Here’s How Much Income Puts You In The Top 10%

How much income puts you in the top 10% of Americans? The answer might surprise you! According to U. S. income percentile data, earning around $163,000 annually puts an individual in the top 10% of earners. But does a six-figure salary actually make you wealthy? We break down average and median income, top 10% and top 1% income thresholds, and how age, education, and location affect your earning potential. Plus, discover practical ways to increase your income, avoid lifestyle inflation, improve your savings rate, and invest for long-term financial independence. Because building wealth isn't just about what you earn—it's about what you keep! ⁠⁠⁠⁠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

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• 1:07Speaker 03

  How much income puts you in the top 10% of earners? Let's talk about it.

• 1:13Speaker 04

  Ruby, I am so excited because this is an interesting thing. Now, we talk all the time on the show about the reality that comparison is the thief of joy. And so, we don't share this because we necessarily want you to compare yourselves to others, but rather, we want you to have a realistic expectation around where your peers are. Because I have the belief, I have the theory, it's a hypothesis of mine, that most Americans get this very, very, very, very wrong. And I don't think your goal should be to be in the top 10%, although it's a wonderful goal. We're going to talk about is that necessary to build wealth and do you need that? But I do think it is healthy and appropriate and right to level set realistically

• 1:55Speaker 04

  where average Americans are and then even where the top tier of American earners are.

• 2:00Speaker 03

  So, let's test Bo's theory. If you're watching live on YouTube, we have a poll in the chat right now that says, "What percentage of households in the US have an annual income of more than $1 million per year?" What do you think? We have a list of answers there that show what percentage of people you think make over $1 million? Take a second to answer that and then we're going to dive in. And we want to say before we dive in, if you are a top earner and you find that out on today's show, congrats.

• 2:30Speaker 04

  That's great.

• 2:31Speaker 03

  That's great, like Bo said.

• 2:32Speaker 04

  Well, maybe. It might be great. It depends on what you do.

• 2:34Speaker 03

  But we do want to say that keep in mind, a high salary alone doesn't guarantee wealth. It's a crazy but true stat that many high earners are living paycheck to paycheck. So, we're going to talk about that. And then if you find out that you are in a lower or a middle income bracket today, don't be discouraged because similarly, how some wealthy people are living paycheck to paycheck, people can absolutely build wealth and financial independence through smart choices, behavior, even with a lower or average income.

• 3:05Speaker 04

  And I think what's really interesting is I think a lot of people, there's sort of these, these two sides of the coin that exists in sort of the American mindset. One is, "Oh, well, if you want to be a top 10% earner, you must be a celebrity or an athlete or a musician or one of these types of things to be in the top 10%." And I think you're going to be find it's very interesting. That may not be the case. But then there's this other side of the coin where, again, this is my hypothesis and we're going to test it to see if it's accurate. I think a lot of Americans, we always assume that everyone else out there, all of the other people walking down the street, rubbing shoulders, they must be doing better. They must be in a different spot. They must be in a different echelon than I am and I just refuse to accept that.

• 3:49Speaker 04

  I do not believe that is the case.

• 3:51Speaker 03

  Yeah. Okay. I think we're ready to show some data. We're going to start with what financial mutants think. How many people make $1 million in America? And then we're also going to talk about what the average American thinks. So, team, do we have that poll ready to pull up the results?

• 4:09Speaker 04

  Oh, see, this, it's not.

• 4:11Speaker 03

  I know.

• 4:11Speaker 04

  It's not fair.

• 4:12Speaker 03

  Once again, are mutants?

• 4:14Speaker 04

  Are mutants.

• 4:15Speaker 03

  You're mutants for a reason.

• 4:16Speaker 04

  They think about and see the world differently.

• 4:18Speaker 03

  So, 77% of folks in the chat right now said that they think it's a half a percent of people make $1 million a year. 15, uh, two, or yeah, 15% said it's 2% of Americans that make $1 million. And then 8% said it's 5% of Americans or more. All right?

• 4:38Speaker 04

  So, the vast majority of our financial mutants believe that in order to make, or if you're someone who makes over $1 million a year, the two comma clubs, seven-figure land, it puts you in a very small percentage. But would you believe the average American does not subscribe to this?

• 4:55Speaker 03

  They're not a mutant.

• 4:56Speaker 04

  Look at this that we found. This is from YouGov data via the World Economic Forum. Would you believe that the average American thinks that 19 to 20%? And if you're not familiar, that's like one out of five people make over $500,000 a year. That means when you go, you walk out in your place of work, walk down to your mailbox and count five people, the average American thinks that one of those five people make over half a million dollars a year. Average American also thinks that 10% of the population make over $1 million a year, when in reality, it is less than half a percent. The average American thinks that you could line up 10 random folks and one of those 10 is going to make over $1 million.

• 5:39Speaker 04

  When in reality, you would have to line up 200 folks to maybe find one person that made that kind of income. But then, again, there's this like flip thing on the other side. Okay, how many Americans out there make under $25,000? How many Americans are like really, really kind of at the lower end of the income threshold and really struggling? Americans think it's 35%. In reality, it's only 18%. So, we have this like warped barbell view that people that are doing extremely, extremely well are, there's a huge number of them, but then there's also people that are doing extremely, extremely poorly. And the answer is, the reality is, it actually exists somewhere in the middle.

• 6:19Speaker 03

  So, let's talk about what does it actually take to be a top earner and what that means for you? If we look at the median income for single earners in the US, according to data from the US Census Bureau, the median income, just to set the baseline, for single earners is $55,584 a year. So, let's compare that to the top 10% of earners. It's actually just below $163,000 per year to be in the top 10% of all Americans.

• 6:50Speaker 04

  And again, I think if you ask people, "Hey, what's it, you know, describe the people that are the top 10% of earning in America", you're going to hear, "Oh, they are professional athletes, they're actors, they're musicians, they're celebrities, they're names you've heard." When in reality, we work where we are to bound wealth. We get to work with tons of individuals and tons of families that are able to achieve this level of income success and they're not household names. They're not athletes, they're not celebrities. So, it doesn't take as much income as you might have thought to fall into the top 10% of earners.

• 7:20Speaker 03

  Right. And then just in case you're curious, the top 5% of earners, it's $225,000 a year and top 1%, it's around $507,000 per year, calling back to that other stat. So, that top 1% to 5% is making some pretty significant money, but that is not a large percentage of the American population.

• 7:41Speaker 04

  It's really interesting, even if you're not in the top 10%. If you make $100,000 a year, if in the course of your career, you've crossed into six-figure land, that automatically puts you in the top 18% of earners. And so, maybe you have a goal of getting the top 10%. We all talk about a shovel is not a big shovel, it's not a necessity for wealth building, but there are circumstances in which it does make things a little bit easier, but it's not absolutely necessary. So, let's talk about, okay, if you want to increase your income and move in that direction, what would be required? But before we do that, it makes sense to at least acknowledge and call reality to the fact that there are different variables that affect your income and what you earn.

• 8:24Speaker 04

  First, if you've traveled at all, you recognize this, is geography. Not every part of this country is created equal from a socioeconomic status and a cost of living status. And so, incomes, as you can imagine, vary wildly from state to state, from geography to geography. There was this really interesting, there's really interesting math that we found and it shows what is the income that you need to reach the top 1% in each state, right? So, there are some states where you need to make over $1 million a year to be in the top 1%. There are other states where you don't need anywhere near that level of income. So, there's a wide gap, a wide margin between those two.

• 9:08Speaker 03

  Right. For instance, the top 10% in Massachusetts, it's around $263,000. Top 10% in Mississippi, it's $153,000. And just to put some more context to it as well, Massachusetts is one of the top earning states and the highest. West Virginia, Mississippi and New Mexico, if you can't see our chart, you would need half of what you need in Massachusetts to be in the top 1% in those states. So, it varies greatly by your location, the cost of living. A lower income in a low cost of living area may actually create more wealth building opportunity and margin than a higher income in a higher cost of living area. And if you live in those high cost of living areas, you know this is true.

• 9:51Speaker 04

  We have seen this firsthand. We'll have clients that are out in the, in the Bay Area or out on the West Coast, like, man, honestly, just to get. Buy you need to make and I'll fill in number $200,000 a year where in other geographies in Mississippi and some of the other states, if you make $200,000 a year, that's an unbelievably high income relative to the cost of living. So where you live matter, the cost of living in your area matters, but it's not the only thing that affects income. Another thing that affects income or certainly at least has affected income over the past 40 or 50 years is education. Education, it certainly can

• 10:29Speaker 04

  increase your earnings potential, but rate of return or ROI on that investment matters because I think we fall into this false reality that the more educated I get, the more money I'm going to make, the more school I go get, the more money. So it doesn't matter if I take on student loans, it doesn't matter if I dig myself a hole. I will in fact make more money and that doesn't always tend to be true. The field of study, cost of school, student loans, career path, all of that affects whether increasing your education is actually going to be a fruitful endeavor from an earnings standpoint.

• 11:03Speaker 03

  Let's look at the median earnings by education level so that you can actually see some numbers with this. And then we're going to talk about how this may be changing as well. But if you have no high school diploma, usually the median income earnings is $40,000 a year with a high school diploma that jumps to $50,000 per year. With some college or an associate degree, it goes to $57,000 per year. And now here with a bachelor's degree, data does show that it jumps up to $82,000 per year. So that is a pretty significant bump. And then with an advanced degree, up to almost $100,000 per year. So there is data behind this. Education can and does matter. But something that jumps out to me is that first of all, a lot of people in the current economy go to trade schools,

• 11:47Speaker 03

  make six figures, don't have, don't even fall into the data that we just read because they are making great income in a different trade. Also, we were discussing, this is kind of changing generally in culture. Like I think this is some, you know, opinion here for sure. But I think if you look around, you're seeing a lot more people take non-traditional paths. And also, people who are taking on the amount of debt, that it doesn't even cover that gap. Like I, it jumps from $57,000 per year to $82,000 per year with, with a bachelor's degree. But if you have, you know, $50,000, $60,000, $100,000 of debt, does that really matter? Does it really move the needle?

• 12:30Speaker 03

  No. So things are definitely changing, but education is definitely something to pay attention to.

• 12:34Speaker 04

  And this is something that even, you know, we as parents of young children are having to navigate now. What are we going to tell our children? How are we going to talk about this? Because I think, and again, you can write this in pencil, this is an opinion. One of the reasons why you see such a big income discrepancy between some college associate degree and bachelor's degree is for millennials around our age, four-year degree used to be a requirement for employment. You had to have a degree, you had to have the four-year thing to be able to get a job. I don't know that that's going to continue to be the case moving forward. And so what I think is going to likely happen is we're going to see a smoothing of this. So if you are going to send your kids to college, or if your kids are going to choose to go off to school, make sure that they are beginning with the end in mind. What am I going to study? How much do I want to pay for this? Is it reasonable?

• 13:18Speaker 04

  Am I following the appropriate financing rules? Because you don't want to dig yourself a hole that's going to be impossible to get out of when you start your career. So geography matters, education matters. And then another reality, whether it is appropriate or not appropriate, whether you like it or don't like it, age often affects our income. I know that when we are young, we want to make a gazillion dollars. But oftentimes when we're young, we haven't developed the skill sets. We haven't had the 10,000 hours. We haven't been able to do the things to reach our peak earning years. And if you look at the data, the data what's a support that income generally tends to increase as we age.

• 13:56Speaker 03

  Median earnings by age are $40,000 for a 20 to 24-year-old, $60,000 for age 25 to 34. And then you got a nice jump to $70,000 in your peak, or I guess, close, 35 to 44 is $70,000. And then 45 to 54 is really your peak earning years. But median income only goes up to $71,000. 55 to 64, it goes down to $67,000 per year. So that 35 to 54-year-old range really is a key time, often is peak earning years because you have some experience under your belt. Maybe you've climbed the ladder at your place of work. Maybe you have more connections than ever. It makes sense that over

• 14:37Speaker 03

  time, you're going to statistically earn more. And that's something to keep in mind and to plan for.

• 14:43Speaker 04

  All right. So you're out the thing. Okay, guys, I get it. Generally speaking, more income is better, bigger shovel allows me to do more things. How do I climb the income ladder? What are the things that I can do to improve my lot? And we think that there are some things, the first of which is focus on controlling the things that you actually can control. Your income is not necessarily this static figure, this static number. It tends to be a lot more dynamic. And in certain situations, you, you can't influence it. You may not be able to give yourself a raise or give yourself a promotion. But one of the things we can all do as earners is increase our skill sets. Maybe it's adding additional certifications. Maybe it's adding additional

• 15:24Speaker 04

  value that we can add either to the organizations that we work for, the organizations that we run. So figure out, how can I master my craft and continue to improve? And, and again, write this in pencil, this is a Boism. As technology is changing, how can I make sure that I understand the direction that technology is moving in so that I'm not someone who's left behind? Am I understanding what it is, how it works, and how I can best utilize that to make me a bigger, faster, stronger, more effective version of myself? If you can do that, whether you're a 20-year-old or whether you're a 60-year-old, odds are you're going to be able to have some positive influence on the direction that your income moves.

• 16:02Speaker 03

  The second thing you can do to climb the income ladder is to make your current income work harder for you.

• 16:08Speaker 04

  Love it.

• 16:09Speaker 03

  This is getting back to the basics. If you've watched Money Guy, you know that maintaining a reasonable cost of living relative to your income and avoiding high interest debt goes a very, very long way. And I hear you, cost of living can be frustrating right now. I totally get that. But it is true that any creativity you can do, or if you do have the kind of privilege of living in a lower cost of income area or having that option, all of those things really do matter, especially when you're starting out and while you're on your way up your income growth ladder. Because the sobering and motivating truth is that a $100,000 earner who's spending $95,000 of that every year is ultimately saving a lot less and building a lot less wealth than someone who's earning

• 16:53Speaker 03

  $75,000 but spending just $60,000 and actually investing that difference and building wealth for the future. Those are two very different stories, even though a $95,000 and $75,000 income feel really different. It's a lot of it is what you make of it in those behaviors that you have control over.

• 17:11Speaker 04

  And look, I think this third point really drives it home is that income isn't everything. I think for a lot of us, it's this idea of a scoreboard. Oh, I want to make this level of income so I can say that I'm in the top 20% or the top 10% or maybe the top 1%. But it really doesn't matter how much money you keep, you make. What really matters is how much money you keep. Are you able to turn your income generating potential into actual wealth and to actual assets? Because what you do with your dollars matters a whole lot more than how many of the dollars that you're bringing in. If you have a high savings rate, I'm going to argue that a lower earner with a higher savings

• 17:52Speaker 04

  rate can often outpace a higher earner with a lower savings rate. Because a higher earner with a lower savings rate tends to have a much larger lifestyle, much larger footprint, is going to need to replace a much larger portion of their life via their portfolio. Small savings rates often aren't able to do that. And if you're curious, how much should I save? Where should I put my dollars? We have a tool for you. Go to moneyguy.com/resources and check out by age, how much you should save. So if I'm someone and I'm like, okay, I'm 25 years old, I'm just starting out, I want to be saving, and my goal is to be financially independent. I want to be able to replace 80% of my pre-retirement income by the time that I get full retirement age at 65. Well,

• 18:35Speaker 04

  your savings rate might be okay at 11%. You might be able to do that, assuming nothing changes in your life, there are no hiccups, messy middle doesn't get all that mess messy. But maybe you're someone who waited till your 30s and now you're like, man, I just have finally caught the bug of sound financial decision-making and building for my future. 11% savings rate might not do it for you. You might need to actually get your savings rate up to that 20, 24, 25% so that you can live life on your terms, the way that you want, when you want. That's what we're all working towards and striving towards. How do we become financially independent? And the better, more disciplined decisions we make today will have a huge impact on that. Not only in terms of how we save and how

• 19:18Speaker 04

  we build, but also in terms of how we invest in ourself to increase our income to then use that income to turn it into true wealth and true assets.

• 19:27Speaker 03

  I love that. We love seeing the data just as much as you. It's interesting to see where you are in comparison to the median, the average, all that, all those things. But I love what Bo said, that income isn't everything. It's one piece of the puzzle. And that's what we talk about here on the Money Guy Show every single week. Now we're going to jump into some really fun stuff. We've got some questions from you queued up about your personal financial situation. We also have a segment from the wings where Bo and I are going to, yes, react to some current events and headlines in the financial media. So stick around for that as well. With that, are you ready to dive into some questions?

• 20:03Speaker 04

  I love it. Team is out. Did you already say the, did you already say teams out there?

• 20:07Speaker 03

  I didn't say they were out in the wings. So you have to say that.

• 20:08Speaker 04

  So for those of you who don't know, those of you that's the first time hanging out with us, we have a team. They like to hang out in the wings. They're the ones collecting your questions. A lot of people ask, hey, are these things really live?

• 20:19Speaker 03

  Wing pantomime.

• 20:19Speaker 04

  Yeah, they're really live. Hey, did they really answer it? Yes, we really answered your question. So if you have something you're curious about, you want to get our take on, you want us to weigh in on, make sure you get your question in the chat right now. The team is out collecting those. I, can I, can I speak freely?

• 20:36Speaker 03

  It's your show, sure.

• 20:37Speaker 04

  Okay, awesome. We get asked this question all the time. Hey, what do y'all do with the questions that don't get asked? You may not know this, but we actually read all the questions. We read them, we go through them all. A lot of the things, when we see people, hey, we see, oh, man, there's a lot of people asking this question about this thing. Sometimes that's how we like form future content. Hey, we ought to build a show around this. Or we have a lot of people asking this question. This might be something.

• 20:57Speaker 03

  Or future resources.

• 20:58Speaker 04

  Build a resource.

• 20:59Speaker 03

  A lot of our free resources are because of that.

• 21:01Speaker 04

  Uh, we could not do what we do without knowing what it is that you value, what it is that you're curious about, what questions you have. So if you have a question, curiosity, thing you want us to weigh in on, make sure that you get it in the chat right now.

• 21:17Speaker 03

  With that, we're gonna start off with a question from A B asking. It says, if I just bought-

• 21:23Speaker 04

  Is that like always be asking?

• 21:25Speaker 03

  I think it is now that you say it.

• 21:27Speaker 04

  Abraham Baldwin asking.

• 21:28Speaker 03

  It could be either.

• 21:33Speaker 03

  But the question he is asking is, if I just bought a house and learned I have to move within one year for my work now, does buying a house in the new city still qualify, in air quotes, for the 3-5-25 rule as a first home? All my down payment money is now in home equity.

• 21:54Speaker 04

  See, okay, A B, I don't, um, Brian's not here, first of all. So the things that I say end up carrying a lot of weight. And so when I tell you that there's a mode and mechanism and method to break a rule, I don't have like a counter here to be like, oh, no, you can't do that. Um, this is what stinks. Uh, when we, when it comes to buying homes, and for those of you who aren't familiar, when it comes to buying a house, we have this rule, 3-5-25. For your first house, we want you to put down, you don't have to put down 20%, at least 3%, 3% down. But we want you to make sure that you can be in that house for at least five years because there's a lot of transaction costs to real estate. And real estate's not a given that it's always gonna be up at the time that I need to sell it. Uh, generally, it increases through time. But again, there's a lot of transaction costs,

• 22:37Speaker 04

  both when we acquire a home and when we dispose of a home. So you want to make sure you're in the house long enough to justify those transaction costs. And we want to make sure that your total spend, what your, what your housing cost, you does not exceed 25% of your gross income. So this is the situation that A B's in. Hey, I bought this house and I loved it. But lo and behold, uh, a year later, I gotta move for work. So I'm always, whenever life happens, I'm always like an after action kind of guy. I want to do an assessment of, hey, the decisions I made previously, did I make those decisions well? Was I sound? Now, it's potential, it's possible that this job change came out of the blue. You had no idea it was gonna happen. It caught you off guard. A year from now, you thought

• 23:21Speaker 04

  you'd be there in five to seven years. That truly happens. If you knew, ah, my job's probably gonna change, or I'm in this role where it's gonna, like, um, we, we work with a lot of engineers for this large company that you've heard of, that, um, they make like heavy duty machinery. It's what they do. Well, they know that in every location they're gonna be, they're gonna be for three or four years, and they're gonna bounce, and they're gonna bounce, they're gonna bounce. For them, it does not often make sense to buy homes in that geography, rather. They just sign these long-term, uh, long-term rentals, and it allows them, they, they buy a house in the place where they want to eventually land, but they'll end up renting everywhere else. If you knew that it was a chance that you were gonna be moving, you're gonna be bouncing, then I'm gonna say, shame on you for making this like

• 24:04Speaker 04

  aggressive decision, uh, with a short-term view. But let's assume that's not the case. Let's assume that's not the case. Sometimes life happens. Uh, and what I would argue is that if you've only been in this house for, for one year, you're probably not gonna have the means or method to be able to come up with 20% for your next down payment. So if you bought another house, you're probably not gonna be able to put 20% down. You're probably gonna take all the equity that you have of your current house, you're gonna sell it, and you're gonna put that down. That's gonna be the next thing. Allow me to challenge your thinking though, because you just lived through this thing where, hey, I thought my plans were sure. I thought I was gonna be here, and lo and behold, uh, it's a year in the future, and now I gotta move. Perhaps, when you move into this new geography, maybe

• 24:49Speaker 04

  buying is not the most prudent decision. Maybe you ought to say, oof, fool me once, shame on me. Uh, no, that's not the way to go. Fool me twi- fool me twice, you can't be fooled again.

• 25:00Speaker 03

  What?

• 25:01Speaker 04

  Uh, there's a, there's a handful of folks that are gonna get that joke. If you don't get that joke, you can Google it. Uh, you got tricked one time by making that decision, potentially poorly. Perhaps you should give yourself some freedom and flexibility to rent in this new geography. Because one of the things about moving in a new area, okay, what school district do I want to be in? If I have kids, or I'm gonna have kids? What's my commute to work? What's my commute to the gym? Where's the grocery store? Like, all these things matter. A lot of times, if you're moving into a brand-new place, you might not know those. So we encourage people, often, if you can rent, meaning you're like, you're in a situation where that makes sense, perhaps it makes sense to rent where you're moving, get a lay of the land, find where you want to be, all the while, hopefully being able

• 25:44Speaker 04

  to save and build up money to be able to buy that next house. Because when you buy the next one, it sounds like you're gonna have to run afoul of the 20. That's just the reality. Because I don't want to tell you, no, no, you, bad luck, you gotta, you know, wait 10 years and save up 20%. But if you're gonna run afoul of the three part of 3-5-25, or the 20 part of your second home, then you better make sure you don't run afoul of the five-year part. You better make sure the next home that you buy, you have an extremely high level of certainty that you're gonna be able to be in there long enough to justify home ownership. Because homeownership is a wonderful, amazing, great thing, but it's

• 26:25Speaker 04

  not an absolute necessity. And when it's made at the wrong time, under the wrong circumstances, it can really bite you in the bum. And we don't want any bum bites. So, um, make sure you measure twice, two, three, four times before you make that decision.

• 26:37Speaker 03

  This question instantly did make me have so many questions about your job. Like, okay, I mean, maybe the answer is yes here, and that's fine. But like, you, do you want to move?

• 26:47Speaker 04

  Yep.

• 26:47Speaker 03

  Do you want to stay in this job at this company? And I mean-

• 26:50Speaker 04

  Is this job offering you a relo package? Because there's a lot, again, we have some clients who work for some companies that the relo packages their companies have are like, hey, we will sell your current home, and we will, we will make you whole on any money you lost. That's an incredible, so I definitely ask those questions about the,

• 27:07Speaker 03

  Yeah, and like, is there a potential this would happen again? Like Bo said, I know sometimes it does come out of the blue. I have friends who like a company they worked for got acquired, and then their role had to move to a new state because it was like being consolidated. But even then, like, if you're in the middle of an acquisition, do you want to buy there? You know, because you just don't know, it's a bit turmoil. So I think what you said was great. And I, I think the questions about the job are really key there. But, very interesting question, and we appreciate you being here and asking the question.

• 27:35Speaker 04

  I love, I mean, you can tell, A B, I love that our audience gets the stuff. I just know that, that's how I know y'all are my people. I drop a thing like that, y'all get it. I love it.

• 27:44Speaker 03

  I know that you, yeah, that you were doing that last week, too. All right, next question's from Nathan.

• 27:50Speaker 04

  I'll give him a Tumblr.

• 27:54Speaker 03

  Okay.

• 27:55Speaker 04

  Right, it's just me here. I get to decide, don't it?

• 27:57Speaker 03

  Okay.

• 27:58Speaker 04

  Can we do that? Can we give away tumblers?

• 27:59Speaker 03

  We can.

• 28:00Speaker 04

  We don't do that anymore?

• 28:00Speaker 03

  I may or may not have made some promises that I was gonna wait another week, but I will, but you trumped that, so, congrats.

• 28:07Speaker 04

  Is our admin team the one that we's-

• 28:09Speaker 03

  I can neither confirm nor deny.

• 28:11Speaker 04

  My bad, admin team.

• 28:15Speaker 03

  Well, but you heard it here first, A B asking, Bo has given you a Tumblr. So, email [email protected], and we would actually love to cash in on that. That was just some administrative behind the scenes that I won't go into.

• 28:28Speaker 04

  You tell them, I'll help them box them up. If we get behind, I'm, I'm really gonna-

• 28:32Speaker 03

  Okay.

• 28:33Speaker 04

  Uh, you remember that time that we did, whatever. We did, me and Brian did the thing where you had to like, uh, build the box, and you had to see who did it fast? You remember that?

• 28:40Speaker 03

  Oh, vaguely, yes. Yeah, yeah, yeah.

• 28:43Speaker 04

  Happy to do it.

• 28:47Speaker 00

  The action's on the court. And as the official beer sponsor of the NBA, Michelob Ultra is getting fans closer to the game with a chance to win courtside seats, merch, and more. Visit michelobultra.com/courtside to enter. Michelob Ultra Courtside, 26 to 27. No purchase necessary. Open to U.S. residents 21+. Begins on October 1st, 2026, and ends on June 30th, 2027. Multiple entry periods. See official rules at michelobultra.com/courtside for free entry, entry deadlines, prizes, and details.

• 29:14Speaker 01

  Are your ad campaigns lighting up the dashboard? But not the pipeline? That's bull spend and marketers are calling it out in dashboard confessions.

• 29:24Speaker 02

  My boss asked for results, so I opened my dashboard for the only positive sounding metric I had. Impressions.

• 29:31Speaker 01

  Cut the bull spend. See revenue, not just reach. LinkedIn delivers the highest return on ad spend of major ad networks. Advertise on LinkedIn. Spend $250 on your first campaign and get a $250 credit. Go to LinkedIn.com/campaign. Terms and conditions apply.

• 29:45Speaker 03

  All right. Nathan's question says, how do I prioritize paying off student loans slash a car loan? That are both around 6% when I'm 21 and feel like my wealth multiplier is too big to sacrifice? The total of all student loan and car loans are 40,000 dollars, not 40%.

• 30:07Speaker 04

  All right, Nathan with a Y.

• 30:08Speaker 03

  Nathan with a Y.

• 30:09Speaker 04

  I got some questions for you. Here's what I want to know. You're 21, you're super young, your wealth multiplier is insane. I know for a 20, do you have the thing over there? I know for a 20 year old, it's 88 times. But for a 21 year old, it's going to be somewhere slightly less than 88, but still really, really remarkable. Or if we just say 21 to 66, it's an 88 time multiplier.

• 30:30Speaker 03

  76 times over.

• 30:31Speaker 04

  76. So every dollar that you invest can turn to 76. The question is, how do I approach things like student loan debt and auto debt? So here's what I want you to do. Team, uh, production team, can you pull up for me? I got, I got two slides I'm thinking of. One of them is a slide that suggests, actually no, scratch that. I have one slide I'm thinking of. It has like, okay, how do I know when to prioritize student loans? How do I know when to prioritize car loans? And how do I know when to prioritize?

• 30:58Speaker 03

  A chart of what qualifies as high interest debt. I think we have that.

• 31:01Speaker 04

  Here's what I'm going to argue for you. If your student loans are around 6%, while it's right on the cusp, it's right under the threshold. I'm going to argue for you, that probably does not count as high interest debt. So if I'm a 21 year old, I'm probably not gonna, now if it's 6.9% and that's different than 6%. That's different than like 6.1%. But I'm not going to get like super aggressive about prepaying the student loans. I might pay that on a reasonable schedule while factoring in, hey, I want to be building money on the side. On your auto loan, and this is crazy talk. If you have an auto loan that's also around 6%, assuming that it's in 238. Now, if you get, went and got an auto loan and it's over like 72 months, you've already screwed the pooch.

• 31:46Speaker 04

  Like you've already lost the plot. You got to figure out, how do I rein that in? How do I get that inside the 238 confines? But once you get the car loan inside 238, meaning you're going to have it paid off inside of 36 months. I would argue, I don't think you have to be aggressive about paying that off more quickly than that. So I've got, you know, minimum payments or reasonable payment on my student loans while I'm 21. I've got my car satisfied inside of the 238 framework. Then everything above and beyond that, I'm with you. Let's go out there and earn that 76, 77 time multiplier by following the financial order. Reveal the thing up for me?

• 32:22Speaker 03

  Absolutely.

• 32:24Speaker 04

  I've made it through my high interest debt. I've done that assessment. I'm getting into now step four. I've got my emergency fund. Once I got my emergency fund, I want to start socking it away in that Roth IRA and that Health Savings Account, building up those tax free dollars so that I can have my money work for me as hard as it possibly can. And if I can do that, then there's a really good chance my future son will look back and say, holy cow, that money I saved when I was 21, some of the most valuable money I ever saved in my whole entire life.

• 32:53Speaker 03

  So what steps should he pay off his student loan or prioritize it?

• 32:57Speaker 04

  So I'm going to say that's not high interest. That's a niner. That's a niner. Here's what happens. If your student loans are above 6%, it's a niner in your twenties. But I'm going to argue that as you get into your thirties, now it drops to a three piece. So you've got to like figure out, like, when do you?

• 33:16Speaker 03

  He means step three, in case that wasn't clear.

• 33:17Speaker 04

  When do you make that assessment?

• 33:18Speaker 03

  That's true. And that's why that chart we just pulled up a minute ago, it shows it changes each decade. Like the number is going to go down what counts as high interest debt.

• 33:27Speaker 04

  That's right.

• 33:28Speaker 03

  The older you get, because we want you to pay off some stuff before you get to retirement. That gets more and more important. So, um, good question, Nathan. You do have a very powerful wealth multiplier. If you want to know your wealth multiplier or download your own copy of the Financial Order of Operations, go to moneyguy.com/resources. It's all there for free for you, both in downloadable form and some calculator forms if you would rather use that.

• 33:51Speaker 04

  Love it.

• 33:53Speaker 03

  All right, let's do another question and then we're going to get to our from the wings segment. So stick around for that.

• 33:57Speaker 04

  Am I going, I feel like I'm going long on these questions. Do I need to answer more? Do I need to introduce more brevity or is this okay?

• 34:03Speaker 03

  I think you're doing great.

• 34:04Speaker 04

  All right.

• 34:04Speaker 03

  You get, you're giving good answers. You're just not used to Brian not being here.

• 34:08Speaker 04

  Yeah, normally there's like a shared, like a shared space for that, but.

• 34:12Speaker 03

  I don't say as much as Brian.

• 34:13Speaker 04

  That's right.

• 34:13Speaker 03

  I'm sorry. Maybe I'll, maybe I'll change it up.

• 34:15Speaker 04

  Who does? You know what I mean?

• 34:17Speaker 03

  Oh my goodness. You said it, not me. All right. Next up is Kyle's question. It says, hey, Money Guy team.

• 34:24Speaker 04

  Hey Kyle.

• 34:25Speaker 03

  Should I view Roth IRA and Roth 401K the same? I'm not touching it until 59 and a half. Employers offer 401K. Income is too high for normal contributions. Wondering if backdoor contributions are worth it.

• 34:41Speaker 04

  So here's what I'm going to tell you. Can you look at them the same? I'm going to say yes, with a caveat, because here's, here's my opinion. And you can write this in pencil, but I do have some credentials. So maybe you write it in like a really good pencil. The Roth IRA, I believe, edges out the Roth 401K for just a handful of reasons. Number one of which, you get to choose where your Roth IRA is, how? So if I wanted it at Fidelity or Vanguard or Charles Schwab or wherever, I get to choose a custodian that my Roth IRA is, goes to. With my 401K, I don't get to do that. My 401K is going to be captive with the company that my, with the custodian that my company has chosen to hold that plan.

• 35:24Speaker 04

  So it might be a Voya, Empower, Fidelity, Vanguard, fill in the blank. I get to choose that. Well, because I get to choose a custodian, odds are on my Roth IRA, the cost of operating the Roth are going to be lower because there are no costs to operate a Roth at one of those low cost custodians. With a 401K, likely as a plan participant, I probably am going to bear some costs for the record keeper or third party administrator. So there's a chance that I'm actually going to pay less in my Roth IRA than I'm going to pay in my 401K. Now, let's assume that you have a good 401K and all the investment options match. Because in your Roth IRA, you get unfettered unrestricted access to any investment you want. So if you want to go buy the very lowest cost S and P 500 index fund, you can do that in your Roth IRA.

• 36:08Speaker 04

  Inside the 401K, you can only buy the funds that they make available inside the plan. And if they're not super low cost indices, perhaps you don't have that same availability. But here's the real reason why for a, doesn't say hell jar.

• 36:23Speaker 04

  With a 401K, most 401Ks are pretty locked down. That you can't go inside and get any of that money until you either retire or separate service. Meaning I change jobs, get terminated, whatever, and I can roll it into a thing. So those 401K dollars are really there and they're going to be there, they're going to be locked away until you change jobs or until you retire, which is what you want to do. That's, that's how they're supposed to operate. With the Roth IRA, there is this like one little provision that when I put money into Roth IRA, if I had to, in an absolute, like worst case emergency, I could break the glass and I could go in and get my basis, meaning the money I've put in back penalty free and tax free.

• 37:05Speaker 04

  So if I put $7,500 into a Roth this year and next year that you know what hits the fan, then I can go in and get that $7,500 back and I don't have to pay taxes or any penalties on that. Had I put that 7,500 into my 401K, unless they have like a hardship provision or a loan provision, which are awful, I can't go get those money. So I have just slightly more access there. So what would I like to see you do, Kyle? Do the Roth IRA, knock out that 7,500. And then once you've done that, as you, will you hold up the thing for me, Revi? The Financial Order of Operations.

• 37:37Speaker 03

  Got it.

• 37:38Speaker 04

  As you finish step five, maxing out your Roth, assuming you don't have access to an HSA, then you go to step six, your employer sponsored retirement plan, and you can do even more Roth. Because while you can only do 7,500 into a Roth IRA, inside of your 401K, you can go all the way up to $24,500 and you can make Roth contributions. And I, I had a call with a prospective client two days ago and they didn't realize this. Just because you do Roth contributions does not mean that you don't still qualify for the employer match. You know, the employer match in most circumstances, unless you elect otherwise, has to go in the pre-tax bucket. Well, this person thought, oh, well, because that's pre-tax, if I want to get the match, I gotta do pre-tax. So I'm going to do 3% pre-tax to get the match, I'm going to do the rest of the Roth. And I said, oh, contraire.

• 38:23Speaker 04

  That's not what you have to do. You can still do all Roth and your employer match will still go in the pre-tax bucket, and that's totally okay. So Kyle, for you, if you're getting like super crazy, 7,500 to Roth IRA, then 24,500 into your 401k, that is tons of Roth-free, tax-free Roth dollars growing for you.

• 38:42Speaker 03

  That's great. Kyle, thank you for the question. Also, Nathan, if you would both like a Tumblr, just email [email protected]. We would love to send you one since we answered your question on the show. All right, it's time for our From the Wings segment, which I'm excited about. But first, I have to give a shout out to our guy, Brian Preston himself. October is a big month. It is the last month for pre-orders of Millionaire Mission on paperback, and it is your last month to get in on the really fun perks that we have planned for everybody who pre-orders the paperback version of the book. This book, it is still that same New York Times bestselling book we know and love, but it has been revised

• 39:24Speaker 03

  and updated with some news stories, fresh case studies that Brian's really proud of, and fresh numbers for 2026. So if you haven't read the book yet, or if you love the book and want to keep supporting Brian's mission to get some good financial advice out to everyone who needs it, please go to moneyguy.com/millionairemission and preorder. It really helps us get the message out and makes the book more noticeable to the powers that be. So thank you so much for your support. And all the information about the preorder perks are there on the webpage as well. Brian's book club, we have some fun things being announced soon about what that is going to be. So you definitely want to be in on that, just saying.

• 40:04Speaker 04

  Do you remember, when was the original launch, original launch of the original book? Do you remember?

• 40:11Speaker 03

  May 2024?

• 40:12Speaker 04

  May of 24. Here's what's wild. Here we are, two, you know, rapidly approaching three years in the future. Brian still reads all the comments. You know what I mean?

• 40:20Speaker 03

  I know, the like reviews on like Amazon and everything.

• 40:23Speaker 04

  It is like fuel to the fire. Because if you guys are curious, are we in the Discord? Do we read it? Yep. Do we go on the Reddit threads and read them? Yep. Do we read our YouTube comments? Yep. Is Brian reading the Amazon or all the book reviews? Yep. We try to stay dialed in on what you think about the things we're doing are. So if you've read the book, and if you've like gotten value out of it, you've enjoyed it, leave a comment in there. So all people can know, oh, yeah, this is great. We should do, I should get this. This helped me out on my journey. Because that stuff is more motivating than you realize. It's the reason why we get to keep doing this. We get to keep putting this stuff out there. So thank you for doing that. Thank you for continuing to let us be part of your financial journey.

• 41:00Speaker 03

  Love that.

• 41:01Speaker 04

  What was the website again?

• 41:02Speaker 03

  Moneyguy.com/millionairemission.

• 41:04Speaker 04

  Got it.

• 41:05Speaker 03

  Get it at all the major retailers. All right, From the Wings, our team, From the Wings, have put together several financial-related news stories.

• 41:17Speaker 04

  Okay.

• 41:18Speaker 03

  In the current events world. I'm going to read them off, and we are going to decide if they are thumbs up, news, or thumbs down, noise, should you pay attention or not pay attention. Are you ready?

• 41:28Speaker 04

  I'm ready.

• 41:30Speaker 03

  First headline, highest mortgage rates in three years chill the housing market. Is it news or noise? I said it's news, and so did you.

• 41:40Speaker 04

  Why do you say it's news?

• 41:41Speaker 03

  Well, because people who need to buy a house or want to buy a house, this matters. It's going to greatly impact what they're going to pay month to month for their mortgage and all of the additional costs.

• 41:53Speaker 04

  We did a recent show, and we showed for the exact same house. I want to say, guys, tell me if I'm wrong, it's like a $400,000 house, same down payment, same all the things. What the cost was with, I think, like a 4% interest rate, which we saw a number of years ago, versus 7.5%. And interest rates in and of themselves, by themselves, cause the affordability of housing to be very, very different for the exact same house, in the exact same place, in the exact same street. And so there's a lot of people that are, that are either trying to get into a home, or potentially considering trying to upgrade or sell their home. They're saying, man, I just can't do it with interest rates as high as they are.

• 42:31Speaker 03

  Yeah.

• 42:32Speaker 04

  And so I do think it's, it's news, because I still am a proponent that most things, especially when it comes to housing or real estate, are supply and demand driven. And if the affordability stays high, the cost of housing stays high, and interest rates stay high, it's going to create a demand issue where supply is going to increase, but there's not going to be enough demand, and something's going to have to change. Something's going to have to call. So if I'm a first time home buyer, I'm keeping like a close eye on, okay, what's happening with interest rates? Seven and a half seems pretty awful. But man, might six and three quarters be more compelling. Might six and a half be more compelling. Is that something I think I'm going to see in the near future? So I just want to stay abreast of that if I'm someone in that market. Now, if I've got my house,

• 43:14Speaker 04

  and I'm a couple of years in, and I've got the, you know, two and three quarters mortgage, I'm just quietly smiling to myself and not telling anybody about it. Because you tell all people about that.

• 43:23Speaker 03

  Maybe it's not so much news for you.

• 43:24Speaker 04

  That's right.

• 43:25Speaker 03

  And that's fine.

• 43:26Speaker 04

  That's exactly right. It's more noise than anything else. But for folks trying to get in, I do think it matters. Interest rate matters, price matters, what you pay matters. For most folks, when you buy a home, it is the single most expensive, largest purchase you will ever make. And so you want to make sure you make it well, and it's well thought out. And right now, it's a really, the current environment makes it more difficult to make that decision as wisely as we could have a number of years ago.

• 43:51Speaker 03

  Yeah. All right. Next headline, stocks are at record highs for all the right reasons. Investors are still biting their nails. Is this news or noise? Ooh, we both said noise.

• 44:05Speaker 04

  It's this easy. Always be buying. What's the stock market doing today? I don't know. What'd it do this week? I don't know. What'd it do this month? I don't know.

• 44:12Speaker 03

  It's just tail as old as time.

• 44:14Speaker 04

  What's in this quarter? I don't know. What do I care about? Am I saving? Am I putting dollars in? Do I have a portfolio that matches my time horizon, risk tolerance, available accounts, goals, risk capacity, all these different things? If I know that I have that, and I know that I'm saving well, I don't really care what the market does in the short term. I want to make sure that over the long term, I'm putting my dollars to work, because I believe that over the long term, it's going to continue moving up and to the right. That's the hope that we have as investors. And so focusing on and getting lost in the noise of short-term, short-term daily price movements, I think has way more risk of you arriving at a false conclusion or making an emotional decision.

• 44:58Speaker 04

  So I think all time highs, all time lows is noise, in my opinion.

• 45:02Speaker 03

  Agreed. I've seen friends miss out because they were, you know, buying or selling because of headlines like these, and you just kind of lose out in the end.

• 45:12Speaker 04

  I think it was Nick Murray who famously said, man, if you think the market's high right now, wait till you see it 10 years from now. And I love that. That's a great, if you could go back in time, and pick the S and P, pick the Dow, whatever, if you could have told yourself, your 10 years ago self, that, hey, it'd be trading at this level today, you'd go, oh, no, that sounds insane. And lo and behold, here we are. And that's kind of the way that this ever-expanding pie of our economic and capital markets work. And so I'm happy to be an investor. I'm going to keep buying. As a matter of fact, I'm going to always be buying. That's what I do.

• 45:44Speaker 03

  Always be buying. All right, we've got two more. And the last one, the team made me not look at the images for. So I don't know what they are. So we're all going to be surprised together.

• 45:54Speaker 04

  It's going to be like a monkey peeling a banana upside down or something.

• 45:57Speaker 03

  Probably. Next headline, nearly 70 million kids now have a Trump account, but parents have to claim it first. Is this news or noise? I said news.

• 46:09Speaker 04

  News, man. Trump accounts are, it's free money from the government. Now, whether you agree with it, disagree with it, like him, don't like him, that is not part of this conversation. What's part of this conversation is there is this thing that's available to you. If you have a kid that is of the correct age to be eligible for it, that is free money. And that free money can be put into account for it, and it can grow over the long term for your kids, and it can start that engine of compounding growth. And so.

• 46:36Speaker 03

  And the reason I said this was news is because this is suggesting, data was actually suggesting very, very few have actually been claimed.

• 46:44Speaker 04

  That's right.

• 46:45Speaker 03

  That means like, if you have a kid in that age range, you as a parent have to go do the step to like claim and open the account in order to get that free money. So the account is like automatically opened, but if you're not going and taking advantage of it, you will not benefit from those dollars, and neither will your child. So I think that's news. I think that was really a surprising stat.

• 47:04Speaker 04

  It's so interesting. The, the key to like financial success is being a, a passive investor, meaning like, I don't like, I'm not super active in like how I'm investing, but an active participant in your financial life. I'm actively following the foo. I'm actively building my merchant. I'm actively putting my money to work, but I'm passively letting those dollars grow. Don't be someone who just sits by and lets life happen to you, because you're going to miss out on tons of opportunity. But if you think an 88 time over multiplier is insane for a 20-year-old, did you know that for a zero-year-old, a newborn, the wealth multiplier is?

• 47:37Speaker 03

  647.

• 47:40Speaker 04

  That Trump account for a newborn can turn into 657? 657?

• 47:48Speaker 03

  Forty-seven?

• 47:50Speaker 04

  647 times what it is today, if you let that money work all the way till they retire. Don't miss out on that opportunity.

• 47:58Speaker 03

  Yeah. All right. Last but not least, the headline says, gangster walruses exercising bear among the funniest wildlife photos of 2026 from USA Today.

• 48:10Speaker 04

  I gotta see the, I gotta see the photos.

• 48:15Speaker 04

  That's hard. That's like the uh.

• 48:17Speaker 03

  That's just a bunch of walruses? They're gangster walruses cuz they're gang- there's a lot of them in this photo for those of you listening. They're just in the ocean and they're just kinda staring at us.

• 48:26Speaker 04

  WWA walruses with attitude, right? Look at that.

• 48:30Speaker 03

  I mean, it is a good photo. Oh!

• 48:32Speaker 04

  Oh my goodness.

• 48:33Speaker 03

  An exercising bear. That's cute.

• 48:35Speaker 04

  Hold on, that's a- hold on. What? Why is there a paw coming out of his back? Is this a-?

• 48:41Speaker 03

  Is this a hi?

• 48:43Speaker 04

  Oh, he just twisted.

• 48:44Speaker 03

  I didn't even think that till you said that.

• 48:46Speaker 04

  He's doing his obliques. He's doing his obliques. You know what? I like it. I um.

• 48:51Speaker 03

  The funniest wildlife photos of 2026. Whoa, is that a praying mantis just sitting?

• 48:57Speaker 04

  Yeah, but that... Is that? I don't know why. I just feel like that's a her. It's a- it's just she and she's like- that's like- she's like posing.

• 49:06Speaker 03

  It's like the attitude of her pose, yeah.

• 49:08Speaker 04

  It's like coming up on praying mantis vogue. That's awesome. What else you got? You got any more? That's it.

• 49:15Speaker 03

  No, that was it. Just three.

• 49:17Speaker 04

  Obviously the ex-

• 49:17Speaker 03

  Oh, is that news or noise? I'll take that. That's news.

• 49:19Speaker 04

  You kidding me?

• 49:20Speaker 03

  I like some happiness in my day.

• 49:21Speaker 04

  Look, health is wealth. If a bear can do a few crunches and twist the obliques-

• 49:26Speaker 03

  So can you.

• 49:27Speaker 04

  So can you.

• 49:29Speaker 03

  I need that. Alright, that has been our From the Wings segment. Thanks for playing along and thanks to our team in the wings for some good financial education and a little fun. We appreciate it. Alright, let's dive back into some questions. You look like you're thinking really hard.

• 49:48Speaker 04

  I was trying to come up with like a bear working out joke. I couldn't get one. I was trying to get one on the spot, but

• 49:53Speaker 03

  That's tough.

• 49:53Speaker 04

  I didn't get there.

• 49:54Speaker 03

  It's tough. Well, if it comes to you, let us know.

• 49:56Speaker 04

  Alright.

• 49:57Speaker 03

  This question's from Amber. Is it a good idea to apply for a personal line of credit as a just-in-case slash emergency option? Not to use it regularly, but just as an extra level of security? I'm 34, female, with a 70K income, on step five of the foo, with 120K in retirement. I have a thought, but I wanna know what your thought is.

• 50:21Speaker 04

  Well, here's what I- here's what I know. You're 34 years old and you tell me you're on step five. Reveal the thing up for me.

• 50:28Speaker 03

  Yep, that would be Roth and HSA, so you're investing, which is where that 120K of invest is probably coming from. Maybe in your 401K too.

• 50:35Speaker 04

  Right now, uh, for those who aren't familiar, this is the Financial Order of Operations. Nine-step process to tell you what to do with your next dollar. If you want your free copy, you go to moneyguy.com/resources, download your free copy. If you're on step five, uh, because I'm good at math, I know that means you are past step four. Well, step four is a fully funded emergency fund and I don't remember. She said 34, female, single, married. Did she say? I don't remember what she said.

• 50:59Speaker 03

  I don't think it specified.

• 51:00Speaker 04

  So, don't know if you're single or married, but you either have- if you have a fully funded emergency fund, you either have three months of living expenses or six months of living expenses or somewhere in between to cover you. Well, my opinion is the reason the emergency fund is there is to do the very thing that you're asking for. Man, should I open up this line of credit just so I have access just in case of an emergency? Just in case, I would argue an appropriately funded emergency fund should satisfy that. Cuz here's what I don't wanna have happen. You've got, uh, 100- I'm assuming if you're opening up a personal line of credit, I'm gonna guess this is maybe like a home equity line or something. You didn't say- you said personal line, not home equity line.

• 51:40Speaker 04

  I worry, if you have access to it, does it start looking like- you know how like when Bugs Bunny is like, uh, he's like going through the desert and he starts seeing all these mirages and he starts seeing like the turkey leg? I'm worried that when you have that line of credit there available, they're like, oh man, I wanna go on that trip. Did you know that right now, uh, John Mayer's playing the sphere or whatever? Man, I really wanna go see that, but you know what I gotta do? I got this line. I'm just gonna do- I'm just gonna- I'm just gonna pull-

• 52:11Speaker 03

  It's just a little bit. I'll pay it right back.

• 52:13Speaker 04

  And you know, you know what? Hey, I need a new car. I got- rather than going through the dealership, what if I just, ah? And all of a sudden, that ease of access, that money, and you wake up one day and you're like, holy cow, I've got this debt. I'm of the opinion, if you've done the things that you were supposed to do, you should not need to have that emergency option there. I don't like the idea of having it opened up, having it available. Now, don't mishear me. Home equity lines are fine. Home equity lines of credit are fine. If you're using them for the right reasons at the right time, but opening one just to have it? Ah, I worry about the behavioral thing that could happen if that were there. Because here's what I know to be true. If I have cash, and look, this is a little bit of a Ramsey-ism.

• 52:58Speaker 04

  If I have cash and I gotta spend my cash, it feels painful. But when I swipe, it's just easy, right? Like plastic, the card does not diminish. If I gotta pull something out of my emergency fund and I gotta pull that out to pay for something, that's painful. My emergency fund is 20 grand and I gotta pull something out and all of a sudden it's 15 grand. I'm like, ugh! If I go do it on a line of credit, it almost feels like funny money, like Monopoly money. Like, oh, it's just- it's not even real. Behaviorally, I would worry about that being the case, so if you can avoid doing it, I think I would avoid doing it.

• 53:34Speaker 03

  That was my thought too. The behavioral ease scares me and it makes me wonder like what- Maybe you do have like a lower risk tolerance? Like I'm a more risk averse person too, so I understand that. So like maybe you are more comfortable with a little extra cash? There's nothing wrong with that. But also to Bo's point, the emergency fund of three to six months should make you feel really good and really secure. Yeah, I wouldn't wanna open up debt in an emergency if I don't have to. I'd rather use my emergency fund, so, well said. Amber, if you would like a Money Guy Tumblr, just email [email protected] and we'd love to send you one.

• 54:09Speaker 04

  Vinyl said they should make a credit card that like shrinks every time you swipe it. Could you imagine being at the grocery store with that person who really has a problem and they're like trying to- Can you tap? And they're just like-

• 54:20Speaker 03

  They can't.

• 54:22Speaker 04

  That's hilarious.

• 54:24Speaker 03

  Alright, let's go to Justincredible33.

• 54:28Speaker 04

  Oh, great name.

• 54:30Speaker 03

  Um, oh, I went out of order there, team. Sorry about that, but we're gonna go to that anyway.

• 54:35Speaker 04

  We gotta crack team if I think it's up there.

• 54:36Speaker 03

  What is the best alternative for someone who does not medically qualify for term life? 41 years old, with 33-year-old spouse and two young kids, about five times annual income saved. Want options outside employer group life.

• 54:52Speaker 04

  See, here's the problem. What you've described, uh, so does not medically qualify, meaning like, hey, for some reason I've had a medical condition or I've had something happen in my past, then now an insurance company is saying, hey, we're unwilling to underwrite you for life insurance. And it could be because of a big thing or a little thing. These things just happen. Well, one of the reasons why employer options are so great is because oftentimes an employer option, they're not underwriting you specifically as the individual, they're underwriting the entire class of employees that you fall under. So even if you can't get insurance on your own, you might be able through your company to get the free $50,000 of life insurance that the company provides,

• 55:34Speaker 04

  but a lot of employers will let you increase that. Like, hey, I'm happy to pay for it, but I wanna get 10 times my annual salary. I make $50,000 a year. I wanna get a $500,000 death benefit of insurance through my group plan. Realistically, your group plan might be the only way you can do it if you're uninsurable otherwise. And if you're 41 and your spouse is younger and you have two young kids, uh, you've got about five times your annual income saved, which is great. We say that by the time you get to 40, which you have three times your annual income. So you're certainly ahead of the curve, but you're not financially independent. Cuz the question I would ask Justin, I'm assuming your name is Justin, um, is if that proverbial bus hits you on a Tuesday afternoon,

• 56:19Speaker 04

  would five times your annual income plus your wife's income provide the life that your wife and your kids, that you would like for it to provide? And does it replace all of the income, uh, income that you would have earned in the rest of your working career? Odds are, it's simply- odds are it probably wouldn't do that. It might not be enough. And so I think that outside of just saving like a banshee and trying to build up assets as quickly as you can, I think that employer-sponsored coverage is probably gonna be your best bet to be able to get some sort of coverage in place. Now, just so you know, uh, generally for healthy people that are a low risk, uh, that have low insurable risk.

• 57:01Speaker 04

  So these are people that like, if you're gonna do your thing, you're gonna get like preferred, preferred plus, whatever, it's often less expensive for you to go direct and not do it inside your employer plan. Because again, with the employer plan, they're taking the average health of all the people in the population. When you go get underwritten specifically, like, oh, this person's super healthy, preferred plus, it'd be lower cost. For those on the other side, hey, I'm a little bit unhealthy, a little bit overweight, I've got these other issues going on. It might actually be less expensive for you to look at the group plan. So we always tell people, when you're assessing, get quotes both ways. What would it cost to increase through my employer? What would it cost me to go to direct? And which one makes more sense? Which one, uh, is more interesting? I think in your case, Justin, your employer plan is probably the best bet.

• 57:45Speaker 03

  Justincredible33, thank you for the question and the awesome username. If you would like a Money Guy Tumblr, just email [email protected].

• 57:55Speaker 03

  All right, now we're going to go to Will Marrow's question. Hi, Money Guy team. JL Collins says to switch from Roth to pre-tax at the 22% tax bracket to invest the tax savings. How does this align with food step five? At what exact marginal bracket should we stop Roth?

• 58:16Speaker 04

  Look, I love JL and it's okay. It's a little bit wrong right here. That's fine. I'm kidding. That's not.

• 58:21Speaker 03

  It's fine.

• 58:22Speaker 04

  We think about it a little bit differently. If you were in a lower tax bracket, we love the idea of you doing Roth. And in our world, because most people, they live not only in a, they live not only in a country that taxes their earnings, but a lot of people live in states that tax their earnings. So the math we want you to do, Will Marrow, is we want you to take your marginal federal rate, that's the rate of tax you'll pay on the next dollar that you earn. That's the one that's on the tax bracket. Marginal federal bracket plus your marginal state bracket. If that's below 25%, so in this instance, like, hey, if I'm 22% and I live in a, in a no income tax state or very low income tax state, Roth makes all the sense in the world.

• 59:04Speaker 04

  However, if you are in marginal bracket, marginal state plus marginal federal that's above 30%, I'm going to argue that the current year tax benefit is so valuable that you don't want to walk away from it. Meaning every dollar I put into pre-tax, if I'm in the 30% or above marginal tax bracket, is going to save me 30 cents in taxes. Realistically, I can think of that, it's not exact as, but that's like a 30% imputed rate of return. And likely later on, when I retire, I'm in a financial independence, there's a good chance I'll be in a lower bracket than the 30% bracket. If that's the case, I want to do pre-tax now, I'm going to max that out. And then with those tax savings, I can then go fund a Roth IRA or fund my HSA or do a

• 59:49Speaker 04

  backdoor Roth. In our world, in our view, below 25%, we love Roth. Above 30%, we love pre-tax. Between 25 and 30 becomes a little more nuanced. What's your current account structure look like? What do your current three buckets look like? What's your age? What's your earning potential? What's your retirement going to look like? In that 25 to 30, we could kind of go either way. But for us, a little bit different than JL, we say below 25 Roth, above 30 pre-tax. Not far off, and this is flavors. Some people like chocolate, some people like vanilla. We just think that our vanilla with chocolate swirl is better.

• 1:00:26Speaker 03

  Sounds delicious. Will Marrow, if you would like a Money Guy Tumblr, go to moneyguy.com or no, email winner at moneyguy.com and then.

• 1:00:34Speaker 04

  Then go to Money.

• 1:00:35Speaker 03

  Then go to moneyguy.com because there's a lot of cool stuff there. Exactly. But truly, now's your moment to go to moneyguy.com/millionairemission and preorder Brian's paperback version revised, updated, better than ever. Thank you for your support on that. The pre-orders really help us get the mission out to even more people. And on behalf of Brian, he says a huge thank you to you for doing that.

• 1:00:59Speaker 04

  Huge thank you, guys. We, we are so fortunate. Me and Brian joke, you know, we have a lot of tours that come through, people will schedule, come by and see us, which is awesome. And at least weekly, we're like, man, this is the craziest thing in the world. We get to do this. Like, we get to sit here, we get to talk. If you're not following us on social, we've got to do some really fun social stuff, whether it be Brian making delicious peanut butter sandwiches or me showing how good of a swimmer I am. And we got more stuff cooking for you. We're actually, when we turn the camera off, we're going off location to film some more social stuff. So if you're not following us on Instagram, if you're not following us on TikTok, if you're not connected with us on Facebook, if you're not in the Discord, if you're not connecting with us outside of this, you should be.

• 1:01:43Speaker 04

  Because we want to make sure that we are constantly putting out not just information. Look, you know this to be true. We're going to put out educational content. It is the very heart of what we do. We believe there's a better way to do money, but we also recognize we got to figure out ways to not be boring and to try to be entertaining. And man, our team is amazing. They come out with awesome ideas. Me and Brian do our best to execute them well. And sometimes we do and sometimes we don't. But if you're not connected, you're not going to see that stuff. So make sure you go out and follow us on socials. Make sure, if you're not subscribed right now to the channel, we would love to know that you're out there. So make sure you subscribe right now. Click that button. Thank you, thank you, thank you for letting us be a part of your financial journey.

• 1:02:25Speaker 04

  So long as you guys keep showing up, so guys, so long as you guys keep tuning in, so long as you guys keep interacting with us, we're going to keep doing this. We don't plan on slowing down. We really do believe that we are making a difference in the financial world. We could not do that without you. So thank you, thank you, thank you, thank you. For Rebi and Brian and the rest of the team, I'm today's host, Bo Hanson. Money Guy team, out.

• 1:02:53Speaker 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.

• 1:03:33Speaker 05

  Hey, Bo's here. When your next track starts, listen for the decisions that the artist makes. The vocal pushed right up front, the bass that waits half a beat, that sample from a 70's underground gem. Every choice deliberate. With Bo's, you'll hear it all. Your music deserves Bo's.

• 1:03:59Speaker 06

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