Brian Paid Off His Mortgage - Here’s What He Learned

Should you pay off your mortgage or invest the money instead? We break down a powerful case study comparing two 30-year-olds with the same mortgage - one pays it off early, the other invests. You’ll also hear how Brian recently paid off his mortgage (finally!), plus we answer your questions on umbrella insurance, mega backdoor Roths, and how to bedazzle your basic life without falling into lifestyle creep. Jump start your journey with our FREE financial resources⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Reach your goals faster with our products⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Take the relationship to the next level: become a client⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Subscribe on YouTube for early access and go beyond the podcast⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Connect with us on social media for more content⁠⁠⁠⁠⁠⁠⁠ Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. NordVPN.com/MONEYGUY Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Speaker 00

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• 1:03Brian Preston?

  Age-old question: Should you pay off your mortgage earlier? Invest.

• 1:08Speaker 03

  Brent, I am so excited about this because we get asked this question all the time and people want to know. And there are different thoughts out there in the financial world as to what is the most advantageous strategy? Should I pay off my mortgage as quickly as possible and get that knocked out? Or should I not pay off my mortgage and get my money working for me? And today, we hope we can answer that question.

• 1:32Brian Preston?

  Well, of course, the answer is it depends.

• 1:34Speaker 03

  It depends.

• 1:35Brian Preston?

  Because personal finance is very personal. But we did think, hey, this is one of those things, why not do one of the tried and true things that we like to do, which is a Money Guy case study?

• 1:45Speaker 03

  We said, let's look at two different types of financial wealth builders. Let's look at Debt Free Dave, and then let's look at Manny the Mutant. And let's assume that both debt-

• 1:58Brian Preston?

  I wonder where those names came from?

• 2:00Speaker 03

  I don't know, it's just the content team just created- Uh, let's assume that they're both 30 years old. They're both gonna have a $500,000 mortgage. They're both gonna do a 30-year fixed mortgage. And we went ahead and assumed, we looked at the average 10, or the average mortgage rate over the last number of years at about 5.3%, right?

• 2:20Brian Preston?

  Which, by the way, is still a good bit lower than if you walked in off the street right now. You're not getting a 5.3%, but we figured we'd go in between.

• 2:26Speaker 03

  So if we just look at the principal and interest payments, the monthly payment for each of them would be $2,768. But they're each gonna employ different strategies. Debt Free Dave is going to pay an extra $1,000 per month, every month, on his mortgage. So he's gonna pay $3,768 every single month. And then, once that mortgage is paid off, he's gonna invest all of the remaining. Because people make this argument, "Man, if I get my debt paid off quickly, I will have more to invest." So, once his mortgage is completely paid off, he's gonna invest $3,768 per month, all the way till the end of the 30-year period. But then we have Manny. And Manny says, "You know what?

• 3:09Speaker 03

  I'm at a 5.3% interest rate, but I'm young, and I believe that my money can work for me. So instead of paying $1,000 extra on my mortgage, I'm going to begin investing $1,000 every single month." And since Manny is 30 years old, we believe that Manny, over the long term, could receive about a 9% rate of return, based on our wealth multiplier assumption. So, there's the case. There's the two that are laid out. Now, Brian, when you look at these two, do you think to yourself, "Man, I'd rather be Debt Free Dave, or I'd rather be Manny the Mutant?"

• 3:42Brian Preston?

  Well, I mean, I think there's several things to pay attention to. We've done the math, and we're gonna show this deeper in the illustration. It is interesting that Debt Free Dave will have this house paid off at 16 and 1/2-

• 3:54Speaker 03

  16.5 years.

• 3:56Brian Preston?

  So, so there's going to be 13 and 1/2 years, he's gonna be able to throw the kitchen sink at investing. What I will be curious, and I know the answer, but I'm just going ahead and laying the groundwork, is that, yes, it is great that you get to 100%, now throw that money towards investing, but people often underestimate the power of the time. That compounding growth of just putting a little bit of today- For tomorrow in deferred gratification is something pretty powerful. And that's what I like about these case studies. And realize we're also, we use 5.3%. There's an argument that if we just backtrack three to four years ago, the majority of mortgages are well under 4%.

• 4:36Brian Preston?

  So when we show you the spread between what Debt Free Dave and Manny the Mutant, we have gone conservative. We could have really just

• 4:46Speaker 03

  Juiced it up.

• 4:47Brian Preston?

  Totally made this thing an exclamation mark. But we were trying to be as generous as possible. With that, I'll let you kind of walk through what happens after 30 years.

• 4:56Speaker 03

  Yeah, so when we fast forward 30 years in the future, both Dave and Manny have a fully paid for home. So that is the same in both situations. However, when you compare their portfolio values, Dave has built up a portfolio of a million dollars. Remember, he was not saving for that first 16 and a half years. And then he began saving $3,700 every single month for the remainder, which is still an impressive feat. And building up a million dollar portfolio is awesome. However, when you look at Manny and you look at the fact that he let his money work for a longer period of time, his portfolio was actually able to grow to $1.8 million.

• 5:37Speaker 03

  That's an $800,000 difference from what Dave was able to do.

• 5:43Brian Preston?

  And remember, this is my point is, is that we used 5.3%. There's many of you, and I've talked to you, you're debt crusaders and you were in your early 30s paying off 3% mortgage rates. This could be a million dollar difference in the long term. And I think that's something that everybody should be aware of. But I hear you, a lot of you are like, yeah, but it's about the mindset. And most people are spent, I agree. There's a majority of Americans don't have discipline and probably just, you're going to be successful if you just focus on the debt and pay it off. But we know that there's a group of you, you're financial mutants, that you are maximizers. And that's why you don't have to be a debt crusader because you know thyself

• 6:27Brian Preston?

  and you know the power of your time, you know, the value of your money, and you're doing it a different path. Now, with all that said, Beau, are there alternatives or times when maybe you throw the math out and you just still go ahead and prepay the mortgage?

• 6:40Speaker 03

  Yeah, certainly in this situation, when they were 30 years old and you look at Manny and you look at Dave, the math drives a lot of it. But let's say that you had a different case study. Let's say that you had someone who'd been paying on a mortgage for a number of years and maybe this person was in their early 50s and maybe they even had a really great interest rate. Maybe it was down in like the 3, 2.75, 2.5%. And they've been following the financial order of operations and they've been building wealth. They've been doing all the things that they should be doing from a financial standpoint. In that case study, Brian, might it make sense for that individual to go ahead and prepay their mortgage?

• 7:25Brian Preston?

  Yeah, so this is one of those things. You guys know, I've had the dream that when I was doing Millionaire Mission, because just to clarify, because I don't want people to think we're anti-paying off debt. As you guys know, I'm all for you, you debt crusaders. I'm like, when I meet you in person, I'm like, as long as you were saving and investing at least 20 to 25% towards your retirement goals, you can do this as a step eight type thing and you can prepay your mortgage. I'm all for that. But I do clarify in Millionaire Mission that really, under 45, I don't want you doing that until you're paying over because you have to ensure that you make the wealth. Post 45, your wealth multiplier is much lower.

• 8:09Brian Preston?

  You've hopefully already made a lot of sacrifice and built up a base level of assets. Now we can start de-risking to maintain the wealth. So I am clearly, visually you can tell this, over 45 at this point. But I have been walking around with a mortgage. Now, it was very small. I think when I did the book tour, it was $90,000 was what I was sharing. And the mortgage rate was 2.5%. And I just was having a hard time because I was still making close to 5% on my cash. Even though I had the cash, I was walking around and you guys, I've heard you, you're like, what are you doing, Brian? And it's true. I mean, because I was, I was never a minimum payment anyway. I was already putting a little bit extra.

• 8:52Brian Preston?

  So I'm, I'm happy to report as of 8:48 a.m. this morning.

• 8:59Speaker 03

  Is that Central Time?

• 9:00Brian Preston?

  Central Time.

• 9:01Speaker 03

  Central Time.

• 9:02Brian Preston?

  I sent my mortgage company, so we went from 90,000 a year ago when I was doing the book tour launch around May to this morning, I sent them 43,161 dollars and 50 cents to pay my mortgage off.

• 9:17Speaker 03

  So you are officially mortgage free.

• 9:21Speaker 03

  Look at that. Look at that.

• 9:23Brian Preston?

  Printed the confirmation.

• 9:24Speaker 03

  How's it, this is the first time that you've been mortgage free in, when did you buy your first house?

• 9:31Brian Preston?

  I bought my first house when I was 24, 25.

• 9:37Speaker 03

  So 24 years old, here you are. There's a lot of people out there that are aspiring for this. Oh, I want to have my mortgage paid off. I want to have it gone. I want to feel the weight of that falling off of me. How's it feel? A lot of people aren't there and haven't been there. Give us some feedback. What does it feel like to be mortgage free?

• 9:54Brian Preston?

  Well, I don't want to ruin, I'll go ahead and ruin it for you. I mean, it feels good that this, because look, I had an insurance claim. This is the other reason I went ahead and decided to pay it. When you have an insurance claim, they send you the check for the insurance claim, but they put the mortgage company on it. It's a pain in the rear end to get the mortgage company to sign off on it. You have to send it. It takes about three or four weeks. Adds to the process. I went there and I was like, you know what? This is one more hassle factor thing. I just need to have this debt paid off. But I don't, I don't want to ruin it. I'm not debt free.

• 10:27Speaker 03

  I wasn't gonna say.

• 10:28Brian Preston?

  I own multiple commercial real estate properties.

• 10:30Speaker 03

  There's so many people in here saying, congratulations, I'm being debt free.

• 10:33Brian Preston?

  That's why, that's why we said mortgage free is that I don't have any personal debt, meaning I own all my cars, I own all my houses. But, um, but I have commercial debt. I mean, because I own several commercial buildings. If you've been to downtown Franklin, you have been around our commercial buildings that we own here, here in town. And I use debt. I mean, when the, when the bank offers you these buildings at under 3% mortgage, I mean mortgage rates.

• 11:03Speaker 03

  It's hard not to take advantage of it.

• 11:04Brian Preston?

  It's hard not to take advantage of that. And so I'll continue to, and I think that's probably a lesson for all of my financial mutants is, look, I think it's great to de-risk and do all these other things, but also is you can understand what debt is as a tool. You're going to be okay as long as you don't get too far out on the leveraged spectrum. And then nothing I have done has made me feel uncomfortable with where we are from, from a leveraged, you know, levered debt standpoint. That's the, cause that's the, that's the wonderful world of finance. And we do a lot of react content where we'll have people out here who tell you that levered debt is the secret to all things of success. And then we've got debt crusaders on the far left when we've reacted to, who are saying, no debt, just

• 11:48Brian Preston?

  teetotal and stay away from it. I'm here to tell you there's a better way to do money. And we try to give you both the behavioral stuff, but also the analytical stuff. So you can land in that nice Goldilocks center to really stick the personal impersonal finance.

• 12:02Speaker 03

  I love it. We really do believe there is a better way to do money. It's why we show up here every Tuesday morning at 10 a.m. Central, so that we can load you up with financial information. And one of the ways we do that is we like to answer your questions. We actually have our team out in the wings right now, collecting your questions. So if there's something you want us to speak to, something you want to get our take on, make sure you get that in the chat so that we can load you up and help you do money better.

• 12:31Brian Preston?

  I do have one more clarifier, because I think our audience, I don't, Bo, Bo probably getting mad on to me later for this.

• 12:36Speaker 03

  Uh oh.

• 12:37Brian Preston?

  I don't mind sharing from a transparency standpoint, that Bo and I are such financial mutants, that we have actually structured separate accounts to where we're overfunding, in addition to making the mortgage payments on our commercial debt, we have set up investment accounts that we have slated to have everything paid off within 10 years.

• 12:58Speaker 03

  Cause you know what's just as cool as being debt free? Having the ability to be debt free and I've got him on that page now.

• 13:05Speaker 04

  Famous Bo hits in line.

• 13:06Speaker 03

  Building up a pot of money that one day if we want to stroke a check, we'll be able to do that.

• 13:09Brian Preston?

  Well, I don't mind sharing because I mean, we've had discussions where I negotiated because commercial debt, we all know mortgages, you can prepay your mortgage, no problem. A lot of you might be surprised to find out when you start doing commercial borrowing, banks don't always give you that option. They actually charge you additional premiums or they raise your rate if you want any ability to prepay the mortgage because they want to lock you in for whatever time. So when I negotiated in on our, one of our larger commercial loans that I wanted to be able to prepay it every year, we, Bo went along with me, but then later we did a whole discussion and you've convinced me and it's worked out pretty good. I mean, I gotta tell you, we're, you know, two, three years into this, it's

• 13:50Brian Preston?

  amazing how well it's working out where we're dumping big chunks of money in every month with the goal, year 10.

• 13:58Speaker 03

  We better write a check if we want to.

• 14:00Brian Preston?

  Pay the whole thing off. So it's, um, so we're, we're still financial mutants. We're doing this in a very disciplined way, but we're just also understanding the value of taking advantage of the tools that were presented to us at the time.

• 14:11Speaker 03

  I love it.

• 14:13Speaker 04

  That's great.

• 14:13Brian Preston?

  Was that too much?

• 14:14Speaker 03

  No, I think that was great.

• 14:15Speaker 04

  I mean, it's really interesting. It is true. It's a whole.

• 14:17Speaker 03

  Generally, when you want to tell the people about a great idea that I had and how well it's worked out, I'm never, I'm never going to fight you on that.

• 14:24Brian Preston?

  Well, we're, we're, that's why I think we're a good balance is because I'm old enough that I'm, I'm trying to de-risk, but you're still like conquer the world type stuff. So we offset that, that energy really kind of makes us a super force.

• 14:35Speaker 03

  It's like a yin and yang.

• 14:36Speaker 04

  Yeah. It's a good combo.

• 14:38Speaker 03

  It's like a killer bee, if you will, you know what I mean?

• 14:40Speaker 04

  But no, I appreciate, appreciate the transparency behind this big moment because we've been talking about you paying off that mortgage for a very long time.

• 14:48Brian Preston?

  I am mortgage free. I have zero mortgages on, on the houses.

• 14:51Speaker 04

  We actually did.

• 14:53Speaker 03

  Should we have him go do his like debt free screen, but have him just yell, I'm mortgage free.

• 14:57Speaker 04

  He'll just whisper it.

• 14:57Speaker 03

  I'm mortgage free.

• 15:01Brian Preston?

  I don't think Dave's put me on air. You don't think so? No.

• 15:03Speaker 04

  I have a feeling not. I don't think you quite qualify, but that's all right. You're a financial mutant. We did poll the audience at the beginning of the show. Has Brian paid off his mortgage? Has he actually done it? And we had only 57% say yes. So that goes to show how long we've been saying like, maybe he's gonna do it.

• 15:23Speaker 03

  It's like the little boy that cried wolf, right?

• 15:25Brian Preston?

  How many times have I talked about this and not done it?

• 15:28Speaker 04

  Right, it's true. It's true. But it all worked out. It's been a fun runner and congrats again. Lots of congratulations in the chat, even though you're only mortgage free.

• 15:37Brian Preston?

  Only mortgage free, but that's awesome.

• 15:38Speaker 04

  All right, let's jump into some personal finance questions. The first one is from Go Lucky Monkey. It says, I'm 23, working and in college. I'm living with my parents. My monthly spend is only about $300. So my six-month emergency fund is only $1,800, which feels low for stuff like car repair. Should I still go by the six-month rule? Or should I save more? How do I know how much to save?

• 16:08Brian Preston?

  Why is he saying six months? Because it's actually three to six months. So I would, I would say first go home, give your parents a big old bear hug. Because they're, if you're only, if your monthly spend is $300, you are heavily subsidized by the parentals. Because there's not much you can do in life for $300 right now. High cost of living everywhere. So that's the first thing. And then, but I would encourage you, I still want you to have three months of whatever you make in emergency reserves. Because at some point, you're going to open your wings and lead the nest. And I think that that would be a good step. But I also want to help you maximize the, the power of your time and the wealth multiplier. Because you, you've got a lot of good stuff working for you right now.

• 16:53Speaker 03

  If you're following the financial, Brian, will you hold the thing up for me? If you're following the Financial Order of Operations, one of the very first steps is you want to have your highest deductible covered. And so one of the things I'd be curious about, you're 23, so there's a chance that you're not on your own insurance. There's a chance you're still in your parents' insurance when it comes to health insurance.

• 17:10Brian Preston?

  Cause he said he's under 26, right?

• 17:11Speaker 03

  Yep, he's 23 years old. When it comes to auto insurance, there's a chance you're still in your parents' auto insurance. So you're not responsible for that deductible. So what I would figure is, okay, for the insurance deductibles that I do have, cause you had mentioned like a car repair, if you add some sort of thing that was going to be an insurable event, you want to make sure you have at least enough to cover the deductible for that. I would imagine as a 23-year-old, there are some things that you are probably desiring to save for, like getting out of the house, like getting on to your, getting out of the house, living on your own, having your own house, apartment, whatever that thing may be. And so one of the things that I would encourage you to think about is why, yes, buy the book. If you're going to have three months of emergency fund cash in living expenses,

• 17:56Speaker 03

  you would have, you know, 900 bucks in your emergency fund. However, I don't think there's anything wrong with being slightly future oriented and saying, you know what, I'm gonna go probably in the next year, next two years, I want to go be in an apartment somewhere. And I know that apartments are going to cost $1,500 a month in my area. So I might want to carry an emergency fund relative to where I'm going to go. It's like you're trying to hit a moving target. So I don't think it's crazy for you to have a little bit more in cash and liquidity, just because I think that right now, your lifestyle is artificially lower than it will likely be 12, 18, 24 months in the future, unless you just have like

• 18:38Speaker 03

  a very long-term living in the home plan. And if that's the case, there's probably some sort of conversation you ought to have with your folks if it's only costing you 300 bucks a month to live. Cause there's a good chance you're in their house, it's costing them more than $300 a month for you to live in the house. So I think it's okay to aim for where you're going and build up cash.

• 18:59Brian Preston?

  Well, if he knows his living expenses are artificially low, you could also use an income percentage

• 19:06Speaker 03

  Sure.

• 19:06Brian Preston?

  to be part of this three-month buildup as well. Cause you could say, okay, I know I want to save 25% once I get out on my own.

• 19:15Brian Preston?

  Taxes are going to probably be 15%.

• 19:17Speaker 03

  Sure.

• 19:18Brian Preston?

  So there's 40%. Why don't I have, take 60% of whatever I make, times three, you could, you could back into it from a mathematical way and, and save, you know, and have, assume your living expenses are going to be 60, 70, maybe even 80%, but you get to play around with those variables. But there's a way to back into it if you know that you're on an artificial expense situation.

• 19:41Speaker 03

  Love it.

• 19:42Speaker 04

  That's great. Go Lucky Monkey. It is your lucky day because today is a Tumblr day.

• 19:47Brian Preston?

  Tumblr day.

• 19:48Speaker 03

  Let's go.

• 19:48Speaker 04

  Since we answered your question live, just email [email protected] and we'll send you a Money Guy Tumblr.

• 19:54Speaker 03

  Brian is mortgage free and we're giving away tumblers.

• 19:57Speaker 04

  What a day.

• 19:58Speaker 03

  Could today get any better?

• 19:59Speaker 04

  It can't.

• 20:00Speaker 03

  Holy cow.

• 20:00Speaker 04

  This is the peak.

• 20:05Speaker 04

  All right. Jason Z says, can you explain how to think about and evaluate umbrella insurance needs? I bought a $1 million policy a few years ago and now my net worth is just above that. Do I bump it up to 2 million now or wait? Thanks.

• 20:24Speaker 03

  So let me give you the sort of the, the loose rule of thumb that we give. Uh, first of all, what umbrella insurance is, is it's insurance that sits as an umbrella over your other coverages. So it sits over your home insurance, it sits over your auto insurance, and it provides additional coverage for the unknown, unknown things in life.

• 20:43Brian Preston?

  Like liability protection.

• 20:44Speaker 03

  That come your way that you could be liable for. Uh, so what we generally recommend is for someone who should carry umbrella coverage, you want to have roughly equal to your net worth in coverage. So if you're worth a million dollars, it would make sense to have a million dollar umbrella coverage. Well, Jason said, hey, I'm at like a little bit over that. I'm at like 1.1. Should I go ahead and bump up to two? You can, because it's very inexpensive, but I don't know that it's a necessity. I think it's okay if you carry the $1 million until your net worth starts to inch up closer to that 2 million. And then you think about increasing to 2 million. And then when it goes to 3 million, you increase to 3 million. I think that's okay. I don't think you have to be exact with that. I think you can give yourself a little bit of wiggle room.

• 21:28Brian Preston?

  We could almost play this like elementary math rules.

• 21:31Speaker 03

  Is it?

• 21:31Brian Preston?

  You round up or round down? One and a half, you know, maybe now you got a two, but if it's 1.4, maybe you stay at one. I mean, you could, the reason, and let's give you the why that we like umbrella insurance so much is that you quickly find out with umbrella coverage, if you match it to your net worth, you think, okay, a million dollars, how much would that cost? And you find out, wait a minute, it was only a few hundred dollars to give me this additional coverage that essentially takes the bullseye of liability if I got sued or other things off of my back. And then you find out, hey, to go another million dollars on top of this is only another few hundred dollars more. It's just the bang for the buck of what you're spending to protect your net worth from contingencies that you just don't know is why it's, it's, it's an easy decision to make that.

• 22:16Brian Preston?

  So if you can understand that why you can quickly realize is that we're really splitting hairs here, trying to figure out if it's one to two, but you can, if you want to, I like good systems because all you financial mutants do, you can base it off of elementary rounding if you want, or whatever your comfort level is. If you're a very nervous person, be proactive and maybe round up quicker. But if you're a person that's very comfortable, you know, with, with where you are in your risk profile and other things, then you can wait and do it as you feel comfort. But I do like it to match where your net worth is.

• 22:47Speaker 03

  Love it. Give away this Tumblr and then I got 10 cents of free advice about insurance.

• 22:52Speaker 04

  All right, Jason Z, if you would like a Tumblr, just email [email protected].

• 22:56Brian Preston?

  I bet it's worth more than 10 cents.

• 22:57Speaker 03

  We used to do this, we used to do a show, Brian, this is back, this is like way back in the day. This is pre YouTube days, pre, like way, way back when, called Ungrateful Service Providers. Remember we used to do this one? And here's something you may not know, and this is so valuable, and I want to share like a, like a confessional story right now that you guys can benefit from. So every year, or at least every couple of years, it's worthwhile to reprice out your property and casualty insurance. Because what so often happens is you get a property insurance carrier, and you have your home, and you have your auto, and you have your umbrella, and then just every year it kind of renews. And then it renews, and then it renews, and then it renews. Well, every year, the premiums kind of creep up and creep up and creep up, and life events happen.

• 23:40Speaker 03

  Maybe your spouse gets in a car accident, maybe there is a snowstorm, and she like slides off the road and hits the fence. And because of that, there's like some insurance surcharges because you had to have this big claim. Maybe that's a thing that happens to you. But maybe that thing that happened was like a number of years ago, but it's kind of like out of sight, out of mind, and your premiums continue to like just increase through time. Well, then maybe you are working out with a buddy who happens to be in insurance and it's like, hey, let me, let me quote your insurance. I'm like, okay, yeah, sure. You know, I've done this recently, not realizing how long ago it was. And it was unbelievable. I think I told you the number. It was unbelievable how much money I saved just by going through the re-quoting process. So just because you've been with someone for a long time, just because

• 24:25Speaker 03

  you've been with an insurance company that you like or that you know, doesn't mean that it's not worth the exercise to re-quote your home and auto and umbrella, at least on some sort of regular cadence, because it can literally save thousands of dollars a year, or potentially hundreds of dollars a month, if you're willing to work through that exercise. So don't sleep on that. It's an important thing to do, and it's something that all financial mutants should be doing.

• 24:51Brian Preston?

  So without a doubt, ungrateful service providers that works with your, your insurance. And I'll add to, because I was on a text chain with my old neighbors, I have a group of buddies from my old neighborhood in Georgia, and one of them, just their son, I think is their second son, just across 16, and I quickly reminded them, hey, raise your deductibles when you have those teenagers in the house, because you're not filing claims on the, the little tickety tax stuff anyway. Because we've had clients who, you know, when you have teenagers in the house, first of all, as soon as your kids start driving, your, your premiums are going to go way up, because there's high risk there. And then, and I will tell you, as soon as you have those drivers on, they're probably going to get into little fender benders or something, but you don't always need to go file a claim

• 25:36Brian Preston?

  on that, because they will drop you like a bad habit. If you, we've had clients that happens. I always tell people, if, if you, since you're not going to be able to use your insurance as much with those teenage drivers in the house, might as well raise the premium, the premium, I mean, your deductible up, so that your premium actually will come down, because you're going to self-insure some of that anyway, in case, you know, they back out of the driveway and hit one of the other cars in the driveway. That's where I've seen this happen the most, is little tickety tax stuff like that. You're going to need to self-insure that. So go ahead and just take away the temptation of you filing claims, and also, you know, reap the benefit of, of a lower premium by the, the higher deductible.

• 26:15Speaker 03

  Love it.

• 26:17Speaker 04

  That's great.

• 26:17Speaker 03

  And by the way, that's not suggesting that your current insurance company is bad. You may, you may be with a grateful service provider who gives you top tier rates, but you won't know unless you work through the exercise. At least working through the exercise on some sort of regular cadence.

• 26:31Speaker 04

  Sure.

• 26:33Speaker 03

  A lot of people are like, I've been with my insurance company for 32 years.

• 26:36Brian Preston?

  You can still, you can have them reshop your rates.

• 26:38Speaker 03

  That's right.

• 26:39Brian Preston?

  That's why I like working with brokers.

• 26:41Speaker 03

  Cause they can shop across multiple, multiple carriers.

• 26:46Speaker 04

  Good stuff. All right, the next question is from Nita Tumblr. And it is your lucky day, Nita Tumblr.

• 26:54Brian Preston?

  The moon and the sun have aligned.

• 26:59Speaker 03

  Did you say the?

• 26:59Speaker 04

  What does that mean?

• 27:01Speaker 03

  So he said the moon, I thought he said the mood.

• 27:04Brian Preston?

  Cause I thought. The moon, no, an eclipse is occurring. It's, you know, those things don't happen every day.

• 27:09Speaker 04

  Okay, I understand now. I was like, I don't know. I wasn't following.

• 27:12Brian Preston?

  Turn around.

• 27:13Speaker 03

  Here we go. Somebody's mortgage free today. Holy cow.

• 27:19Speaker 04

  All right, Nita Tumblr says, hey, Money Guy team. Walking through setting up a mega backdoor Roth conversions. Employer allows after tax contributions and in-service rollovers.

• 27:30Brian Preston?

  Boom, boom.

• 27:31Speaker 04

  Is there a benefit to reducing after tax funds to do 7K Roth?

• 27:40Speaker 00

  Power up your play with Nintendo Switch 2 and experience Link's legendary adventure. Now reborn in vibrant detail on our fastest and most powerful system yet.

• 27:52Speaker 00

  And harness the power of the Ocarina with the built-in microphone.

• 28:01Speaker 00

  The Legend of Zelda Ocarina of Time, a Nintendo Switch 2 exclusive. Game and system sold separately. Game rated everyone 10 and up.

• 28:08Speaker 01

  As wish lists grow, you know where to go. Head to Ulta Beauty. We have gifts they'll love from brands like Tato One and Rare Beauty by Selena Gomez. Shop beauty faves to give or keep from Shark Beauty, Sol de Janeiro and more. Not sure what they want? You can't go wrong with Baumann, Clinique or Redken. And don't forget to put yourself on the list. Book a salon moment or add a little more sparkle to your season. Shop holiday in store or at Ulta.com. Ulta Beauty.

• 28:37Brian Preston?

  Well, you ought to do the 7K Roth anyway.

• 28:40Speaker 03

  Yeah.

• 28:40Brian Preston?

  But is the income high enough to do? Because usually we see mega backdoor Roths occur with people with incomes high enough that they usually can't qualify for normal Roth.

• 28:50Speaker 03

  Yeah, if you think about, what's the ultimate outcome here? It's going to be kind of the same because doing a Roth contribution or doing the mega backdoor and getting the money in the Roth is getting money into the same bucket. What's changing is how much you're able to do because with a backdoor Roth conversion, you can do $7,000 if you're under 50 years of age. With a mega backdoor, you can actually take those all the way up to the section 415 limit. So you have your salary deferral, whether you're doing Roth or pre-tax, then you have your employer portion, then you have your after-tax on top of that. So for a lot of folks, it's 20, 25, 30, $35,000 that you're getting into this mega backdoor component, which is awesome. But I would argue that before you even get to mega backdoor, Brian, you got the thing? You can hold up for me?

• 29:34Speaker 03

  We have a system that is nine steps that allows you to think through what's the best thing to do with my next dollar? Well, if you're working through the financial order of operations, you're going to notice that inside of step five, it says, hey, you should go fund your Roth IRAs, you should go fund your HSAs. That's before you get to step seven, and I'm even going to say like somewhere bleed between six and seven because that's where mega backdoor Roths would come in. So there's a good chance that if you're already doing the mega backdoor, but you've not yet funded the Roth or not yet funded the mega backdoor, you've kind of skipped a financial order of operation. So I think it would make sense to kind of reevaluate, have I done all the things I'm supposed to be doing before I get to this advanced stage?

• 30:19Brian Preston?

  Yeah, we didn't really explain the mechanism of what a mega backdoor Roth is because we're using language, just real quick, I don't want to prolong it too much, but there's what's called backdoor Roth contributions or conversion contributions where if you make too much money to make Roth IRA contributions, assuming you have the right IRA structure because.

• 30:41Brian Preston?

  Realize a lot of people walk into a pile of quicksand really quick if they have SEP IRAs, rollover IRAs and other things where they mess up how it's allocated. But assuming you have the right structure, you can then make contributions to a traditional IRA and then convert it into a Roth IRA. And as long as you didn't take a deduction on the traditional IRA contribution, that's a tax-free transaction. So that's the backdoor conversion Roth contribution. When we say mega backdoor, that's where that's employer plans that are designed specifically to not only allow salary deferrals, not only to allow the employer portion with matching and profit sharing, but they add what's called an after-tax. That's right.

• 31:26Brian Preston?

  And then when they allow, because getting the money in after-tax is one thing, but then you have to figure out, well, how do you turn this into a Roth? Well, then they allow either in-plan conversions or they allow you to have in-plan distribution. So then you can convert. And when you have those perfect ingredients, you can do what's called the mega backdoor, whereas you can make those after-tax contributions and then convert it into Roth assets with the same thought process is there's no limit on how much you can convert into those Roth. Up to, we'll tell you, the 415 limits. And also I'll add the caveat, you don't want to crowd out your free money from your employer.

• 32:08Brian Preston?

  So make sure you're paying attention to matching funds, profit sharing funds, because you don't want to get so fund happy with your doing this mega backdoor that you squeeze out because the government does allow your employer just to say, oops, they've already funded, filled up these 415 limits. Employer, you get to keep your money because they were overzealous. So you always try to leave a little bit. It's one of those Goldilocks things where you have to kind of balance it out to just get it just right.

• 32:33Speaker 03

  Unless, can I say one, can I say, because this is, this is just mind blowing. There is an employer out there, I'm not going to say the employer's name, but you've all heard of it, who has the unbelievably most generous employee comp package I've ever seen. Because they do a above double digit match on their employees comp. And they don't just take into account IRS comp, they go above the limit. Oh wow. And even if you squeeze out, even if you squeeze out the employer contribution to 401k, they will then dump it into a cash balance plan, so it stays tax deferred. So this employer, I mean, this literally, for employees at certain income levels,

• 33:16Speaker 03

  is like sixty, seventy thousand dollars of employer money that flows into these plans. If you happen to work for this employer, and there are hundreds of thousands of you out there who work for this specific employer, you know what I'm talking about. It's wild. So the whole reason I say that is make sure you understand the unique intricacies of your plan, because not every single plan works exactly the same. So if it's something that you have a question about, ask HR. Or if you're doing some of these more complex strategies, it's worth getting a second set of eyes on there to make sure you're doing it correctly. I can't wait to ask you after the show who it is so I can apply for part-time work. Buddy, it's, it's.

• 33:51Speaker 04

  I know, I'm gonna send in my application right now.

• 33:53Speaker 03

  It's wild.

• 33:54Speaker 04

  Just kidding.

• 33:54Speaker 03

  It's wild. I'm waiting, I keep waiting to see if like anyone's gonna, because I. Can you tell me the industry? Nope, because you'll get, as soon as I say the industry, you'll get it. So, but, but I know that we have tons of folks in our audience that, because there's hundreds of thousands of people that work for this employer. It's, it's wild.

• 34:17Speaker 03

  I'm just gonna let that, I'm just gonna let that dangle out there.

• 34:20Speaker 04

  We'll just leave it there. But what we won't leave there is need a Tumblr. If you would like to change your username to gotatumblr, just email [email protected] and we will send you one. Thank you for being here and for your persistence. There it is.

• 34:35Speaker 03

  See, no one was talking, it was complete silence.

• 34:37Speaker 04

  Very well done with the.

• 34:39Speaker 03

  Very respectful of you. I waited a question and a half because of you. It was just sitting here, what's it called when the water bubbles up? Condensating. It was just condensating, waiting me to drink it, because I didn't want to be rude. Water bubbles up on it.

• 34:55Speaker 04

  All right. Brandon M. has a question for you both. On the Money Guy resource, how much should you save? Which you can get at moneyguy.com/resources for free. Why is a 6% return used when 9% return is used on other Money Guy resources?

• 35:11Brian Preston?

  This is a great question.

• 35:12Speaker 04

  Is this just to be conservative or take into account the 3% of inflation? I thought it was good, too. Can you talk about kind of our philosophy on why we use certain percentages for certain illustrations?

• 35:23Brian Preston?

  I'll let Beau give even more of the nerdy parts on premiums of investments and stuff. But I will tell you, one of the things as a financial planner, we do in all of our illustrations is that I try to be conservative on what reaches success. So that you don't get into those desperate moments. Because I've sat across the table from people who think that they're ready to retire. And they're interviewing us to hire us. And I have the unfortunate position of telling them, you know what? I think you gotta work three more years. And so anytime I've designed systems that are going to require you to make big life decisions to go across that threshold, or that you're going to go tell your employer that you're

• 36:07Brian Preston?

  no longer working, or you're going to just drop out of whatever you're doing for a living. I'd rather be conservative with the assumption than to just assume everything is going to work out. Now, this is where it gets, from an educator's standpoint, why do we use 9% on other things? Is because I don't mind, from an education standpoint, showing you what the potential is on what assets can do. Because it really illustrates, from an educational standpoint, how big of an opportunity it is. It doesn't mean that you should use that in your conservative assumptions to make big decisions. It just ties into everything else we do. Think about all the times I talk about putting on your 3D glasses. I'm trying to always help you be the best decision maker out there.

• 36:52Brian Preston?

  So you can know when to be super optimistic, but also when to tighten it up. Because this is a measure twice, cut once type of decision. We've tried to build that into our illustrations. So we motivate you when you should be motivated, but we also make it as conservative as possible. But now Bo, you've actually, cause you, you designed, if y'all could see the beautiful architecture of what Bo has designed behind the scenes, cause he is a whiz on macros and all kinds of things with Excel templates and so forth. You have, there is some things behind that striving.

• 37:25Speaker 03

  I'll tell you, here's, here's the real reason why. I mean, the whole, why do we share? How much should you save? Like, what is it? Well, a lot of people don't realize, and this is where financial mutants, they get a little sideways, but not sideways in a bad way. We think so much about math, math, math, math, math. And that illustration is actually much less about math and much more about behavior. Cause when it comes to how much can you save? What is the thing that you can influence? And there's only one thing, you can influence how much you save. You don't get to influence what the market does. And so what we wanted to be careful of doing is putting in some really frothy rate of return assumption. Hey, we're gonna do an eight percent, nine percent, 10% because it's not a given. It's not a guarantee

• 38:06Speaker 03

  that that's what the market returns are going to give us moving forward. Now, past performance is not indicative of future performance, but man, it sure is pretty consistent. When you look at like the S and P 500 over the last 50 to 60 years, it's been pretty strong. What I would hate to do though, is create an educational illustration for someone that says, hey, here's what you should do. And it's based on this like very aggressive or just overly comfortable rate of return. And it gives you a false sense of confidence. You know what? I don't have to do as much or I don't need to save as much because the market's going to carry me. And while that may be a truth, that may be a reality, what we want you focusing in on, focusing in on is the behavior. Cause what it's supposed to do is get you started. And then as you get

• 38:50Speaker 03

  started, okay, how much did I save? 25% Then you're going to start tracking your net worth and you're going to see what are my actual rate of returns that I'm recognizing? And then the actual things that you're doing are going to be the fuel that keeps you moving forward. We want that to be the motivation, not to be some 10% rate of return assumption in there. So a lot of the stuff that we use, whether we use a 10% A 20 year old and we talk about $1 can turn into 88 or a 6% for what can 25% do for you? It's because we're trying to influence the behavior of you beginning to take steps in the direction of moving towards financial independence. So that's why we landed on that for the 25%. Because if you really like dive into the illustration, there's so many assumptions in

• 39:35Speaker 03

  there around like, okay, what are we trying to do? Okay, we're going for an income, income replacement ratio. Well, we know that when it comes to retirement, we don't actually try to replace income. We want to replace expenses. So even there, there are some variables that went in that aren't perfect. If you're going to use it for actually designing and structuring a financial plan, but directionally, we want your behavior to be right. So that's why we stayed super, super conservative on that illustration.

• 40:00Brian Preston?

  Well, there's also, because we're, we knew you do anything that has projections is 30 years in the future. Inflation comes into play, rates of returns come into play. So that's why it's important to, to, to structure this in a way that does tie some, some very conservative assumptions, but also it's not disconnected from the reality of what you see. A lot of people in their, in their walk towards financial success, reach their, their great big beautiful tomorrow. And I think we've really balanced that well. But I love giving the clarification because we love the math. We love the, the behavior. We try to give you that perfect mix right in between. So you can be the best financial mutant version of yourself.

• 40:41Speaker 03

  Love it.

• 40:42Speaker 04

  That was a great question, Brandon. Thanks for being the catalyst to let us kind of, you know, talk about the math behind those things. If you want to see those resources, moneyguy.com slash resources will take you there. It's full of free downloads, free calculators, and you can see all of the rate of returns that we've been just talking about. So go check that out. And Brandon M, if you want a Tumblr, just email winner at moneyguy.com and we'll work on getting that sent out to you.

• 41:08Speaker 04

  Josh O is up next. How should a pension factor into your retirement investment mix? Does this fixed income reduce the needs for bonds? Assume pension is about 30% of my retirement spent. What do you think? Pensions.

• 41:25Brian Preston?

  Well, look, this is a mixed bag is because pensions, if it was, if you're forced to make only one decision is that this is a promise that is going to pay to you when you retire. That's not really a net worth element. That's more of a reduction in what your

• 41:46Speaker 03

  Need is.

• 41:46Brian Preston?

  Need is from your assets at retirement because a portion of your living expenses is going to be covered by your employer through this promise. Now, the complicators in this are that a lot of pensions will allow you a lump sum option when you retire, where you could turn this into an IRA, roll it into an IRA or some other retirement. So that is going to be a complicating element. The other thing is, is that we just can't trust our employers in some aspects on these pensions because it's gotten to be a very strong planning opportunity that if your pension is made promises that are well above what the pension benefit guarantee corporations, the government's protection.

• 42:28Brian Preston?

  There's a chance that if they've underfunded their pensions, that they might just go to the government and essentially shed that responsibility. So you need to be aware of that because like I said, it's a promise from your employer that may or may not be fully funded in the background. So those are the kind of the things I'll let Bo kind of tell you now how you should triage or come up with a decision matrix on this. But that's kind of the complications when people ask me about pensions and net worth and even retirement planning.

• 42:58Speaker 03

  Yeah, and I think one of the questions depends on Josh, when you're asking this question, are you asking it as someone who's in their twenties or thirties, who is paying into a pension, is going to have a pension at retirement and you're trying to figure out, okay, well, how should I change my allocation? Or are you someone who's right at the cusp of retirement and you're about to utilize the pension, you're thinking, how should I? Employ this in my allocation because even the way that it affects the allocation changes based on the stage of life you're in. And I think so often people are looking for like a one-to-one metric. Okay, if this is a, if this represents 30% of my retirement spend, does that mean that I can reduce my fixed income by 30%? Well, not necessarily because there are a ton of other factors that come into play. It's part science and part mathematics,

• 43:42Speaker 03

  but there is part art to it. We do have a number of clients who have really, really healthy pensions and they're also drawing social security. And because of those two things, the majority of their living needs are met. And so it's really interesting in that situation, you could argue that these clients have a large capacity for risk. They could go really far out on the risk spectrum because their living needs are met. Would that be appropriate? Maybe. You could also argue these clients have a very low risk capacity because they don't need the portfolio to grow anymore. They might as well focus on capital preservation and control and keeping the assets in store. And would that be an accurate assessment? Yeah, it could kind of go both directions. So, so much of it depends

• 44:24Speaker 03

  on the individual investor and the individual financial plan that's in place for that person. Sometimes we do indeed allow pensions to replace a portion of the fixed income in someone's financial portfolio. In some cases, we don't allow it to replace because they have a risk tolerance that would suggest a more conservative portfolio anyways. And what we allow the pension income to do is control our cash position in the portfolio. So it changes through time based on your unique circumstances. You have to answer the question, okay, where am I today? Where am I moving to? And what am I ultimately trying to accomplish? And I don't mean just financially, but I mean like peace of mind

• 45:04Speaker 03

  wise. Like what do I want my retirement to feel like? And then you reverse engineer an allocation that matches what those goals ultimately are.

• 45:14Speaker 04

  That's great. Josh O., thank you for the question. If you would like a Money Guy Tumblr, just email [email protected].

• 45:22Speaker 04

  All right. Next one is from Keith. It says, "My wife and I are in our mid-30s and looking at an early retirement in our mid-50s. Can I be putting too much into Roth? Currently 65% in Roth out of 440K in investment accounts. What do you think?"

• 45:40Brian Preston?

  First of all-

• 45:40Speaker 03

  Do you know how he knows that he has 65% in Roth, Brian?

• 45:45Brian Preston?

  How?

• 45:45Speaker 03

  He went to learn.moneyguy.com and he downloaded the Money Guy Net Worth Template Tool because one of the great things about this tool is right on the front page, every single year when you fill out all your data, it shows you your tax buckets. It shows you how much do I have in pre-tax, how much do I have in Roth, how much do I have in after-tax? And because Keith has been tracking that every single year, he knows right now, today, 65% in Roth assets. Wouldn't you love to know that for yourself? If you do, go to learn.moneyguy.com and check that out.

• 46:16Brian Preston?

  Y'all have heard me make this statement before. As a parent, you're not supposed to let anybody know you have a favorite child. Well, it's the same way with your investment accounts, except that we tell everybody our favorite accounts are Roth accounts. I mean, because if you want proof of that, just look at a financial plan and you'll see people the last, you know, even in the financial order of operations, Roth accounts get priority in funding because that tax-free growth is pretty spectacular. But then you'll see people, even in later years, they typically don't want to use their Roth assets because they have great legacy, meaning that you can, you get 10 years to let them grow, continue tax-free before you pass them on to your heirs.

• 46:57Brian Preston?

  So, these are great accounts. People love Roth accounts in a lot of ways. The only thing that immediately popped in my mind is, is that we always tell people, "Look, when you're in a higher income situation, you have to ask yourself, is there a tax arbitrage for the future?"

• 47:12Speaker 03

  Sure.

• 47:13Brian Preston?

  Because it's not uncommon when you're in peak earning years, if the top federal rate is 37%, and then you live in a high-tax state, let's just pick on California, and you're, you know, it could be as high as 13%, you quickly see 50% of your money is going towards taxes. In that situation, you- Probably would want to take advantage of the tax deduction now. A lot of people then move to lower tax states or even tax states that have preferential treatment towards retirement assets later in retirement. And you might, and you've, look, even the most recent tax bill, a lot of giveaways for older retired people. So it's not uncommon that when you retire, the tax policy really rewards the, the large

• 47:57Brian Preston?

  percentage of older people who vote with some, some little carve outs in there. So you might be in a tax arbitrage where when you leave your earned income, especially if it's a high earned income, your, your tax rates might actually go lower in retirement, especially if you're going to retire at 55. To where you might want to do a Roth conversion strategy then.

• 48:18Speaker 03

  Sure.

• 48:19Brian Preston?

  Versus pay the highest possible rates now. But otherwise, I love Roth, but I, but I think it's, it's worth mentioning about the Roth conversions and the tax arbitrage, but there's a lot of assumptions that go into that plan.

• 48:30Speaker 03

  Yeah. And I would argue, Keith, let's assume for a moment that you're not in this super high tax situation. Let's assume that you're following the financial order of operations and your combined tax rate is below 25% when you look at the marginal federal and marginal state. And so, yeah, I'm doing Roth IRA and I'm doing Roth 401k and I'm building Roth and building Roth and building Roth. Is that a bad thing? I, I don't, you're in your mid 30s. And so when I think about this, if you're planning or retiring in your mid 50s, you really have 20 years, right? So you have 20 years to try to figure out, okay, exactly how am I going to use these dollars? So do I think it's bad that you have an emphasis on Roth right now? Not necessarily, because those dollars that you're saving right now in the Roth are going to be so valuable in your 50s, 60s, 70s and beyond.

• 49:14Speaker 03

  Now, as you get into your mid 40s or maybe into your late 40s and you start to begin to see where the actual landing strip is and you're preparing for that landing, well, yeah, then you might want to think through, okay, well, how am I going to use these dollars? Where am I going to pull from in that gap from my mid 50s to 59 and a half? How am I going to structure that? You certainly want to put some thoughts into that, but there's a good chance that you're going to have plenty of time over the next 20 years to. Figure that thing out. And we actually did an episode. Oh my gosh, I can't remember the name of it. Rebi, will you come up with this? It was like three ways, three ways to get to your retirement assets early if you have to.

• 49:55Speaker 03

  That was not the name of it, but basically we walked through, one of those ways is, is you can always access basis inside of Roth contributions. Pre 59 and a half with no taxes, no penalties. So there are some strategies that you can employ. It was a show where we walked through 72T, we walked through Roth conversions.

• 50:13Speaker 04

  Oh, I do. Okay. I do remember this show.

• 50:15Speaker 03

  We walked through a few different ways that you could retire early. Maybe it was.

• 50:19Speaker 04

  Three ways.

• 50:20Speaker 03

  Three ways to retire early that you may not know about was the name of the show. So you ought to go check that out because we actually walked through some of the scenarios for folks who do want to retire in that early 50s to mid 50s and how you can bridge that gap. So I don't think you can have too much Roth, certainly not at this stage of your financial journey. Unless what Brian said happens and it makes sense for you to be building pre-tax assets. Then it's not about having too much Roth. It's about being inefficient and how you're allocating your savings.

• 50:53Speaker 04

  Nice. Very thorough thoughts for Keith. Thank you for being here, Keith, and for asking a question. If you would like a Money Guy Tumblr, we'd love to say thank you and send you one. Just email [email protected].

• 51:04Speaker 03

  If you could have a superpower.

• 51:08Speaker 03

  You know what mine would be? I was gonna ask you what would yours be, but mine would be, I wish I could recall the name of every episode we've ever done.

• 51:14Brian Preston?

  That's the superpower you'd want?

• 51:16Speaker 03

  Well, it's like a Money Guy superpower, right? Like not like a real superpower.

• 51:19Speaker 04

  I still think you're shooting way too low.

• 51:21Speaker 03

  You don't, really?

• 51:22Speaker 04

  A Money Guy superpower and that's what you choose?

• 51:24Speaker 03

  If you could archive and just pull the name of every, like you had like, oh, we did a show on this and be able to pull, you know how many times? I'm in that situation. I'm trying to tell somebody, oh, we did a show on this. Like, oh yeah, can you send me a link? And I'm like, ah.

• 51:35Speaker 04

  You're like, no, I can't.

• 51:36Speaker 03

  I remember so talking about it and stuff.

• 51:38Speaker 04

  Well, you can just search in our, like, I know how to find that.

• 51:41Brian Preston?

  I think, I think superpowers are slippery slope. Cause think about it, if you, even if you could do like Superman and fly. I mean, once you have a wife and family, you know.

• 51:51Speaker 03

  You're not gonna fly anywhere. Well, I guess you could hold them, right?

• 51:53Brian Preston?

  That seems unsafe.

• 51:55Speaker 03

  Well, no, no, no, no. Hold on, but if you're Superman, if you're Superman, you have like superhuman strength, so you could hold three kids, well, two kids and a wife and still fly and everyone would be safe.

• 52:06Brian Preston?

  And then even if you thought like, okay, Tom machine.

• 52:08Speaker 03

  He saved buses before.

• 52:09Brian Preston?

  Think about Tom machine or knowing the future or being able to go in the past. Sometimes I wonder, is, is there too much of the, I mean, if you knew everything, would that actually turn out to be a positive or would it be a negative? I, I think superpowers are overrated.

• 52:23Speaker 04

  Look at Brian, so content.

• 52:24Speaker 03

  We all agree flying. Flying would be the one, right? Like, it would be flying.

• 52:28Brian Preston?

  So you had a bird strike and you like took you out right there.

• 52:30Speaker 03

  No, if you're Superman and you strike a bird, that bird's complete.

• 52:33Speaker 04

  It would be teleportation for sure.

• 52:35Brian Preston?

  You don't get to be Superman.

• 52:37Speaker 03

  Oh, so if you fly, you do not have superhuman strength? You just have flight ability?

• 52:41Brian Preston?

  We have to clear, I mean, cause it seems like all the above. Everybody, I wanna be Superman. I mean, you shoot lasers and you'll be bulletproof.

• 52:49Speaker 03

  I'm tracking now. You're saying if you could fly, but you weren't strong enough to like hold your family.

• 52:54Speaker 04

  It wouldn't be that useful.

• 52:55Speaker 03

  Or can you fly strong enough that you could like pull them behind you? You know, like when you have those.

• 53:00Brian Preston?

  Oh, that was, man, think about that landing. That'd be brutal.

• 53:02Speaker 03

  You know, like those buggies that you can put the baby in when you ride the bike? And we did, you know what I mean?

• 53:07Speaker 04

  I don't think his family would wanna travel that way. Just a thought. Okay, anyway, interesting sidebar there.

• 53:16Speaker 03

  He said, superpowers are overrated. Weird, that's not true at all.

• 53:21Speaker 04

  I wouldn't have expected that from Brian, but he's reached a new level of contentment. All right, wanna do another personal finance question?

• 53:29Brian Preston?

  Why not?

• 53:31Speaker 04

  Connor says, can you talk more about bedazzling your current life? 50% plus savings rate on 29. I'm on foo step seven through nine, so he gave a range. And one of my fears is lifestyle creep. What is the difference between the two? And then P S, Bo, how much do you bench? But I really wanna know the difference between bedazzling your basic life and lifestyle creep.

• 53:58Brian Preston?

  Oh, Lord.

• 54:00Speaker 03

  Brian, I'll let you do the first part of the question. I'll take the second.

• 54:06Brian Preston?

  Okay, bedazzle your basic, look, I think this is a great question. Connor, you have an awesome question besides the, um, the, the over the top question for Bo. The bench press part. But, look, I wrote, I talk about bedazzle your basic life and the fact that I want people, the, the power, you have this conflict that's going on for young people is that the power of your time is just, it is a superpower, speaking of superpowers, is that if you can take it just a little bit of today, it can turn into something really huge for your future self. And just a lot of people just don't take advantage of that opportunity. So when, uh, when I was talking about bedazzling your basic life is that I do want to make sure that when you get to be my age in your 50s, you don't look back on your twenties and thirties

• 54:50Brian Preston?

  with the regrets and go, man, I really felt like I did, all I did was I was a miser and I saved and I didn't make memories. And that's why I always tell people, there's nothing wrong with you taking your life and bedazzling it up, you know, and for those, I don't know, maybe we're getting so far away and people don't remember what a bedazzler is. It's where you're basically putting sequence on basic stuff, you know, and really making it fabulous without, without expensive costs and other things. So I, I, some of my favorite memories are going on road trips to, I've told you guys, my parents did time shares because they were free. We had no money to, to buy the time share, but they give you basically a free vacation. And that didn't cost any money, but it was still a pretty

• 55:30Brian Preston?

  incredible thing, um, from a memory building standpoint. Um, now I, I, I tell people, you can see how these things are in balance is because when, when Connor's asking this question, I felt like his was not more in his lifestyle and worried about creep. That is something now, cause you'll get to a point, I, I never pick on people in their twenties and thirties when you're living a very modest life, you're saving a lot, but you're still making great memories. It's more when I see people get in their late thirties, even early forties, they got a family and you find out that they have multiple seven figure portfolios, but they're, they're still making the kids sleep in the, the closet at the hotel room. You're like, what are you doing?

• 56:13Brian Preston?

  You know, because there does come a point that you're pushing off, you're being a miser under the terms of, hey, you told me earlier when I was younger, bedazzle my basic life. So I think it's good that I have my 13 year old kid sleeping in the closet at the condo at the beach because we're saving all this money, you know, no, or we're driving, you know, 14 hours to go on vacation versus buying plane tickets for her. That's the balance between bedazzle your basic life and then lifestyle. You know, there's, there's things where I want you to be able to afford your life. That's why we give you all the guidance on 23 eight, 25% housing, what you can do with student loans and all these other things. It's because we're trying to give you the boundaries, but there has come a point that

• 56:56Brian Preston?

  I'm going to tell you, and this is why we don't talk about tight wides anymore. You know, for years and years, I was so proud of how tight I was with every dollar that I spent, but then as I got in my 40s, you start seeing the value of your investment starting to grow and you're always, oh my gosh, I'm not going to die penniless like I was always worried about. I need to make sure I'm maximizing the memories because I won't have my children at this age ever again. I won't be able to do this physically for the rest of my life. And it's kind of, I try to give you the guidance of a person who's been poor now with resources and how you balance giving the most out of your life, but also being very responsible with what you're creating and building.

• 57:37Speaker 03

  Look, this is a little bit of a hot take, but lifestyle creep gets such a bad rap. I want you to hear this from the Money Guy Show first. Lifestyle creep in and of itself is not bad. You said that, hey, one of my greatest fears is lifestyle creep. Where it becomes a problem is when your lifestyle advances faster than your earning potential or your savings. Like if those two things are not keeping up with your lifestyle, there you have a problem. But if. You're saving the way that you're supposed to be saving and your income is increasing. It's okay if your lifestyle also increases. That's what you want. I mean, money is a tool that allows us to do the things that we want to do. And for a lot of folks, some of the things I want to do are be more comfortable. I want to travel differently.

• 58:22Speaker 03

  I want to drive a different type of car. I want to live in a different type of house. None of those things in and of themselves are bad, so long as they don't begin to get your priorities out of whack. So if you're already saving 50%, you're 29 years old and you're doing the thing that you're supposed to be doing, lifestyle creep should not be something you are afraid of. It should be something that you embrace. I say the same thing with people about aging all the time. Oh, I'm so afraid of aging. I'm so afraid of getting old. Well, don't be afraid of it because it's coming. It's going to happen. What decisions can you make right now so that as it happens, it's not a bad thing? It's not a negative? It's not something that works against you? And so it's okay if your lifestyle begins to creep.

• 59:04Speaker 03

  It's okay if you begin to spend those, that, spend money on those things, but do it because it actually adds value, not because you can. Because I've found with my family, Brian, I told you about this, you know, we did this big, I've mentioned this in the show a bunch, we did like a big extravagant Disney trip a couple of years ago and, and it was awesome and amazing and wonderful, but my kids were super young and they fought a lot and they cried a lot. And it was not like this magical, amazing, wonderful thing. It was a great trip, but like it wasn't, it wasn't the poster. Like they, they did not ask us to film for the poster for doing it, right? But you know what? Like a year or two ago, we went to a local state park and it was like not expensive and it was not far away and we never fly there.

• 59:49Speaker 03

  And my kids loved it. We just went and walked through the woods and we hung out and we just fully engaged. And some of that was based on their ages and that. So it didn't cost a lot of money. It was a bedazzling way to do something very basic, but it was so, so, so, so valuable. So don't just assume that you have to spend more money to have valuable experiences. It's not necessarily true, but if that is something that is required to do the things you want to do, it's okay, so long as you're saving and you're staying on track with what your longer term goals are.

• 1:00:21Brian Preston?

  Now for the second part of the question, I want to put in a little bit of disclaimer is that y'all have to be careful how much you encourage Bo. Because a few years ago, Bo really injured himself doing what's called muscle ups. And he's very proud of the fact that he's strong. By the way, if you, if you don't know what a muscle up is, because I would say probably 99% of the public can't do a muscle up. Because that's basically where you're going from, you know, you're, you're one of those people, you do a pull up, which is already hard. Most people can't pull up their body. You know, it's kind of like, I always think about in saving your life. If you fall off a cliff, but you catch on, just like in all the movies they do. Bo would at least be able to, most people can pull up, but then Bo could actually save himself. Because a muscle up means that you not only did a pull up, but then you took your whole body all the way down to your hip.

• 1:01:07Brian Preston?

  So there is some life-saving value to this, because every movie plot for my entire life with an action adventure is, people typically have to pull themselves up from a falling off of a cliff.

• 1:01:18Speaker 04

  He may really injure himself, but he'll be alive.

• 1:01:20Brian Preston?

  But Bo was doing this multiple times. And then there was a separation between your bicep and your, and your, I didn't even realize those muscles were connected.

• 1:01:28Speaker 03

  Yeah, yeah.

• 1:01:29Brian Preston?

  Pectoral and your bicep are connected in some way.

• 1:01:31Speaker 03

  I tore, tore my pec. It was the same injury that one of the Watt brother had. I think it was TJ Watt. So it's like, you know, it's pretty, it's pretty common NFL injury.

• 1:01:39Brian Preston?

  So be careful when you ask, because Bo is very strong, but I'm trying to make sure that we keep him in control. So he doesn't hurt himself because he's getting older.

• 1:01:47Speaker 04

  I'm getting a little worried about him.

• 1:01:48Brian Preston?

  We don't need to be doing crazy, crazy stuff. Because it's also not how healthy you are, it's how healthy you stay.

• 1:01:54Speaker 03

  That's right. And so I have, look, I have, you know.

• 1:01:57Brian Preston?

  Because he's, by the way, he's confessed to me in the last two weeks, he did a muscle up. And I was like, what are we doing?

• 1:02:01Speaker 04

  I love how it's like a secret.

• 1:02:02Brian Preston?

  I was like, you promised me you were not gonna do this anymore.

• 1:02:04Speaker 03

  It happened in October 2022, and I told myself, I'll never do them again, never do them again. But man, the other day I was just feeling real good. And so I just, I just took it for a spin. I don't do them a workout. I don't, don't do them high volume. But yeah, it is one of those things. Like I am at the age now, I have to be more careful about the kind of weight that I lift and the kind of movements that I do, because I want to make sure that I stay healthy. For as long as possible. So it's something that's a, that's a big priority for me.

• 1:02:27Brian Preston?

  If you want to know the real good life advice is the way I've protected myself from falling off the cliff is I just walk around with Bo. So now he can just pull me up.

• 1:02:36Speaker 03

  Pull you up off the cliff.

• 1:02:37Brian Preston?

  As long as I can hang on for a split second. Hopefully Bo is going to pull me up off the cliff.

• 1:02:42Speaker 04

  That's hilarious. That's a good strategy.

• 1:02:43Brian Preston?

  You didn't answer. Did you want to tell me your number?

• 1:02:46Speaker 03

  How much do I bench?

• 1:02:47Speaker 04

  That was part of the question.

• 1:02:48Speaker 03

  I'm in the middle, I'm in the middle of a bench press cycle right now. It's a strength cycle we're doing. So I will find out here in a few weeks.

• 1:02:56Speaker 04

  Oh my God. Okay.

• 1:02:58Speaker 03

  Immediately pre-injury, I was right around 350 and I have a feeling I'm going to be right back in that range. That's my, my bold prediction.

• 1:03:08Speaker 04

  Interesting.

• 1:03:09Speaker 03

  There you go.

• 1:03:09Speaker 04

  Interesting.

• 1:03:10Brian Preston?

  And by the way, Bo's not a small man. I mean, I always tell people about bench pressing. If you're, if you're, if you're over six feet, because Bo's six.

• 1:03:19Speaker 03

  You've got long arms.

• 1:03:20Speaker 04

  And really, I'd be surprised how tall they are.

• 1:03:22Brian Preston?

  Ganky these arms. It creates a lot of distance that you have to cover.

• 1:03:26Speaker 03

  A lot of distance to make.

• 1:03:27Brian Preston?

  Whereas all my buddies in college, when we used to do bench press stuff, I mean, all my, all my 5'8", 5'9" guys, they just, you know, it's like, almost like they hit their chest, their muscles big enough that it bounced right back up and like, they're done. I'm like, whoa, that would be nice if you only had to go four or five inches versus this crazy plane with that much weight. So that's, that's impressive.

• 1:03:46Speaker 04

  Connor, your question covered a lot of ground and for that, we would like to thank you with a Money Guy Tumblr. If you would like one, just email [email protected]. Brian, cheers to this momentum occasion.

• 1:03:57Speaker 03

  Mortgage free. Mortgage free.

• 1:03:59Brian Preston?

  Not that free.

• 1:04:01Speaker 04

  Not, well.

• 1:04:01Brian Preston?

  Mortgage and personal loan free.

• 1:04:03Speaker 04

  But it's been a long time coming. So thank you for listening or watching, joining us for this momentous occasion. And even if you didn't get a Tumblr today, we still have a lot of good, really great free stuff for you at moneyguy.com/resources. Go check out our downloads and our calculators. They'll be right there for you and we'll be back next Tuesday at 10 a.m. Central, right here on YouTube.

• 1:04:26Brian Preston?

  Guys, we have an absolute blast doing this show. I do want to, I have one little sidebar. I got to go to the Dolly musical.

• 1:04:34Speaker 03

  Oh, yeah. That they were premiered in here, right?

• 1:04:36Brian Preston?

  There is going to be, in the coming months, there is going to be, Broadway in New York is going to likely have the Dolly show. And y'all know, we love us some Dolly Parton. And I'm happy to report also because they're doing previews out here at Belmont, at the Fisher Center. Dolly has been showing up at all those shows.

• 1:04:54Speaker 03

  That's pretty cool.

• 1:04:55Brian Preston?

  So cool. I mean, it is so cool seeing her get up there. And she is just spectacular. And this show is good. And I just wanted to say that's something to be on the horizon for, for making memories. If you want to get a little bit of that, you know, mountain love in your life and a little Dolly magic, be on the lookout for that. That was something cool. But I'm your host, Brian Preston, Mr. Bo Hanson, Money Guy team, out.

• 1:05:20Speaker 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.

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