because sometimes when he's getting on like Marine One, you know, he yell out something. Sometimes it's a truth post that somebody's retweeted. What's the, what created this?

• 47:15Speaker 03

  I don't, I don't know the answer to that. And I don't, so I think one of the things-

• 47:19Speaker 04

  It still seems pretty speculative, like nothing has actually happened.

• 47:22Speaker 03

  But conceptually, I think what I wanted, what I want to have a conversation on is, conceptually, if a 50-year mortgage were an option, right? If it were a thing that came to be, and let's just assume that it operates in the way that we understand mortgages to operate right now, as a 15-year or 30-year, because I don't know if it'd be fixed or whatever, what are our thoughts on that? Because our, our audience obviously knows that- Of course, we have an aversion to debt. We say all the time that why on earth would you want to borrow your entire life? At some point, you have to actually own something. At some point, you have to, it's why we have plans and strategies put together where we want our people to be completely debt-free. When it comes to buying a car, you know what

• 48:06Speaker 03

  we think is the absolute best way to buy a car? Pay cash, if you're someone who can pay cash for it. When it comes to having a home and having a mortgage, do we want you to be mortgage debt-free and financial independence? Absolutely. That's something that we desire to be true. So if a 50-year mortgage came around and were an option, what are our thoughts on it? I think the answer I'm gonna throw out there is...

• 48:31Brian Preston?

  It depends. Because that's what I look at as money's only a tool. Here's what I do know is, and look, I try to, once again, we have this no hypocrisy, not trying to be a hypocrite. And I think about, because I have a unique context in the fact that I've been broke as a joke, but then now I have resources and I always think about what got me to where I am and how do I navigate these things. And there's a current problem that I see for young people is affordability of housing. And right now, literally, this is what I love about our policies. We've always been very honest that on your first house, you don't have to put down 20%. Even though talking heads forever were telling

• 49:11Brian Preston?

  people, you know, save up, put down 20%. We've been consistent well before all these housing problems started happening on affordability. We were saying, no, 3% to 5%, because that's, I couldn't afford, I was broke as a joke. I only was able to save up about 3% on my first house. I found out all of our financial advisors did the exact same thing. I'm like, wait a minute, if this is what people who are good with money actually did to get their foot in the door, why are we letting all the talking heads say 20%? So when we designed our rules, we were like, no, don't put that pressure on yourself. Because like I said, your cash flow over life is going to be so inefficient. Because while you don't have money and you're young and the money is the most valuable to you to save and invest, it just doesn't exist because you're not in your peak earning years. So you're...

• 49:56Brian Preston?

  Again, trying to put everything into a period of time where you don't have it. You fast forward to, we just came through an inflationary period where home affordability sucks. It's hard. It's just bad right now, especially in a lot of these areas that people want to live in. So, and I have not seen anybody come up with a really good solution on how we're going to help people navigate this. So at least I like the conversation piece because this might be potentially a Band-Aid for just like the three to 5% rule. Because nobody actually just puts down 3% to 5% and then just sits there with that. Or, you know, I even also realize I lived through the interest only loans back to the God.

• 50:37Brian Preston?

  It's a horrible great recession and I was one of those people also, by the way, because realize I had started when I bought my second home. I just started my business like a year or two before. And so money was tight. I mean, this thing was not, we were in that first three year band where this thing was not guaranteed to make it. I was on an interest only loan and this is back when they, what was your income stated income? That'll do.

• 51:04Brian Preston?

  You know, you're not going to verify it, you know, it's, um, so I've used these tools to come out on the other side. And I would, I doesn't mean that you go and exploit this to your future self detriment. Where you're going to use this to go run up more credit card debt to go buy a nicer car. But if you were just trying to, because what breaks my heart is what happens when I tell somebody you only have to put down 3% to get in your first house. But yet the housing market appreciated so much last year that you saving up that 3% now is just the increase in purchase price. So I at least like the discussion, but I think that it's going to come up to once again, where are you at in your phase? Are you in the make wealth phase? Are you in the maintain wealth phase? Are you in the multiply wealth phase? For those of you in the messy middle.

• 51:46Brian Preston?

  This might let you get into the, on the, on the, into the homeownership train to where now you're not going to be subjected to rents going up through inflation and other things. But that doesn't mean I want you to stay in these things. You have to treat it as a tool. And who knows if it happens. I at least like that it's creating a conversation on affordability because I have not seen anybody really coming up with what is the younger generation going to do to, to, to start working towards this homeownership problem.

• 52:13Speaker 03

  I think I saw this last week and, and, and contenting me, correct me if I'm wrong on this, but the average age for first time home buyers just hit 40. Like you know it was, it was. It was mid to late 30s last year.

• 52:23Brian Preston?

  It was like 33 just a few years ago.

• 52:25Speaker 03

  Yeah. And so what I think, this is the way that I see a 50 year mortgage practically playing out. And I'm thinking about people that come here. Now, if you're someone out in some other part of the country and you want to come become an advisor, you want to work on the Money Guy team here, you have to move to Franklin, Tennessee. It's where we're located. It's where we want you to be, but cost of living here is hard. And so we have a lot of folks that are coming here and they're starting their careers and they're having success, but housing is expensive and they want to start families and they want to set roots and that sort of thing. Well, if we're just telling people, hey, at the beginning of your career, it's great. Do all this stuff, make all these great decisions, but hey, the average first time home buyer can't buy a house until 40? That stinks. And so what, how does a financial mutant actually do this? Okay. Well, maybe 26, 27, 29, 30,

• 53:10Speaker 03

  maybe I start and I go get my starter home and I do a 50 year mortgage. And you guys are right on the mathematics. Yes, it's going to be mostly interest in the beginning and you're not going to build up a ton of equity, but it is going to allow you to get on the ownership side of the equation. And what happens is through price appreciation on those homes, maybe over the next five, seven, eight, nine years, you are paying down some debt. It's small because it's a 50 year mortgage. You are paying down some debt. Hopefully the house is going to increase at the pace of inflation, somewhere between three to 5% on average. So you are building some equity. And then when it's time for you to go to your second home, you do, you do have the ability to build up a down payment. You have some equity built in this house. And what ends up happening is then when you do the next mortgage, you're probably in a 30 year mortgage. So.

• 53:54Brian Preston?

  Well, yeah, we would have to create some nuance, just like. We've done.

• 53:56Speaker 03

  That's right.

• 53:57Brian Preston?

  It's only, it's a Band-Aid to get you in this. It's a tool.

• 54:01Speaker 03

  It's a tool.

• 54:01Brian Preston?

  Just like three to 5% down payment is not on every house. What do we tell you? We always have that asterisk that says on your second house, when you upgrade to the larger house outside of the starter house.

• 54:10Speaker 03

  It's gotta be 20%.

• 54:11Brian Preston?

  You gotta, you gotta take the equity from the first house and put it in. That's the 20%. This would be the same thing because I, I do not like debt. But I, but I do think this is a unique thing that I'm not gonna lie. If, if I was at the beginning of my career and I know that my future earning potential is on the upward trajectory. I'm probably looking at this going, this gives me some options to respect that 25% of housing towards. Cause right now we have so many people that have 40% of their lives of their cash flow going to housing. How do we fix that?

• 54:41Speaker 03

  It's hard.

• 54:42Brian Preston?

  You know, how are you supposed to fund your Roth IRA and all these other things? I at least like that we're having the conversation about it because it might create a tool for a moment in time.

• 54:51Speaker 03

  But also don't, don't miss here. So I think a lot of people would potentially do 50 year mortgages and they would take advantage of it. And it'd be, and it'd be exploited and it'd be a bad financial decision and it would not be great. But also the people buying way more house than they can afford and having way too much of their income. They're also going there. So what I see 50 year mortgages potentially being is a bridge solution for financial mutants that would be able to get on the homeownership side. For young people who can't get there just yet, that might be solution.

• 55:20Brian Preston?

  From a society standpoint though, there's going to be a lot of running amok. But isn't that every financial tool out there? I mean, we are in the generation of buy now, pay later on everything.

• 55:30Speaker 03

  That's literally what a 50 year mortgage is like, just a super expanded buy now.

• 55:33Brian Preston?

  It would be. So you'd have to just know what it could and could not do and where the dangers are and, and be, it's, it's no different than me in this interest only loan I'd used back in. When I started the company and I moved to that second home, I was scared to death of it because I was like, you mean to me, you mean to tell me that I'm gonna buy this house and all I have to pay is the interest on it? I'll never own this house. I always felt very convicted about the fact that this is, I'm going to use this product, but I'm going to dislike using this product until it gets me out of it. And I think that that's the way you'd have to use this, this tool if it ever became to mark, it came to market.

• 56:08Speaker 03

  Yep. And, and most people who, most people have done 30 year mortgages. I can, I can, I'm trying to think through people I know. Have not actually paid on a mortgage for 30 years. That's not the norm. Most people end up paying on a mortgage and then they move and then they get another mortgage and they move and they get, and that's kind of the way that it happens. So the idea that someone's gonna buy a house today on a 50-year mortgage and 50 years from now, they're still gonna be paying on that mortgage, seems low probability, just the way that the normal housing life cycle works. But I don't know, because you know what they may do, a 50-year mortgage and five years fixed rate and 45 years variable. Well, that's not great. You know, we're assuming it's a 50-year fixed mortgage, probably wouldn't be, probably would be some sort

• 56:50Speaker 03

  of reset periods in there or something. But it's interesting. It's an interesting conversation to have. We want you, financial mutants, to own your life. So even if it did happen and it were a thing and you did take advantage of it, we want you to have a plan of how you actually build wealth and get outside of debt. Because financial independence, Brian always says, is the opposite of financial encumbrance. And so being debt free is the

• 57:13Brian Preston?

  goal. You don't want to have obligations when you're supposed to be at financial freedom. And then this is why we talk about debt is always chainsaw dangerous. If you're not scared while you're using it, you're probably using it wrong.

• 57:23Speaker 03

  Do you think, was that okay? Do you think we did okay on that one?

• 57:25Speaker 04

  I do. I think you may have surprised people, but I think we also knew you were gonna say it depends. Like, that's not surprising. I did confirm, New York Times released an article just a few days ago that says 40 is the new number for 2025 for the first time homebuyer age. So I do think that's a new thing. And it was 38 in 2024.

• 57:47Brian Preston?

  That's why I at least like the rabid conversations on it, because that is a, that is a problem if people are putting off, y'all know, because I've done some of my walking tangents videos, I talk about how sentimental I've gotten now that my kids are getting older. And I'm just worried that between, A, between housing affordability, other things, we're just gonna quit having kids. They're just all, the old man in me that's like population and sentimental, you know, family and other things. I'm like, all these things are just, people are just gonna keep pushing off life and I don't like it. I don't think that's a positive thing, always.

• 58:22Speaker 04

  Yeah, no, I get it. No, I think it's good that y'all talked about it. Obviously, we don't know a lot about it. We don't know if it'll even happen, but it's an interesting thought exercise.

• 58:29Speaker 03

  That's what I want everyone to take away from. No one knows if this is actually even a thing. It's kind of like this made up thing that we just had a conversation around. But I do think it's viable to think through. I love it. We just want to see potential solutions introduced out in there to help solve some of the very real issues that a lot of young folks are facing.

• 58:47Brian Preston?

  We just had a big team meeting with the primary advisors yesterday and it's kind of the guidance I said is like, there's a system within our financial planning firm that I was like, I think this is the right path because it's nimble, it does this, it does this. And I was like, but I'm always open if you have a suggestion for making it better. Not a complaint. I don't like complaints without solutions because that's just you complaining. But I think I at least give this credit is that let's come up with creative ideas, think about it. Let's figure out how we help the next generation kind of navigate these things.

• 59:18Speaker 03

  Love that.

• 59:19Speaker 04

  Yeah, no, fair enough. Good conversation. I'm glad that we got to chat about it. Something a little different, a little spicy. But we do love talking about these things and hopefully helping you build confidence on your financial journey. This is what it's all about. So be sure to go to moneyguy.com. We'll be back every Tuesday at 10 a.m. Central, but moneyguy.com is always there for you. So we've got tons of free resources, archives of all of our shows. So if you want to know more like about our home buying rules, we have a whole free download that walks you through our thoughts on buying a home. We also have a home buying calculator that will let you know how much house you can afford with Money Guy guidelines. So be sure to check that out, moneyguy.com/resources to continue the conversation.

• 1:00:01Speaker 03

  Is all the new search stuff up there, is all that ready to go or not yet?

• 1:00:05Speaker 04

  It is, and I was gonna have visuals next week to tell everybody about it, but you'll be telling about it now.

• 1:00:10Brian Preston?

  Way to ruin it, Bo.

• 1:00:11Speaker 03

  No, no, I'm just saying if I were a Money Guy fan-

• 1:00:14Speaker 04

  Because I didn't have my act together enough today.

• 1:00:15Speaker 03

  And I've been listening for years or for months or maybe for weeks and haven't been to the website in a while. I'd go check out moneyguy.com because the website has had some massive overhauls that Reeve is going to talk about next week.

• 1:00:24Brian Preston?

  It's dangerous to ask this question with a hot mic because I could probably ask this as soon as we cut off the cameras.

• 1:00:30Speaker 03

  First to sneeze, no less.

• 1:00:31Brian Preston?

  No, but it is, tomatoes wise, are people throwing tomatoes at the answer? Because that's the thing, this is so personal finance, sometimes I get caught up in the fact that we are math nerds. And we're always trying to give people the best answer for maximization. But then I know that sometimes behaviorally-

• 1:00:51Brian Preston?

  People would be better if we just said no, you know, but you know, but we try to treat everybody like, hey, this is how I would approach it with money. I'd be curious, what's the initial feedback from the audience?

• 1:01:02Speaker 04

  I mean, I don't think anybody's like throwing tomatoes. I think we had a lot of people very against it when we were first in the poll, understandably, like we get it, it's not optimal.

• 1:01:09Speaker 03

  No negative reaction to our response, though.

• 1:01:11Speaker 04

  But yeah, a lot of people said like, yeah, it depends. I knew they were going to say that because, and that's kind of why we're all here, right? Like, we understand that there's some nuance or like, it's a conversation worth having.

• 1:01:20Brian Preston?

  Yeah, I mean, a lot of people will run amok with this, without a doubt.

• 1:01:22Speaker 04

  Oh, for sure. Yeah, like it's not an optimal thing.

• 1:01:24Brian Preston?

  It's only a matter of time if they had a 50-year mortgage that now you'd be able to buy your vacation property with 50-year mortgage. And if, you know, you have a whole cottage industry.

• 1:01:32Speaker 03

  50-year mortgage, 20-year car loan.

• 1:01:33Brian Preston?

  Oh, you know, yeah. Once again, you will never own anything in your life. We'll just amateurize it all out so you can afford anything 200 bucks a month.

• 1:01:41Speaker 04

  Right. That's not the goal.

• 1:01:43Brian Preston?

  Yeah. Buy now, pay later.

• 1:01:45Speaker 04

  For housing.

• 1:01:48Brian Preston?

  Guys, we love creating content. Can't you tell? What I love is that I don't even, I didn't even get to see all the context, but we love you guys, how you bring ideas and you bring topics to us that we're willing to let you see behind the curtain and we'll talk about this stuff in real time. So, you know, right there in the moment, see how our brain works. And I think you can just see the root seed that sits at the nucleus of all this is that we really do want to help you become just better with your money and know how to navigate this because money is only a tool, but I at least want you to maximize. I want you to dazzle your basic life. I want you saving a little bit today so you can, of course, build your great, big, beautiful tomorrow and live your best

• 1:02:29Brian Preston?

  life without regrets. I'm your host. We're all about the education, all about helping you become the best financial mutant you can be. Brian, Bo, Rebi, and the rest of the content team, Money Guy team, out.

• 1:02:41Speaker 03

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

• 1:03:15Speaker 05

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