How Much Do You ACTUALLY Need To Retire? (Big Announcement! )

How much do you actually need to retire—and are your retirement savings on track today? We’re introducing the new Know Your Number retirement calculator, a completely free tool designed to help you estimate how much money you may need for retirement based on your age, spending, current investments, annual contributions, retirement age, expected returns, and withdrawal rate. We’ll walk through retirement planning examples for someone starting at 25, navigating the messy middle at 33, and catching up at 40. Whether you’re calculating your retirement number, evaluating your savings rate, or building a long-term investment plan, this tool can help you understand your next move.⁠⁠⁠⁠ Jump start your journey with our FREE financial resources⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Reach your goals faster with our products⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Take the relationship to the next level: become a client⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Subscribe on YouTube for early access and go beyond the podcast⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Connect with us on social media for more content⁠⁠⁠⁠⁠⁠⁠ Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:02Speaker 00

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• 1:06Brian Preston?

  Guys, your patience has been rewarded. I'm the worst at keeping secrets. So today we get to do the big reveal.

• 1:14Speaker 03

  Brian, I am so excited because this is something that frankly, we've been planning to do for a while, but we come up with an idea of a thing that we want to do. But then it takes time and it takes build and it takes effort and it takes all the people in the background working and it's been hard for us to keep this under wraps. But it is something I think I can say that we are both so, so, so, so excited about.

• 1:36Brian Preston?

  So I don't want to keep them waiting anymore. So before we give you the, the new thing, we have to sadly share with you that for, and first, thank you for everybody who's supported us over the years. We had a course called the Know Your Number course. And sadly, we are actually taking that course away.

• 1:55Speaker 03

  It's going away.

• 1:56Brian Preston?

  And here, I need to give you a little context here. The Know Your Number course, are we taking this away because it was a failure? No. The reality is biggest revenue, digital revenue generator we've ever had. This, this on itself is a six-figure annual business with the Know Your Number course. So you're like, why in the world are we taking this away? Bo?

• 2:21Speaker 03

  Why we're taking it away is that we listen to you guys and you're like, man, this is valuable. This is good. This is helpful. This answers questions that I've always had. And it gives me some actionable steps to know, okay, what should I need to be doing? What should I be changing? And you guys have said to us, it's so valuable, it's so valuable, it's so valuable, it's so helpful, so helpful, so helpful, that we decided, well, we should take the course away. We should no longer let it be a course. We should no longer have that be something available out on the website for you to go buy.

• 2:56Brian Preston?

  Well, okay.

• 2:57Speaker 03

  Instead.

• 2:58Brian Preston?

  Instead, this is the thing. Look, I've often, if you think about every show, when we get the questions, it depends. We always, it comes down to, are you ahead of the curve, behind the curve, or right where you're supposed to be with your, your, your financial walk? And it's so valuable. That's what the course is. Remember, I always, when I, when I think about how we want to structure everything, I wanted Millionaire Mission, the book to kind of be tip of the, tip of the spear, meaning that if you didn't know anything about money, go grab this book and this is going to essentially mainline all that great information. But then the rest, a lot of the courses, like the Foo Course and even the Know Your Number was to help you accelerate your journey. But so often we say, are you ahead of the

• 3:41Brian Preston?

  curve, behind the curve, right where you're supposed to be? Like, instead of having it in course format, why don't we actually open this thing up and make it a completely free calculator?

• 3:50Speaker 03

  That's right.

• 3:51Brian Preston?

  On the website. And we put a lot, this thing has been months in the, the development because we wanted to make sure that this gave you the right motivation, the right feedback. So you could definitively answer, head of the curve, behind the curve, or right where I'm supposed to be.

• 4:04Speaker 03

  That's exactly right. Know Your Number is now going to be, be available to everyone. So you have a question, you have a friend who has a question, you have a loved one that has a question about where am I, where should I be, where am I going? It is going to be a free calculator, along with our other calculators, out there on the website. We're so excited about it. We wanted to demo it for you. We want to show you, how does this work? What does it look like? So let's run through it together. Let's assume that you are someone out there and you are 25 years old, just starting out on your financial journey and you're planning on retiring somewhere around normal retirement age at age 65. Let's say that based on what you're doing right now, you think that the level of life

• 4:49Speaker 03

  that you would like to live, the lifestyle you'd like to have in retirement would equate to roughly $5,000 per month in today's dollars, right? So everything we're going to do is in today's dollars. And let's assume that by now, you have already saved and accumulated not $125,000. That's too much for a 25-year-old. Let's assume that you have saved and invested so far, $10,000. 25 years old, first job, $10,000. And let's assume that on average, you're saving about $12,000 a year, about $1,000 a month. The question becomes, am I ahead of the curve, behind the curve, right on the

• 5:29Speaker 03

  curve? So you hit calculate and what you'll see is this unbelievable output that lets you know that, hey, your retirement number at age 65, to live the life that you want to live on your terms, the way you want to live it, is right at about $4.9 million. And guess what? Based on your inputs, you're actually on the trajectory, on the path to be able to retire a little bit early. You're actually going to hit your financial independence number at 62 years and four months, even before your 65-year-old time horizon. And we actually show that to you graphically and visually that, hey, you're actually right where you need to be and a little bit ahead of the curve.

• 6:11Brian Preston?

  But wait a minute, Bo. For a lot of you out there, you're realizing the typical American doesn't even start saving and investing until they're in their 30s? This is, this is somebody who started in their 20s and they're saving, you know, $1,000 a month. It doesn't surprise me that they're ahead of the curve. How about somebody that's more in the messy middle?

• 6:29Speaker 03

  All right, let's go messy middle then. Let's assume that you are 33 years old. Let's still assume that you're planning on a standard age 65 retirement. Let's assume that, yeah, you're a little bit older. So now you think that for retirement, you want to spend probably $6,000 a month. Let's assume that now that you've had some time to build, some time to save up, you've currently saved up $100,000 of investment assets. And let's assume that you're saving $18,000 a year.

• 6:58Brian Preston?

  So about $1,500 a month.

• 7:00Speaker 03

  $1,500 bucks a month. When we go to calculate that, boom, your financial independence number, $4.6 million. And again, you are right on the path. You'll actually hit financial independence at 64 years and 10 months. So just slightly before your 65th birthday, we would argue you are right on track with where you want to be to be able to reach financial independence.

• 7:21Brian Preston?

  So we've already done, we did somebody who's ahead of the curve. Now we've got somebody right on the curve. How about somebody who's actually a little behind? Maybe you didn't discover our content until you were 40 years of age.

• 7:31Speaker 03

  All right. So let's go and let's say that you're 40 years old, that again, you want to retire at age 65.

• 7:36Brian Preston?

  That's only 25 years.

• 7:37Speaker 03

  You still want to spend $6,000 a month. But let's assume you aren't, you have not saved as much as you would like to. If you only have $50,000 in an investment portfolio, but you're committed to doing this, so you're going to save $24,000 a year, about $2,000 a month, basically maxing out your 401K balance. What you're going to see is that your retirement number at 65 is about $3.8 million. But you're not necessarily going to be on track to hit that. It's time for a little bit of cold water. You're not going to hit that. You're actually not going to be able to hit that financial independence number until you're 73 years old, almost 74. So what would need to happen? What would need to change?

• 8:21Speaker 03

  Well, if you could increase your savings by an additional $1,500 a month, you would then be able to hit your targeted, your goal retirement age. We want this to be a useful tool where you can play with the inputs. We even have an advanced mode where you can change the assumption, adjust the assumptions, so that you can figure out where am I on my financial journey? What adjustments should I make to be able to be on path?

• 8:45Brian Preston?

  Yeah. So this is, guys, I, I hope you can tell, this is going to be powerful for you to put your own information in. So I'd encourage you to go to moneyguy.com/resources. Get in there and start playing with this thing. I think it's, you know, we wanted to make sure that everybody feels like you know exactly where you are in this journey. So you can, because there's no better time to make corrective adjustments to your portfolio than ASAP today. Now, maybe for some of you, maybe you're closer to miser versus mutant and you're way ahead of the curve. This is going to be your indicator to start living your life a little bit better. You know, the, the big thing, everybody, I, I know we've taken some flak recently, Bo, because we added Monarch and some other ads and sponsorships.

• 9:29Brian Preston?

  But guys, I want you to know, the abundance cycle is legitimate. When we took the Foo Course, if you remember the initial version of the Foo Course was $250 was the entry price to get in. We was like, no, no, no, this is too valuable to, to kind of put a high ticket value to this. It's worth, you know, it's priceless.

• 9:48Speaker 03

  Sure.

• 9:48Brian Preston?

  But let's drop the price down to $49 because I want more people to have this. It's not about necessarily the revenue or profit that we can get from this. It's helping people accelerate their journey. This is the next part of that abundance journey, is that if we can give you this free tool, let you go out there and figure out exactly where you are, you're probably going to have the opportunity now to accelerate your journey. So hopefully you'll remember when your life gets complicated, who planted the seeds? That's what we're trying to do is while your life is simple and you feel like you have it all under control, we want to give you all the tools to accelerate the journey. But when success creates complexity, we'll be there waiting for you with the porch light on.

• 10:29Speaker 03

  And we genuinely believe that there's a better way to do money. And the, the more that we can equip you, the more that we can help you do money better, it's cheesy as it sounds, we feel like we are kind of making the financial world just a little bit better. So yeah, we walked away from revenue. We walked away from some economics here. But frankly, we felt like it was the right thing to do. And we felt like it was something that could be helpful to you, could be helpful to those that you love. So if you haven't had a chance to play with it, go play with it. Moneyguy.com/resources. Tell your friends about it. There's no cost, absolutely free. And we want this to be something that is helpful and useful for you guys. Just like how every single Tuesday at 10 a.m. Central, we show up right here to answer your questions. We want to speak to the things that you're

• 11:12Speaker 03

  curious about, answer the questions that are on your mind. So right now, we have the team out in the wings collecting your questions. If you have a question or there's something you want to get our take on, make sure that you get it in the chat right now so that we can load you up. With that,

• 11:30Speaker 03

  Credit Director Rebe, I thought you were gonna say something.

• 11:32Brian Preston?

  Well, I did.

• 11:32Speaker 04

  He has a PDA, I can tell.

• 11:33Brian Preston?

  I had one more little quick thing.

• 11:35Speaker 04

  He was like, ooh.

• 11:36Brian Preston?

  Look, I know when people try this, they're gonna quickly realize, the only thing we ask is we want your email address.

• 11:43Speaker 03

  Sure.

• 11:43Brian Preston?

  So if I was somebody filling this out, I'd be like, what do they do with that email address? Are they selling that email list? No, we do not sell access. But I will tell you what you get. You get our weekly newsletter, which if you look at the complete, the open rate on that newsletter, it is out of this world. It's because I'm part of it, by the way, too. Every week I look, because I want to see where the team is going to pick on us, because every week, there's usually a little Easter egg of something where they're having a little fun at our expense, which I love, by the way. If you're not self-deprecating, you're not a good time. So it's, but it is one of those things. Go out there and check it out. We literally are trying to connect with our audience, so we know who you are. Y'all know, a few years ago, there was this whole thing where you worried about deplatforming

• 12:24Brian Preston?

  and all these other weird things, because YouTube, podcasting, I wish that when I started this all back in 2006, I would have started collecting your email addresses. It would have saved me a lot of stress, because we want to know who our audience is, just in case, and also so we can just stay connected with you. So that's why we ask for email addresses. It's not to go sell it to anybody, or anything like that. It's just so we're connected to our financial mutants.

• 12:49Speaker 03

  All right, can I, can I just put, before I get to the question, I just want to put one disclaimer out there, only because this hit, this hit me, just as I thought about this. This tool is supposed to be a tool. It's supposed to be helpful. It's supposed to be a guide. It's supposed to be one of the things that you can use to help make financial decisions. This is what this tool, this tool is not a full financial plan. This tool is not customized to your unique situation. Yeah, you can put in your variables and your stuff. We want to be as useful as possible, but don't mishear us that this is a replacement for you actually doing the work of running the numbers and stress testing the plan to make sure that your plan is on place. This is supposed to be a spot check to let you know, am I ahead of the curve, behind the curve, right on the curve? It's not a, oh, hey, I put some numbers in there, and I think they were kind of right,

• 13:34Speaker 03

  and it said I can retire 52. Later, boss. That would not be a wise decision on your part. So make sure you don't skip the work of doing the work when it comes time for financial independence.

• 13:47Speaker 04

  Well stated. If you are playing with the Know Your Number Calculator right now, I am excited to hear what you think. I love seeing the chatter about it. I'm really glad to see you're liking it so far. We are going to be talking about it, answering questions about it in the Moneyverse throughout the day today. So if you haven't joined already, that's our Discord server for Financial Mutants. Go to moneyguy.com/moneyverse. It's free to join. We'll have a thread going about Know Your Number, so we can talk about what the tool, just like Beau said, should be used for, should not be used for, what kind of assumptions went into it. So yeah, if you're interested in that type of thing, and want to know some more, and want to talk with other mutants who are thinking about retirement and their number, please join us. We would love that.

• 14:28Speaker 04

  With that, let's talk about some financial questions from the chat. Are you guys ready?

• 14:33Brian Preston?

  Oh, I'm ready.

• 14:34Speaker 03

  Yes, ma'am.

• 14:35Speaker 04

  All right. J. Till Swag says, hey, Money Guy team, I have to imagine I'll be spending more money at 65 in retirement than at 85. Have y'all seen the same thing with clients, and how does that affect planning?

• 14:51Speaker 03

  Yes, yes, yes, yes, yes, yes, yes. This is, this is why we say that safe withdrawal rates are a wonderful back-of-the-napkin planning solution. If I can draw 4.7% at the first year of retirement, I can increase that with inflation every year in retirement, I'll be okay all the way out to age 95. That's great academically and theoretically, but practically, it looks very different. Most of our clients, most of the folks that we interact with that help cross through that threshold, will have some form of a go-go retirement period, a slow-go retirement period, and then likely a no-go retirement period. But oftentimes, that no-go retirement period, you replace the going with medical expenses or other costs. And so you want to make sure that you factor that out.

• 15:34Speaker 03

  That's why just saying, okay, 4%, that's my number, that's what I'm sticking with, I think you're doing yourself a disservice. Because in reality, for our clients that are retired, there's a season where they might have 6%, 7%, 8% withdrawal rate. Then there's another season they might have 2%, 3%, 4% withdrawal rate. And then there's a season where RMDs kick in, and the withdrawal rate changes. It's much more dynamic than that. So it absolutely does affect the planning and affect the viability and sustainability of your plan.

• 16:00Brian Preston?

  Yeah, I mean, for, for this, it's such an interesting thing. We have clients that, you know, I always say, when they become, walk through that threshold of retirement, we run scenarios every year. I mean, that's, that's kind of what I do with a lot of my retiree clients, is we are updating the scenarios every year, because, and it's so fun to go through the celebration with them, because in some years, you're planning for a wedding, you know, a couple just got engaged, you know, you have a wedding coming up, you're always taking health checks on what's going on with their cars, because they're replacing their cars, big trips, where they're taking the whole family on, on a big, big trip. We, we model it all. And then even you take into account the market performance. So every year, the variables are changing, and we can, and we're kind of the dashboard

• 16:43Brian Preston?

  to make real-time adjustments, so that you don't have to feel like, you know, that, that what you set, and that you did a 4% safe withdrawal rate, that that is just a static thing. No, when you actually cross into retirement, it's going to be an annual, plus, remember, we're also stacking in Roth conversions.

• 16:59Speaker 03

  And the planning changes through retirement.

• 17:00Brian Preston?

  Every year, it changes how that's going, and even throughout the year, because we'll do a kind of a preliminary plan at the beginning of the year, but then at the end of the year, we'll say, hey, we can't do as many Roth conversions, because you had an extra income show up from this. So we make those type of adjustments in real time, and it's powerful. But I, I do like people, kind of as you, different phases of life, how you do your planning, but without a doubt, take into account the age in the scenarios, because it is true, once you're past like probably 80, you don't see as much like big travel and big fun things. There's a much more slower, but you, you filled in the gaps nicely. It's medical expenses, unfortunately, and other things that kick in, that still are quite expensive.

• 17:44Speaker 04

  Great question, J. Till Swag. Appreciate you being here. Next question is from Braden. It says, I am self-employed and have a good income. I max out mine and my wife's Roth IRA, as well as max out our HSA. Should I open a solo 401k or invest in a brokerage account? Liquidity would be nice.

• 18:05Brian Preston?

  You see, you, you threw in that last little part, that now makes it where it's gonna be harder to answer this for a broad group.

• 18:13Speaker 03

  Well, it's gonna be hard to give specific advice to your unique situation, but whenever we face a question of, what should I do next? We have a handy-dandy little guy that will help. Brian, you can you all the thing up? We have the Financial Order of Operations. It's a nine-step process that we hope lets you know what you should do with your next dollar, and you already gave some clues. You said, hey, I've maxed out both mine and my wife's Roth IRA, and we've also maxed out our HSA. That tells me that immediately, you're at the place to where you have satisfied step five of the Financial Order of Operations, and now you're moving into step six.

• 18:47Brian Preston?

  But, has he really satisfied step four?

• 18:52Speaker 03

  Well, I'm assuming so. I'm assuming so.

• 18:55Brian Preston?

  But, but, listen, hear me out. He said he's self-employed. And then he's, his next ques, as he closes out, he goes, a little liquidity might be helpful.

• 19:05Speaker 03

  And I'm sitting there, I'm like... Oh, I just assumed that was for like early retirement or stuff, not like the gay liquidity.

• 19:09Brian Preston?

  Maybe, that's why I think it's, it's, because look, the easy answer is saying, yeah, go get a solo 401k, because do you realize, not only you get to max out all the salary deferrals for yourself, you also get to do the profit sharing contribution. It is massively important from a tax planning standpoint. It's really a great little hack for self-employed individuals. But there is a burden that self-employed people have, is that if things go sideways, or you go through a season where maybe the revenue or profit is not what it was in better times, you better have enough capital to get you through that desert of, and that's why your cash reserves, you know, you hear us say three to six months, but for a self-employed individual, you might need to boost that cash reserves out, because you're not just

• 19:54Brian Preston?

  thinking about your household, meaning, you know, three to six months, you might need to be thinking about the payroll of the company. You might need to be thinking about the obligations of the company. So you might balloon this thing up well beyond six months. I'm just saying, do that work first as part of step four, before you can get into the really sexy sizzle stuff of getting into the solo 401k.

• 20:16Speaker 03

  And I'm gonna argue, because again, a few, a few little tips you've given us. You said that you and your spouse are contributing to Roth IRAs. That gives an idea of where your income is, or likely the top threshold of where your income could be. If you're not yet saving 25% of your gross income, and you've already made sure that you have step four in there, you already have your emergency fund, whether that's six months or likely more for a self-employed individual, I do think the solo 401k is a great solution, a great stop to, or a great tool to implement on your path to financial independence, because when you really want to start thinking about the taxable brokerage account, the after-tax liquidity, is once you get into step seven, and you're beginning to think about, okay, well, how am I going to use these dollars?

• 20:59Speaker 03

  That is very different for someone in their 40s who's thinking about exiting the workforce in the next 10 years, versus someone who's 28, who's just kind of dreaming, oh, I think one day I want to retire early. If that describes you and where you are, I think the Financial Order of Operations can be your guide, because the tax savings associated with solo 401ks, whether it be on the pre-tax contributions going in today, or even potentially the Roth contributions you could do, if you choose to go that, that route, can be wildly valuable for you over the long term. And I don't want to see you just prioritizing liquidity today theoretically by doing the brokerage account, and missing out on that huge tax incentiveized savings.

• 21:37Speaker 04

  Love it. Brayden, thank you for the question. Thanks for joining us on the live stream. In case you're interested in our rapid fire segment that will be coming up later in the show, today, we are taking all rapid fire questions straight from the money verse. So if you are in the money verse, you can get there by going to money guy.com slash money verse. It's free to join and you can post your question in the live stream thread. You'll see in there. Everybody will tell you where to go. Post your rapid fire question. We'll be doing that later in the show. But until then.

• 22:07Speaker 03

  I heard a deep breath again. That means he's got something.

• 22:09Brian Preston?

  I have a question.

• 22:10Speaker 04

  Yeah.

• 22:10Brian Preston?

  See, for those behind the scenes here, we're working on something and we got Ken running around. Is that a gimbal? Is that what that's called? That is so fancy. I was like, is this just, have you seen?

• 22:22Speaker 03

  Look, you're talking about things that they can't see. That's not nice.

• 22:24Brian Preston?

  But it's going to, it's going to eventually work its way. I'm sure, I'm assuming this video and these pictures and realize I'm like the squirrel. I'm like.

• 22:31Speaker 03

  If there's something going on behind the scenes.

• 22:33Brian Preston?

  I'm like the dog from Up where there's a squirrel.

• 22:35Speaker 04

  Video team members is shooting some B-roll for all the industry people right now. Just getting some footage.

• 22:42Brian Preston?

  Websites and other.

• 22:43Speaker 04

  Yeah, just for us to have for different projects.

• 22:45Brian Preston?

  Fascinating for me to watch Ken walking around with this contraption. And like, so when I watch all my Disney videos and they're in the parks, like recording, you know, you know, live streams and so forth. Is that the type of contraption they're walking around with?

• 22:58Speaker 04

  Probably. Yeah.

• 22:59Brian Preston?

  Yeah. That's legit. But I, I mean, it'd be a little weird, but you know, if you're in a theme park with that, but it's a, it's pretty cool.

• 23:08Speaker 04

  Yeah.

• 23:08Brian Preston?

  Okay. I'm sorry.

• 23:09Speaker 04

  Carry on.

• 23:10Brian Preston?

  I just didn't want everybody to wonder why it's Brian's eyes. They seem to be following.

• 23:13Speaker 04

  Why does he seem so distracted?

• 23:15Speaker 03

  We just assumed that that's just normal.

• 23:17Speaker 04

  I was gonna say, often distracted. It's fine. It's all fine.

• 23:20Brian Preston?

  Really cool.

• 23:22Brian Preston?

  Make sure you get all the team, Ken, because I know they love all the behind the scenes. People love being on camera. Right?

• 23:28Speaker 04

  They're all, they're all offended. They're like, ah.

• 23:32Brian Preston?

  I've been trying to get cameras on the crew for years. They don't want it. I think it'd be hilarious. Okay, nevermind. We'll keep going.

• 23:41Speaker 04

  Chels904 has a question for you. Ready for it?

• 23:44Brian Preston?

  Yep.

• 23:45Speaker 04

  How would you think through buying down your interest rate? Would you base it off how long it takes to get that money back? This is a great question. I have friends ask this question because all of a sudden like, oh, I could do this thing, buy it down my interest rate when I'm buying a house. What do you think about this?

• 23:59Brian Preston?

  It's a math equation.

• 24:01Speaker 03

  I, okay, let's see how good our production team is.

• 24:06Speaker 04

  Here we go.

• 24:07Speaker 03

  And if I'm making this up, my bad, production team. I think we have a resource out on money guy.com slash resources about how to know when I should refinance, right? I think that's a thing that we have, a resource out there. And while this question isn't specifically around refinancing, it's the same sort of math equation. The thing you want to do is okay, to buy down points is going to have some sort of economic cost. It's going to cost me a thousand dollars, $2,000, $3,000, whatever that number is. Well, when I pay that economic cost or some benefit I'm going to get, the monthly payment that I'm going to have will be this much less or X amount less because of the interest savings. Well, then the question becomes,

• 24:51Speaker 03

  how many months of that interest savings does it take for me to recoup the cost that I paid to buy those points down? Well, if it seems likely that you're going to be in the house longer than that amount of time, I think buying down points makes a lot of sense. If it seems likely that you're not going to be in the house that long, or maybe it's going to take 15 years to recoup the cost, perhaps that is not something that makes sense for you to front in because you won't be in the house long enough to receive the benefit.

• 25:19Brian Preston?

  Well, you wanna, you want it to be, there's a balance there because it's not just how long you'll be in the house. You have to ask yourself, is the market going to adjust enough to where I could do like a zero cost refinance? So that's why I would, I would love for this to be a short turnaround time. This needs to think less than three to five years. I mean, three to four. It's, it's really a no brainer when this, I've seen opportunities where you can buy it down or do a refinance where you're like, oh, I could recoup this in less than three years. It's a much easier decision because three years will go by in a blink of an eye. If you have to get beyond five years, I'm like, man, there's a lot of things that could happen beyond five years with interest rates and so forth. So it's not as compelling. There's other, one other little, little, little sweetener. Now, most

• 26:04Brian Preston?

  of us take standard deduction these days.

• 26:06Speaker 03

  Yep.

• 26:07Brian Preston?

  But if you do itemize or you're close to itemizing, realize if you're buying, if you're buying down the rate on the purchase of the house that you're moving into, you can immediately deduct that in the year of purchase. If you're refinancing, that has to be amortized over the length of the loan. That's just another little tidbit. It doesn't really come into play as much as it used to because the standard deduction is so high for the majority of Americans now.

• 26:35Speaker 00

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• 27:34Brian Preston?

  Did we answer it? Did we cover it all?

• 27:36Speaker 03

  I think so.

• 27:37Speaker 04

  I think so. Chels904, thank you for the question.

• 27:39Speaker 03

  You want to hear a crazy thing?

• 27:40Speaker 04

  I do.

• 27:41Speaker 03

  I have not fact checked this. So this could be totally wrong and I'm saying it on air out loud, but I read in the comments and if it's in the comments, it's got to be true. Do you know why the gimbal was invented?

• 27:55Brian Preston?

  Oh gosh, this is, because all the camera, all of my editors are like, these, they're, they're the real guys that know the technology.

• 28:01Speaker 03

  When and why?

• 28:02Brian Preston?

  Because when you walk, you bounce.

• 28:03Speaker 03

  No, no, there was a specific thing that took place that was the origination of being invented. And I'm basing this purely off of the comments that I just read from you guys.

• 28:12Brian Preston?

  We have a crack squad that will fact check it really quick.

• 28:14Speaker 03

  It was invented to follow Rocky up the stairs on the running scene.

• 28:19Brian Preston?

  No way. Is that true? We got a thumbs up from, from Ken.

• 28:22Speaker 03

  That in that wild.

• 28:24Brian Preston?

  That's pretty cool. So did Sylvester Stallone develop this himself? No, I'm kidding. But you know, he did. That was, that movie, you know, if you look back on, you know, they, they kind of guerrilla ambush styled a lot of those, the live scenes, or I mean, the scenes, right? They were out in the crowds and running up, like they didn't get permission to do all that. I don't think. Isn't that true? Am I, they did not get permission. Meanwhile, Philadelphia now gets so much, like when I went, I ran up the stairs. Who didn't? Tell them, raise your hand if you, if you've ran up those stairs like Rocky. And then think about the city probably didn't even want them to do that, but they, you know, asked for forgiveness, not for permission on that.

• 29:02Speaker 04

  And I think they came out on top, honestly.

• 29:04Brian Preston?

  Well, everybody, everybody. Well done, Sly. Not that he needed my approval.

• 29:10Speaker 03

  If people want to know if this is a live stream, oh yeah, it's a live stream. If you don't know if we read the comments, oh yeah, we read the comments.

• 29:16Speaker 04

  Anything goes here, including financial advice. There's lots of that too.

• 29:21Speaker 03

  Some of that goes too.

• 29:22Speaker 04

  Cody B has a question for you guys. It says, hey, money guy team. How does money owed to others fit into the foo? I just graduated college and took a loan from my parents to relocate to a new job. Should I prioritize the loan or focus on step four? I have no other debt.

• 29:40Brian Preston?

  What, I'd also be curious, Cody, what interest rate did they put on this? Did y'all even talk about that? Or is love the consideration here and they're really not even counting on you to pay them back?

• 29:49Speaker 03

  That, that's a great, Cody, if you can give us that information, what are the terms of the loan that'd be helpful? I think, I think it's interesting. So often we want baby birds to launch. We think that it's great. We want you to be able to stand on your own two feet. We want you to be able to fly. We want you to be able to get out of the nest. We want you to be able to successfully do that kind of stuff. But some people, they have this desire so much to be independent that they want to be independent, almost at the cost of like realistically recognizing what their circumstances are. And this is what I mean. Let's assume that Cody's parents are like independently wealthy. And this was a mechanism by which they were able to help him and hey, we're not just going to do it

• 30:31Speaker 03

  for you, but we're going to give you this money to help you get, you know, get on your two feet and we want you to pay us back, but we can be super flexible in terms and all that kind of stuff. If that's the case, I think Cody would be well served to still prioritize his other financial matters. Do I have my deductible covered? Am I getting my employer match? Have I fully funded my emergency fund? Am I saving for the future? And am I factoring in this debt as part of the financial order of operations? Now, that's one side of it. On the other side, if your parents are not in a fantastic financial situation and they really like put themselves in a position that is less than ideal in order to do this, then I think the metrics are different. I think the priority has to be different. So I think a little bit is behind where are your parents in terms of how they

• 31:15Speaker 03

  loaned you the money and where are you in your financial circumstances to be able to prioritize those two things?

• 31:21Brian Preston?

  I think.

• 31:23Speaker 03

  0% no terms, pay it back when I can.

• 31:26Brian Preston?

  Okay.

• 31:26Speaker 03

  See, I just like what, I'm just thinking, would I rather you do that instead of fund your Roth IRA, instead of having an emergency fund, instead of pay high interest debt?

• 31:34Brian Preston?

  This is a teachable moment here. You're like, I detailed in Millionaire Mission that once I got out into the adult life. Um, I got my butt kicked a little bit and I, you know, it just, the math wasn't mathing anymore in adulthood. Once he took into account car payments, rent and everything else. And I ended up running up some credit card debt that I just got in a situation where I had to borrow several hundred dollars from my parents. Now, look, several hundred dollars doesn't sound like a lot, but you know, if you've been, I remember driving to work, um, cause I had like a 35, you know, minute commute and you would hear on the radio station that they were paying bills or giving a thousand dollars. And I was like, that literally would change my life. A thousand dollars would change my life. So that, that few hundred dollars

• 32:16Brian Preston?

  that my parents gave me changed my life when I called them and had to do that hat in hand moment that I wasn't doing good. Now, I made the promise that I wasn't going to get myself in that situation and I paid them back. Now they told me I didn't have to pay them back, but I felt like as a principle thing, if it's less than a thousand dollars, I think you pay it back. You prioritize it because the opportunity cost on your future self is just not that big for less than a thousand bucks. And it's just a principle thing. Pay your parents back very quickly.

• 32:47Speaker 03

  Thousand dollars on a wealth multiplier for a 20 year old is 88,000.

• 32:50Brian Preston?

  If it's over a thousand dollars, I still want you to pay it back within 18 months.

• 32:54Speaker 03

  Really?

• 32:55Brian Preston?

  I just do, because I think that it's not, you have to be serious and I want you to feel the weight when you, when you have to ask for help, you should feel that so that you can also let them know that you, you recognize that something's got to change and you're going to do it because I, look, if you're going to stand on your own feet, stand on your own feet. And that's what, I mean, that's the way I feel about it is if you, and, and I think that it, it will be, cause that's where I consider that the inception point that I actually started living like a financial mutant. When I got so down and, and you know, I just, I was like, this is, I'm going to be different now.

• 33:31Speaker 03

  Yeah. But bring the question back up again. Didn't Cody say this was to help pay for school? Isn't that what the?

• 33:35Speaker 04

  It was to relocate for a new job. So he just graduated. He had to relocate. They gave him some money to relocate.

• 33:42Brian Preston?

  So I think it's probably going to be less than $3,000.

• 33:45Speaker 03

  Yeah. Yeah. I'd, I'd be curious to know that. Um, yeah. Look, I don't fully.

• 33:49Brian Preston?

  It's okay if we disagree on this?

• 33:51Speaker 03

  I don't fully disagree. Here's what's not okay, Cody. Okay. I'm borrowing money from mom and pop, but then I'm still going to like go out to eat and I'm still going to casually live my life and I'm going to do all this other stuff. I think you're missing the plot there, but the alternatives are, I'm a young person. I'm trying to fund my emergency fund. I'm trying to build up my Roth. I'm using that money for other like well-intended purposes. Oh man, I don't.

• 34:14Brian Preston?

  But can I kind of tell you, cause I've had people I've let borrow money from me and, um, you know, and it's just, I'm just gonna tell you.

• 34:22Speaker 03

  But this is mom and dad. This isn't.

• 34:23Brian Preston?

  Human nature though. Human nature.

• 34:25Speaker 03

  Others is a different answer, but mom and dad.

• 34:27Brian Preston?

  Human nature. If you don't want them judging your life, get them, get the debt paid off. It's because you know, it's, you kind of just gave the answer to a degree is that you have money outstanding with anybody. It doesn't even have to be your parents. If they go borrow six, seven grand and then you find out that they're still going on Royal Caribbean cruises and doing all kinds of, you're like, is this, why did they borrow money from me if they can make these lifestyle decisions? It shows me they're not serious about getting, fixing their situation. You have to show that you're a different altered person. And then I think you want to get that cloud over you. So pay it off.

• 35:02Speaker 04

  Somebody just commented, just talk to mom and dad. It's kind of true. Like, like what are their, their take on it? Even if they're trying to be nice, but really you know, there's going to come a point where they're going to be like, like you're saying, oh, he's spending on this. He should be paying us back. Like you kind of have to know your family.

• 35:18Speaker 03

  400 bucks, 400 bucks a month paying back mom and dad over a year versus 400 bucks in a Roth. You, hey, I'm going to pay you guys 50 bucks a month. Have them pay a hundred bucks.

• 35:29Brian Preston?

  If the parents didn't want it to be a loan, they just should've said, hey, I'll help pay for your relocation.

• 35:33Speaker 03

  No, but see, then that's different. That is enabling. When it's a loan, it's a, it's a zero percent.

• 35:37Speaker 04

  But they could've said that.

• 35:37Speaker 03

  And they said, that, that is kind of what they did.

• 35:40Brian Preston?

  But is it not enabling if you never have to pay it back?

• 35:43Speaker 03

  Oh, you know, pay it back when you can.

• 35:45Speaker 04

  Is that a hot take?

• 35:45Speaker 03

  I don't know. I don't know.

• 35:48Brian Preston?

  But this, look, I, I've, I'm very happy with my 23 year old, how she's doing, but I think a lot of, I did make her pay half of her first car.

• 35:56Speaker 03

  Sure.

• 35:57Brian Preston?

  Of, you know, I felt like we've had lots of conversations, especially since she was 15. You have to subject, you know, and, and look, I don't, I didn't want to be, cause the way I grew up is different than where my daughter grew up. And you have to, if you grow up with some form of abundance, you still need some type of scarcity in your life. So you understand how money works. Otherwise you end up with these false weird things. How many rich kids who got just pampered and then they get the shock and awe and they realize their best life was with their parents? That's, that's not good either. Because then you're, you don't know how to be, you don't know how to enjoy work. You don't know how to be productive. You don't even know how hard it is to build wealth because you've just, you've had shock absorbers your whole life.

• 36:38Speaker 04

  And see, I think that even just your 50 or a hundred bucks a month could go a long way.

• 36:42Speaker 03

  That, yeah, that's what.

• 36:43Speaker 04

  Like, I'm fine with that.

• 36:43Speaker 03

  Like Brian saying, oh, you gotta pay this off in 12 months or 18 months.

• 36:46Brian Preston?

  I don't know how much. I wish he'd have told us how much because if it's 1,500, then I would tell you to prioritize it. Cause it's not going, the opportunity cost is just, it's big. I know if you put, especially if he's at, you know, 88 times over, but it also if it changes your behavior, there's going to be more of a multiplier effect from the changed behavior versus just the paying back.

• 37:06Speaker 03

  I just think if you have favorable loan terms, there's nothing wrong with.

• 37:13Brian Preston?

  Okay. You heard it from Bo.

• 37:14Speaker 03

  Taking advantage.

• 37:15Brian Preston?

  If you're going to lend your kids money, take them predatory shark rates. So you get your money back faster. Otherwise just give it to them as a gift.

• 37:24Speaker 04

  Hmm. Let us know what you think in the comments. That was a spicy one. Agree, disagree, want to fight? Maybe we fought a little bit. Fun. I like it.

• 37:32Brian Preston?

  Look, I, as the only one that has an adult child, I think I get a little more leeway.

• 37:39Speaker 03

  Oh my goodness. I so hope that she needs to borrow money at some point. And she's like, hey, pop, I need to borrow some money. Okay, baby. Here you go. And then she's like, hey, pop, I just worked this year. Um, I really want to fund my Roth, but I think, I think I'm going to pay you back instead. You'd be like, oh, yeah, yeah, yeah. Pay up. No, put that money in that Roth. And Zach, look at, he knows I'm right.

• 37:59Brian Preston?

  No, no, no, anything.

• 38:01Speaker 04

  So yeah, there's some nuance here. Cause it is true. Funding your Roth and going out to eat a bunch is totally different.

• 38:06Speaker 03

  Very, it, it, yeah, it all depends on the behavior.

• 38:08Speaker 04

  And so I think it's true that like thinking as a young person, you don't want that hanging over your head though. That's where I'm like, maybe I'm empathizing with Brian a little bit, but anyway.

• 38:17Brian Preston?

  If you chew your kids' food, it makes it easier to digest.

• 38:21Speaker 03

  That is not what we're saying. I'm, I'm thinking of a person.

• 38:23Brian Preston?

  I'm just telling you.

• 38:24Speaker 03

  Who was unbelievably talented. He's a person from our, from our past, but he was always so unwilling, because his parents were successful. He always felt like he had to do it on his own. And he was unwilling to like, take us, like he was unwilling to like, I'm going to say take advantage of, that's the wrong word to use. He was unwilling to accept the fact that he had an opportunity not available to others. And that's what I'm saying.

• 38:44Brian Preston?

  The mistake in that situation. And this is, and this is why you gotta have conversations with your kids when they're in the house. Don't wait until they're adults. We also know very other successful families. If you don't have, start having financial conversations with your kids, they don't know how money works.

• 38:58Speaker 03

  Agreed. I agree with you on that.

• 38:59Brian Preston?

  This person didn't, they, they got, they, I, there's two people I don't, cause you have, you and I have two people in, that we've had people share things with us. The first one, he should've used the family wealth to help him take his business to the next level. But he was so just in the shadow of the success of, of the family that he was like, I'm going to do everything on my own.

• 39:20Speaker 03

  That's right.

• 39:20Brian Preston?

  To a detriment. And that, and look, you know, I never had those opportunities. So I was a little jealous that he could've amplified and it, and it hurt the business. The other one, you know, we, we know he didn't have good conversations with his children and he sheltered them and they, you know, pampered them. And then as they got to be adults, now they're flopping in the wind on how the world works. And, and, and, and he's like, if I'd have just had more conversations, I wouldn't be having this difficulty that I'm having right now. Because when you get spouses involved, when your kids get old and they get married, it gets even more complicated. So you better go ahead and start planting those seeds so that they can sprout and your kids actually know how money works.

• 40:01Speaker 03

  I do agree with that. Communication to the kids.

• 40:03Brian Preston?

  Don't chew your kids' food. Let them learn to eat and digest the food themselves. And even maybe hunt, you know, and find the food or gather the food.

• 40:11Speaker 03

  You know, my, my daughter's not there yet, but I'm not even just planning on her paying for half. I'm going third to, I'm going to make her have a car payment. I'm going third to third to third. Yeah. I told you this. I've told you this, uh, this is.

• 40:21Brian Preston?

  A car payment in, in.

• 40:23Speaker 04

  I think he has said that before.

• 40:25Speaker 03

  Yeah. If you want your keys this month, you better go babysit or go to your job, whatever your thing is, you better be making money. You gotta make that car payment. I'm a hundred percent doing that.

• 40:34Brian Preston?

  I can't wait to watch. Y'all, y'all go ahead and notate this day.

• 40:37Speaker 04

  Him saying that is the same as you being like, they better be paying back that loan.

• 40:41Speaker 03

  That's, I'll let them learn how to.

• 40:42Brian Preston?

  I know. I'm consistent at least.

• 40:46Speaker 04

  No, you're not. Cause you're saying you don't like Bo's payment plan.

• 40:48Speaker 03

  That's why I like the idea of having the car payment.

• 40:50Speaker 04

  Am I wrong?

• 40:52Brian Preston?

  No, I'm just saying, we'll see if Bo does this. He's also, but I, look, I will say his girls share a room, which I love that.

• 40:58Speaker 03

  My girls are still in the same bed.

• 41:00Speaker 04

  They're really just roughing it, sharing that room.

• 41:03Speaker 03

  Not out of necessity, out of like, that's what, so me and mom wanted to do.

• 41:07Brian Preston?

  We better move on. Everybody's going to be like, is this really a seven minute question?

• 41:10Speaker 04

  Hey, it was a good conversation. I liked it. It was interesting. But with that, we are going to move on to our, it does not depend rapid fire segment, money verse style. All of the rapid fire questions have been pulled from our money verse discord server. So thank you for joining the server, for being active and answering the question.

• 41:27Brian Preston?

  Cody screwed things up there.

• 41:28Speaker 03

  Yeah, he did. No more questions from Cody.

• 41:31Speaker 04

  Thanks, Cody. Remember during this rapid fire segment, you cannot say the words, it depends. And you only have a combined 30 seconds to give your answer. At the end, we'll revisit anything you feel really needed more explanation, but for now we'll jump right into rapid fire with 30 seconds on the clock. First question, at what income or net worth do permanent insurance tax strategies become viable, if they do at all?

• 42:02Speaker 03

  It's net worths above the estate tax limit. So it's going to be 30, well above $30 million for a household and only in the circumstance where liquidity does not exist. Meaning it's a closely held business, closely held real estate, and you need the insurance for liquidity for estate taxes.

• 42:18Brian Preston?

  Yeah. I mean, it's, it's going to be a small subset of the population, probably less than 0.1%.

• 42:25Speaker 03

  And I would argue that really good planning can even replace the need for permanent insurance if you plan well early at those wealth levels.

• 42:33Speaker 04

  Next up, can you roll over the Roth portion of a Roth 401k into a Roth IRA? And the traditional portion, employer match, into a solo 401k to avoid pro rata rules?

• 42:46Brian Preston?

  Yeah, I mean, you can do all those things. As a matter of fact, a solo 401k is a great workaround, assuming you have the income source that is independent, so that you can start doing backdoor Roth conversions.

• 42:57Speaker 03

  That's a great way to get around losing the ability to do backdoors. And you just want to make sure when you call your custodian to do those rollovers, you're very explicit about, hey, I want the traditional to go into this account and the Roth to go in this account. Because if you screw it up and it all goes into Roth account, you're going to get a really ugly 1099 at the end of the year and a really nasty tax.

• 43:14Brian Preston?

  And don't sleep on if it gets over 250,000.

• 43:18Speaker 03

  You gotta follow 5500.

• 43:19Speaker 04

  That was close. Next question, for saving for children, Trump account, 529, UTMAs, or parents brokerage with it earmarked for children? Which one would you choose?

• 43:31Brian Preston?

  Well, I mean, I think, look, they all have different purposes, and I'm going to do this really quick. If you, I don't care what your politics are, if you've got a baby in the house and you're not doing a Trump account, even if you've got a little kid, because of what the Michael Dell and some of the other wealthy people have added, these things are incredible.

• 43:47Speaker 03

  Trump for the free money. If you're saving for college, 529. Any other purpose, I think UTMAs are a great solution for kids, so they can be unconstrained. First car, first time home, all that kind of stuff. I would go in that order.

• 43:58Brian Preston?

  That's what we call an alley-oop.

• 44:03Speaker 04

  I like that you got that in the 30 seconds. Nicely done. How do you know when your savings habits are moving into financial miser territory? And how do you walk yourself back from that? Is there a point where you're doing too much?

• 44:17Speaker 03

  Yes, it's when you're having an adverse effect on the ones that you love. When you and your spouse, and your kid, and other people are at odds because of finances, and it's not because of scarcity, it's because of behavior, because of decisions. So one of the things you ought to go back to is what's the why? Is it big pile of money, or is it using my money as a tool?

• 44:34Brian Preston?

  Yeah, go to us, moneyguy.com/resources. We have the know your number calculator now, that you can actually see if you're ahead of the curve, behind the curve. Use the analytics from that, and then also maximize the family memories, so you don't have regrets in the future.

• 44:48Speaker 04

  Fantastic.

• 44:51Speaker 04

  Next question, when checking if our balances are healthy against Money Guy age milestones, for example, 40, needs three times your income, can we include the pension's net present value?

• 45:07Brian Preston?

  I

• 45:08Speaker 04

  He's thinking about this one.

• 45:11Speaker 04

  He wants to say it.

• 45:12Brian Preston?

  Man, I want to say the D-word.

• 45:17Brian Preston?

  Oh, man, pass.

• 45:18Speaker 03

  Personal finance is personal. If you have a really easy way, and you get a statement that says, this is what the value is worth, if you were to take the lump sum today, potentially you can use that. I think in most circumstances, though, you would not use the pension, and you'd have to do a personal analysis to determine where you are.

• 45:36Brian Preston?

  Put an asterisk on that one.

• 45:37Speaker 04

  Making a note that Brian passed on that question. All right, next rapid fire question, at the risk of sounding foo-ish, uh-oh, would it make sense to fund a 529 before hitting 25% retirement savings, if there is a significant tax benefit? For example, in Indiana, a 20% tax credit on contributions up to $7,500.

• 45:58Speaker 03

  You need to go to moneyguy.com/resources, and do our know your number tool to see if you are ahead of the curve, behind the curve, or right on the curve. Because if you're behind the curve, I would argue that getting the foo out of order is foolish, because no matter how good that tax benefit is, it doesn't matter if you don't have enough money for retirement.

• 46:14Brian Preston?

  You know what happens if you do the foo out of order? It just doesn't work. So definitely take Bo up on the offer. Go play with the know your number calculator, and you'll know right where you are.

• 46:27Speaker 04

  Moneyguy.com/resources to get the calculator. Next question, who is more stressed, treading water Bo or rapid fire Brian?

• 46:39Brian Preston?

  I think they're probably pretty balanced. It's just that the only difference is, is I screw this up, there's no peril on my life. Whereas Bo, he's giving it all he's got. So I would say that, because what was the descriptor that they put in there?

• 46:52Speaker 04

  Who is more stressed?

• 46:53Speaker 03

  Brian is more stressed, but here's why. He's got 30 seconds to answer these rapid fire questions. When I tread water, I tread water for 13 minutes and 6 seconds. So I'm just, just living life, in life.

• 47:06Speaker 04

  Well said. All right, back to some of the first. There's the Bo swimming picture.

• 47:11Brian Preston?

  Somebody turned it into, was it spaghetti or pasta that they had him swimming in?

• 47:15Speaker 03

  Macaroni and cheese, I think.

• 47:16Speaker 04

  Mashed potatoes.

• 47:17Brian Preston?

  Mashed potatoes, that's what it was.

• 47:18Speaker 03

  I am going to take another picture in the pool. That's going to be me, just like sunglasses on, hanging out, to resend to you guys, so we get a new picture instead of that.

• 47:27Brian Preston?

  By the way, my wife and I did the treading water challenge. I did 50 minutes, she did an hour.

• 47:33Speaker 03

  An hour of treading water?

• 47:35Brian Preston?

  I did an hour. I think she could have done more.

• 47:37Speaker 03

  That's

• 47:38Speaker 04

  That's actually impressive.

• 47:39Speaker 03

  Wild. Let's be, I stopped at 13 minutes and 6 seconds. I had more in the tank. I stopped there.

• 47:45Brian Preston?

  Did y'all see that picture? Does that look like a guy who's got more in the tank?

• 47:48Speaker 04

  You can't say that.

• 47:48Brian Preston?

  That looks like a guy, this is where his muscles. Just the comment section, we know Bo has muscles and they don't float. That's the whole comedy here, is that he's got these big, beautiful muscles, that make him look like a weight in the water.

• 48:02Speaker 04

  Okay, we're still on the rapid fire segment, I just remembered. We got a couple more. 30 seconds back on the clock. I am ahead of the curve and in the messy middle. What are some reasonable, bedazzling ideas in this phase of life? Because, Brian, you always say bedazzle your basic life in the messy middle. Don't wait to make memories.

• 48:19Speaker 03

  We've done the thing where we went to Disney and spent like a gazillion dollars. We've also done the thing where we went to a local state park here in Tennessee. Super inexpensive to say, beautiful, tons of trails, tons of stuff. The kids absolutely love that. So there are things in your states you can do that are easy.

• 48:34Brian Preston?

  Yeah, I would look at like, look, national parks, they're a lot of fun. I think some of the roadshow museums, that you can drive within a few hours of your house to go see things. Because the road trip can be just as much fun as the actual place you're going to.

• 48:50Speaker 04

  Love it. Last but not least, when does arbitrage not make sense? Like a 0% APR for 60 months is such a good deal for a new car, rather than getting the same car that is two years old, that is cheaper, but percentage rates are so expensive, and it makes less sense from a warranty and powertrain perspective?

• 49:13Speaker 03

  Get the 0% for 60 months and just pay it off in 36, right? Like, that's, that's the answer I would give. That, just because you have the opportunity to finance at a low interest rate, and that's available, if that's the better deal for the car, do it, but just pay it off in 36 months.

• 49:28Brian Preston?

  The interest rate's just one of the elements of this big calculation here. The big thing is making sure you're not buying a car bigger than what you can afford, based on your income and payoff period. That's what the 36 months keeps you honest in that aspect. 20% down also.

• 49:43Speaker 03

  Did we answer that? Was that the right question we were answering? We answered that question, right?

• 49:47Brian Preston?

  You can, you can hit the asterisk on that.

• 49:49Speaker 04

  We'll hit the asterisk on it, yeah. First up, though, we are now going to go into our, maybe it does depend, segment where we get to

• 49:56Brian Preston?

  Okay, reread that one then.

• 49:58Speaker 04

  You did, the one that you passed on, we're going to read that one again. It says, when checking if our balances are healthy against Money Guy age milestones, like needing three times your income at 40, can we include pensions, our pensions net present value? And you wanted to say it depends so bad.

• 50:15Brian Preston?

  Well, I like Bo's answer and the fact that you could, because a lot of sites do let you see if it has a rollover provision. Then, yeah, you can count that money as it. What I worry is when it's just a promise for the future. You can get yourself into some problems there. And that's what, that's where the it depends comes into. Is this something that the pension benefit guarantee corporation's also going to ensure? Because really, the way retirement comes at the, comes when you get closer to retirement, is what's the actual living expenses that I'm trying to replace? It's not, it's just when you're younger, you're using income as a threshold, just because you're so many decades from retirement, that the numbers can just get wild from a planning perspective.

• 50:57Speaker 03

  Let me share like a math crime that's real easy for people to do. Say you're employed, and you work with a pension, and it's like, hey, I get 2% of my highest three years for every year that I work. So if I work for 30 years, and I assume that my income is this, my pension benefit is going to be X dollars. Well, if I take that pension benefit at X dollars, starting at age 55 or 65, and I calculate the net present value of that income stream, based on my life expectancy, all the way out until today, I have overstated what I've actually accumulated up to this point. Because one of the things that was dependent upon that is, I got to work for 30 years. I got to have my income increase. I got to do all these things. That is not an accurate representation of where you are today.

• 51:38Speaker 03

  So if you're using net present value, based on some future working, future earnings record, I'd argue you're doing that wrong. We see people screw this up with social security all the time. You go out and pull your social security statement, and that's the number it's giving you, is it assumes that you work until full retirement age. If you're someone who's going to leave at 50, 52, 55, you better account for, in social security, you're going to have goose eggs on all those years. Your benefit will not be the same. Don't miss out on that.

• 52:06Speaker 04

  All right, do you feel like you've said what you need to say on that one?

• 52:09Brian Preston?

  Yeah.

• 52:10Speaker 04

  Wonderful.

• 52:12Speaker 04

  The last one about the arbitrage, we talked about the car specifically. The question, I, I kind of felt like, and team, you can tell me if I'm wrong, there was more like, is this a general rule on when arbitrage makes sense?

• 52:26Brian Preston?

  Late, late, late over again.

• 52:27Speaker 04

  Because you could do this on other things besides cars.

• 52:29Brian Preston?

  Read the whole question again.

• 52:29Speaker 04

  It says, when does arbitrage not make sense? Like a 0% APR for 60 months is such a good deal for a new car, rather than getting the same car that is two years old, that is cheaper, but the percentage rates are so expensive and makes less sense from a warranty and powertrain perspective.

• 52:45Brian Preston?

  Yeah, but you could run the math both ways.

• 52:47Speaker 03

  Tell me the difference in the purchase price. Knowing nothing, not knowing how much depreciation happened those two years? The brand new car at 0% sounds way better.

• 52:56Brian Preston?

  Yeah, you just pay it off in three years.

• 52:58Speaker 03

  You just pay it off in three, like that sounds.

• 53:00Brian Preston?

  But you still gotta come up with the 20%. You still, all the rules are designed, look, when we set rules, it's to try to keep, give you some boundaries so that you don't just spend like every other American in the world does, is just that they, they buy these ego purchases with the vehicle and we, that we've tried to create boundaries so that you're not just left with nothing, you know? It's the same reason for like housing, is we do these things so hopefully you can still save and invest for the future and not have regrets. So your 50 year old version of yourself looks at you and goes, well done 20 something, well done 30 something. That, that's because there's so many distractions and cars are a big one. Most kids, when they graduate college, I mean, I think about all my friends that had

• 53:42Brian Preston?

  paid for cars and then they immediately get their first paycheck, like, you know what? Let's go, let's go upgrade this, this whip so that we can impress people who really don't care.

• 53:51Speaker 03

  I, I'm always amazed, and we've done tons of content on this, oftentimes, even though the conventional wisdom has always been buy, use, buy, use, buy, use, buy, use, buy, use, a lot of time it makes sense to buy new. A lot of time it is more economically viable, especially depending on the way that you utilize automobiles, to buy new over buying used. And so every time you go to buy, I would never default to one answer, oh, I'm only going to buy a three year old car, I'm only going to do this, I'm only going to do this, I'm only doing this, or I'm only going to buy new, I'm only going to, you have to do the assessment every time, but if all you're saying is that the two year old car is cheaper, not knowing what that delta is, is the, or only being cheaper is not reason enough to make you lean towards buying used.

• 54:30Brian Preston?

  I think even that depends, because I look at my own life, I didn't really get to buy a new car until I think I was right at 30.

• 54:36Speaker 03

  Mm hmm.

• 54:37Brian Preston?

  Everything else was secondhand cars for my, me and my wife, and I think those were good decisions. So I think you have to do the math. This is definitely not a rapid fire. This is, it definitely depends on your personal financial situation. The biggest thing is keep your ego in check, because cars are one of those things where a lot of people now, because we, look, we have seen situations, Toyota and Honda specifically, to where yes, you go look at it and you say, hey, a used Honda seems like it's only like $2,000, $3,000 less than what I could, as a good negotiator can go buy a new one.

• 55:10Speaker 03

  Get a brand new one for.

• 55:11Brian Preston?

  Then yeah, then take that into account, but don't use this to say, this is why I have to go load up and get my, my family a, a brand new Suburban versus maybe a used vehicle would be much, much better than that.

• 55:26Speaker 03

  Yeah, and those big SUVs like that, oftentimes buying used, you can get a much better deal because appreciation's so there.

• 55:32Brian Preston?

  It definitely depends. Is, there are unique circumstances.

• 55:36Speaker 04

  Depends, you heard it here first. Thank you for expounding. That concludes our rapid fire segment. Thanks, everybody for playing, it was fun. All right, we are going to do another question from Tom.

• 55:46Speaker 03

  Remember that time we got in a fight over a question way back when we started that one?

• 55:51Speaker 04

  Been a couple of times today.

• 55:54Brian Preston?

  Why is this thing, it's like I have an invisible link. Okay, I was, go ahead and hit us up with Tom.

• 56:00Speaker 04

  Okay.

• 56:00Brian Preston?

  There we go, I got it working again.

• 56:01Speaker 04

  He says, I look forward to this every week, so thanks for that, first of all.

• 56:04Speaker 03

  Awesome.

• 56:05Speaker 04

  How does one approach a backdoor Roth IRA when their income increases? And how does that work with pre-existing Roth IRA funds? I pre-ordered the book last week. I love that, hey, hey, you like sandwich two compliments? Sandwich this question.

• 56:18Brian Preston?

  It's a compliment sandwich. It obviously worked, because here we are talking to Tom.

• 56:21Speaker 04

  But what do you have to say to Tom?

• 56:23Speaker 03

  Well, let me answer your question in segments. How does the backdoor Roth affect your current Roth dollars? It doesn't, which is a great thing. There's no, what you have going on currently Roth rise has no bearing or impact on what goes on if you're going to do the backdoor Roth. What you have to be worried about with the backdoor Roth is any of the other IRAs that you have outside of a Roth IRA and outside of an inherited IRA. Those are the two that don't matter.

• 56:47Brian Preston?

  The SEP IRAs, the simple IRAs.

• 56:50Speaker 03

  Traditional IRAs. Rollover IRAs, any of those, those are the ones that factor in. And if you have those type of accounts and you try to do a backdoor Roth, you're going to recognize that when you go through the Form 8606, it actually becomes a taxable conversion based on the prorata rule. So you have to do some account movement, account manipulation. You got to get all of those IRA assets into some sort of a risk of qualified plan, a 401K, 403B, 437, some type of account that you can roll that into so that you have $0 in outside IRA assets. And once you do that, now you have the right account structure to be able to start doing the backdoor Roth. Do we have, goodness gracious, let's see how good our team is.

• 57:31Speaker 03

  I think we have a resource flowchart about the backdoor Roth. Do we have that?

• 57:38Brian Preston?

  That's probably, I think you're getting that confused, that with the, do we have a backdoor flowchart or is that just on what to do with an hour of, you know, a 401K at your old employer?

• 57:46Speaker 03

  We do have the, what do you do in a 401K?

• 57:48Speaker 04

  Yeah, we definitely have a downloadable what to do with your 401K.

• 57:51Speaker 03

  I remember.

• 57:52Speaker 04

  I'm not sure about the backdoor Roth.

• 57:52Speaker 03

  A backdoor Roth flowchart. It may have been a slide, it may have been an illustration in a show.

• 57:57Speaker 04

  I think it was in a show a while ago, to be honest.

• 58:01Speaker 03

  Man.

• 58:02Speaker 04

  You are really, you're on the deep cuts today.

• 58:04Speaker 03

  Right?

• 58:05Speaker 04

  You're like, remember that one thing we did seven years ago?

• 58:07Brian Preston?

  I feel like this is Bo's way of getting back at the team, because they keep showing the, the him swimming picture. So he's like, let's see how deep they can go on these resources.

• 58:16Speaker 04

  We found it, it's Bo swimming.

• 58:19Brian Preston?

  There's your flowchart, that's what they say.

• 58:21Speaker 03

  Now we have to flow this, Bo.

• 58:23Brian Preston?

  There you go, Bo, there's your flowchart, take that.

• 58:24Speaker 03

  It's hilarious.

• 58:28Speaker 04

  All right. I don't know if we're going to be able to find that one, but I think it's in a show. So maybe if you search backdoor Roth on our website, it might point you in the right direction.

• 58:36Brian Preston?

  All of us, if you're wondering if there's ever any little tension under the surface, we have a great time coming to work. But a few weeks ago, we had hilarious videos and our editors, I felt like broke the, is it the fourth wall, fifth wall?

• 58:48Speaker 03

  Yeah.

• 58:49Brian Preston?

  Because we were like, hey, they're going to cut that out. And then you saw, it did not, they did a hilarious thing with Donkey.

• 58:56Speaker 04

  They did not cut, oh, look at the flowchart.

• 58:58Brian Preston?

  Oh, that's a mega backdoor.

• 58:59Speaker 04

  The team is like, hold my koozie.

• 59:02Speaker 03

  I like that, hold my koozie. Our team is so legit. Yeah, so should you use?

• 59:08Speaker 04

  No, I think it's the right thing.

• 59:10Speaker 03

  Okay.

• 59:10Brian Preston?

  It's close.

• 59:11Speaker 03

  It's close.

• 59:12Brian Preston?

  We would, we wouldn't give you three points, like if we were playing horseshoes, this is definitely, we'd have to measure the horseshoes.

• 59:19Speaker 04

  Should you use a mega backdoor Roth?

• 59:21Speaker 03

  Yeah, you.

• 59:22Brian Preston?

  We're measuring, it's not even a leaner, it's, we're measuring right now.

• 59:26Speaker 03

  You had the right words, there were some good words in there that were the same, but no, this was, this was not it. This is a good flowchart, though.

• 59:32Speaker 04

  Well, if you wondered what you should use, when you should use mega backdoor Roth, you can pause and look at that chart.

• 59:38Speaker 03

  But one of the things, one of the things that's great, and this is worth noting.

• 59:41Speaker 04

  Added value.

• 59:42Speaker 03

  Out on our website, if you go to moneyguy.com, our search function has gotten so good that if you do have questions about backdoor Roth, you can literally type that into the search and all the backdoor Roth stuff will just come rushing up to you. So you can kind of go do your own investigation. We have, how many hours, days, weeks, months, did you and our team, Rebi, spend making sure it works that way?

• 1:00:04Speaker 04

  A lot.

• 1:00:04Speaker 03

  So, a lot, so.

• 1:00:05Speaker 04

  There's a lot of content to go through, so we've been, just, we're always iterating and trying to make it more findable for you on moneyguy.com. So always use it as a resource, because we are actively making it better for you for this reason.

• 1:00:16Brian Preston?

  As, as the old guy on the panel here, um, I, you know, I notice in our comment section, like whenever we have reacts, everybody tries to figure out the age of the editors, because they're like, oh, that was, so Ken, what generation are you?

• 1:00:32Speaker 03

  We're one Z.

• 1:00:32Brian Preston?

  Haley, what are you?

• 1:00:34Speaker 03

  One millennial.

• 1:00:35Brian Preston?

  Okay. Does Zmail do editing on them, or is it, because the others?

• 1:00:40Speaker 03

  Millennial.

• 1:00:41Brian Preston?

  Okay.

• 1:00:42Speaker 03

  Two, uh, three millennials and a Z.

• 1:00:45Brian Preston?

  Is that right? Okay. All right, now everybody knows, so you're all better for it.

• 1:00:48Speaker 03

  Now you know.

• 1:00:51Speaker 04

  Brian, he's like, I'm going to spill all the tea.

• 1:00:53Brian Preston?

  Well, I like it, because the comments, the comments are so good when people, because they know, they give the proper credit. I mean, because the team, the editors do make, sometimes I wonder, how would they go do with that? They typically create some pretty awesomeness.

• 1:01:06Speaker 03

  They're wild.

• 1:01:06Speaker 04

  We make it very fun.

• 1:01:09Brian Preston?

  Even if, even if we're the butt of the joke.

• 1:01:12Speaker 04

  Sometimes, we just keep it fun.

• 1:01:14Brian Preston?

  So remember I said self-deprecating is a good thing?

• 1:01:15Speaker 04

  I was literally about to call back, you said you wanted that, so we're doing it here at the Money Guy.

• 1:01:21Speaker 03

  I don't remember the exact quote.

• 1:01:21Speaker 04

  What was the exact quote? If you're not self-deprecating, you're not a good time or something like that?

• 1:01:27Speaker 03

  Yeah, something like that.

• 1:01:28Speaker 04

  Well, you heard it here first.

• 1:01:29Brian Preston?

  Michael Scott.

• 1:01:30Speaker 04

  Thank you to everybody who asked a question today, both in the YouTube chat and in the Moneyverse Discord channel. We really, really appreciate hearing from you and you are really part of the show, you are making this content with us when you ask these questions. So thank you so much for doing that. We will be back next Tuesday at 10 a.m. Central, live streaming, answering your questions some more. And until then, make sure you check out that moneyguy.com that we are constantly iterating on. Moneyguy.com/resources is particularly exciting today because we have a brand new know your number tool. Go check out your retirement calculator, your retirement number, rather, and remember, instead of continuing to make this a paid course and profiting off of it, we made it free, because we're just crazy like that and we want you to have access to it.

• 1:02:13Speaker 04

  So go check it out, moneyguy.com/resources.

• 1:02:17Brian Preston?

  Good chow. I felt like we just loaded it up, free stuff everywhere. Make sure you're getting that, get in there, get that newsletter as well, because I love watching that hit the inbox every week on Saturday morning. I'm your host, Brian, joined by Mr. Bo, Rebi and the rest of the content team. Money Guy Show, out.

• 1:02:35Speaker 04

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

• 1:03:12Speaker 05

  Does anyone know where the bass is? 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.

• 1:03:42Speaker 06

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