This 401(k) Trend is ABSOLUTELY DEVASTATING (And Getting Worse)

If you know us, you know we love a 401(k). New data from Vanguard, though, shows just how leaky these accounts can be. We walk you through the true cost of taking from your future-self, then give you the tools to keep your 401(k) as secure as possible. After that, we answer your financial questions on everything from car buying to new 401(k)s to using the 20/3/8 Rule for... windows? Plus, a fun rapid fire segment with a twist that is perfect for Brian and Bo. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Jump start your journey with our FREE financial resources⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Reach your goals faster with our products⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Take the relationship to the next level: become a client⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Subscribe on YouTube for early access and go beyond the podcast⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Connect with us on social media for more content⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠DRINKAG1.com/MONEYGUY Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:00Speaker 00

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• 1:32Brian Preston?

  There's a trend with 401ks that is going to be devastating for many, many, not mutants, but the folks. 401ks if they're not careful.

• 1:42Speaker 04

  Brian, I am so excited to talk about this.

• 1:45Brian Preston?

  That's called a run on.

• 1:46Speaker 04

  That was, it was, I was on the edge of my seat. I was waiting for the end of it. I am so excited to talk about this, though, because I think this is something that we can improve and something that we can change and something that we can make you guys aware of. Because it is no secret. We love 401ks. For many financial mutants out there, it is one of the most powerful wealth building tools that you Have in your financial tool belt and yet there are some people in our opinion that are screwing it up and may not even realize.

• 2:17Brian Preston?

  Well, I think it look, let's not keep it a secret. Why do we love 401ks is that these things, first of all, free money from your employer. Anytime somebody's gonna just prime the pump and give you free money, you gotta get in there and get that. They're also automatic for the people, meaning if you're trying to actually make the good habits as easy as possible. There's not many things that are more automated than setting up, getting a 401k. Also, I love all the tax benefits, you know, now that you can do Roth with your 401k. I think it was greater than 80 plus percent of employer plans now offer Roth contributions. There's just so many things to get excited about and then to find out that people are just cutting the knees out right from this wealth building opportunity just makes me sad.

• 3:00Speaker 04

  Well, most people, most millionaires that reach millionaire status actually do so inside of their 401k account. It's the first account that gets them into the two comma club. And according to Fidelity, right now, there are 665,000 Americans that are 401k millionaires. And that's up from 537,000 at the end of 2024 and up from 422,000 at the end of 2023. So things are moving in the right direction. 401ks are getting bigger and one of the reasons they're getting bigger is because they are such amazing tools and vehicles. And yet there is this like alarming and frightening statistic that exists. And it's so funny because Vinyl just said this inside the chat.

• 3:44Speaker 04

  He goes, hey, this doesn't apply to any of the people in here. This doesn't apply to us. Why are you guys talking about this if this doesn't apply to financial mutants? And I, I'm actually of the opinion, I think this probably does apply to financial mutants because this statistic would not be true if a lot of people, maybe it's not in the big gravitas way. But we know that right now, Brian, for every single dollar that flows into a 401k.

• 4:12Speaker 04

  Forty cents of that comes out as a premature withdrawal on average.

• 4:16Brian Preston?

  Well, and to help vinyl out, I mean, I look, I'm of the age, I don't think they do this anymore. After school specials. I mean, if there was ever anything going on in society, you know, they would put on these after school specials, like it was a PSA, you know, on all the, so you could avoid the eating disorders or make sure you're not playing with matches and other things like that. So it is important for financial mutants to understand because I think even financial mutants fall into this trap is that if you get into moments to where you're trying to cut the corner off, you know, because like we, we, we just reacted to a bunch of content this morning and people were using home equity lines to pay for cars. People were using 401k loans to buy boats for the Virgin Islands, just silly, silly

• 4:59Brian Preston?

  stuff. So I, I, I think it's important to, yes, to cover these things, not only also so you guys can be the ambassadors, because I guarantee you, every one of you guys has friends and family that are falling into this trap and it's on you. We can only tell, reach so many people.

• 5:16Speaker 04

  That's right.

• 5:16Brian Preston?

  I'm counting on my financial mutants to also use some of these stats and the data points to make sure that people are avoiding these traps.

• 5:23Speaker 04

  And we're going to talk about one specifically, but I just think in general, we've seen this with our client. And by the way, our clients are like cream of the crop type folks who've had some financial success, made good decisions. And even they have fallen into the trap early in their career where they changed jobs and all of a sudden that $20,000 they had in their 401k, oh, well, I changed jobs. Well, now I can just, oh, instead of rolling it over, I'll just distribute that. Well, when you distribute that, you pay ordinary income tax and you pay a penalty on that. And I think that happens over and over and over again. But there is an alarming statistic taking place that is happening that I think is it's become too easy of a release valve to activate. Right now.

• 6:05Speaker 04

  6% of workers in 401k plans, this is according to Vanguard, took a hardship withdrawal last year. So 6% of folks have this special provision where even though you're not supposed to be able to pull out money from a 401k while you're participating in it, there's a little carve out that says, in case of emergency, you can do this. And I think too many people are doing it.

• 6:27Brian Preston?

  But in context matters because you're like, well, okay, 6%. Tell me historically, what does this mean? Is that, because this is back to why are we doing a PSA on this? Why are we doing the after school specials? Because this is an alarming trend that every year for the last six years has gone up. I mean, just to give you guys some context, guys, pre pandemic, this was like 2%. Now here we are at 6% and it's gone up every year for the last 6%. I think there's too many people out there in the public world who are looking at this piggy bank of a 401k and they're basically robbing their future self of the opportunity. So we got to make sure we let people know, be careful. And even some of the tax legislation, I think about some of the tax bills that have come out have made

• 7:11Brian Preston?

  it way too easy. And I understand that they're very noble in the way they're doing the narrative on this, but still, at the end of the day, this will create the ripple effect that you'll have less money in the future if you're not careful.

• 7:23Speaker 04

  And look, you've heard us harp on this before. You know that we really dislike 401k loans? These hardship withdrawals are even more devastating because what ends up happening with these is you actually are taking the money, you know, the, you can think of about a 401k loan, you're kind of like putting your soldiers on the sidelines, your players on the sidelines. With a hardship withdrawal, you're actually taking them out of the game altogether. And it is a costlier option over the long term because, Brian, we talk all the time about the wealth multiplier. And we use it as sort of this educational tool. We say that for every $1, a 20-year-old invest, it can turn into $88 by the time that they

• 8:04Speaker 04

  retire. It's such a valuable idea of thinking about that money growing. But when you flip it around and you think about the alternative of that for someone who pulls a dollar out of their 401k? Think about how that magnifies on the negative side.

• 8:22Brian Preston?

  Well, you don't even have to. We've done the math for you. We went and looked this up is that the average or median hardship withdrawal in 2025 was around $1,900. To put that in perspective for a 30 year old, they're basically taking $44,000 from their retirement for that $1,900.

• 8:37Speaker 04

  Think about that. Was this 1,900? I'm trying to think about something that costs $1,900. Maybe it's a vacation, like go, maybe it's a plane ticket. Was that thing, was that singular cost worth $44,000?

• 8:53Brian Preston?

  For a 25 year old, it's close to $84,000. For the 20 year old, so this is for the cast of Stranger Things. You know, started out as little kids, but they stretch this out so long. They're all 20 years old. When it comes out, $168,000. You can see how the impact of this is, is you want to keep your army of dollar bills working. So we were like, okay, that's enough. We've lamented, we've shared the trouble. How do people protect themselves? So you financial mutants, if you're not following this trap, how can you share with, with your friends and family? So they don't fall in the trap. Let's avoid the desperate decisions. And the first thing you can do is be proactive, not reactive. We love emergency reserves.

• 9:34Speaker 04

  Yeah, and I want to be clear, you know, I think you mentioned this, but if we didn't, you know, one of the, some of the top reasons cited for why people pull out these hardship withdrawals is not for the plane tickets or the travel. They say, hey, it's for avoiding foreclosure and eviction, or perhaps medical expenses or something along those lines. Even when the unknown unknowns come your way, if you're doing the right things, you can do exactly what Brian said. You can stave off that desperation by being proactive and thinking about things like, man, you know what? If I do have an appropriately funded emergency reserve, if I have three to six months of my needed living expenses in liquid cash, when that, not when that foreclosure notice comes, that's a little too aggressive, but when that medical thing comes,

• 10:19Speaker 04

  or when the job loss happens, or when the fill in the blank thing takes place, I don't have to go to my. 401K, I have to go to my retirement accounts? I have cash right there able to protect me when I need it the most.

• 10:32Brian Preston?

  Yeah, I mean, I know financial mutants fall in the trap thinking that cash is trash, but I'm telling you guys, you can turn emergency situations into just inconveniences if you do emergency reserve. So a lot of you, we always say three to six months, you know, it's, by the way, step one of the financial order of operations is going to be highest deductible covered. Step four of the financial order of operations is fully fund that three to six months. If you're trying to figure out my three months, my six months, we actually try to make that easy for you. It all depends upon how easy is it for you to replace a job? How many people are counting on this money? You can understand, obviously, if you have highly marketable, it's only you and your household that you have to worry about. You have access to other, you know, break glass like Roth IRAs.

• 11:15Brian Preston?

  I think maybe three months works for you, but if you're, you know, the single family income, if you're, you know, you have a difficult to replace job, if you have a mortgage or really high fixed costs, probably closer to six months. So make sure you're paying attention to those things so you can really avoid exactly what we started this thing to close the loop, those desperate decisions that make huge mistakes.

• 11:36Speaker 04

  And another thing we want you thinking of, while things are good, while things feel comfortable, while you're in an okay spot, be aware of lifestyle inflation. Now, not all lifestyle inflation is bad, you know, lifestyle creep gets this real negative thing. We want your lifestyle to increase over time. We want your 30s to look better than your 20s and your 40s to look better than your 30s. That is an okay thing so long when you do it inside the parameters. It's why we have rules like 238 for buying a car. If you buy a car inside of 238, or if you buy a house inside of 3525, you're going to prevent yourself from having such a big lifestyle

• 12:18Speaker 04

  that when something comes your way, when an unknown unknown happens, now you don't have to start reaching for the crazy stuff. You don't have to start going into your 401K to get that. You did not lifestyle your way out of financial security.

• 12:31Brian Preston?

  And don't get the financial order of operations out of order.

• 12:35Speaker 04

  That's right.

• 12:35Brian Preston?

  You know what happens, this is for all the dads out there, I'm going to turn this into the greatest dad joke ever. If you do the financial order of operations out of order, oof. It just doesn't sound the same as food. So let's make sure we get the Financial Order of Operations done in the right order. You too can go download your own copy. Go to moneyguy.com/resources. We've done the heavy lift for you. This thing is all terrain, all weather. It will tell you exactly what to do with your next dollar.

• 13:04Speaker 04

  I love it. Sometimes we just need a reminder. You guys are, oh, this, this isn't us. You're not talking to us. We're financial mutants. And we totally get that, but we love that we get to sit here and be that voice of reason, constantly reminding you that's the better way to do money. If you want to be someone who is constantly reminded and you're not subscribed to the channel, make sure you subscribe right now so you can know when we have fresh, new content coming out. Because on this channel, there is only fresh, new content coming out. Every time you get a notification, you can know it's something you have not seen before, which we are so, so, so excited about. So.

• 13:39Brian Preston?

  There's even new stuff to pop off about. So is, are we going to introduce that today?

• 13:43Speaker 04

  Are we gonna, we gonna pop off first?

• 13:45Brian Preston?

  Oh, I'm sorry.

• 13:46Speaker 05

  Yes, I was about to.

• 13:47Brian Preston?

  I'm the worst secret keeper in the world. You gotta see me around Christmas.

• 13:50Speaker 05

  I think we're talking about the same thing. Are you talking about a new free thing that's up on the website?

• 13:54Brian Preston?

  Yeah, we're talking about.

• 13:54Speaker 05

  Absolutely, absolutely. No, so this one, calling all members of the messy middle. This one is for you. Right now on moneyguy.com/resources, there is a brand new to the public resource called The Parents Guide to Raising Financial Mutants.

• 14:09Speaker 04

  Let's go.

• 14:09Speaker 05

  So this is going to help you really find a lot of the things that we talk about here and there, right? All in one place, all about parenting. What, it's all what you need to know about things like being financially prepared to have a child, wealth building strategies and account types for kids, tax credits, how to teach your kids about money and more. So go check that out. It's free. Moneyguy.com/resources. And I'm going to just be completely honest with you. It's a very robust, free resource. It's like 15 pages of content. It's all beautifully designed, really easy to navigate. We really just wanted this to be a great place to point parents and members of the messy middle, or anyone who thinks they're about to enter that type of stage of life, this is for you. So that's brand new, free on the website, moneyguy.com.

• 14:53Speaker 04

  Can I tell you sort of a real world thing that happened to me last week?

• 14:56Speaker 05

  You can.

• 14:56Speaker 04

  That I think is awesome? Uh, I was, I was in a van with seven other entrepreneurs.

• 15:01Brian Preston?

  Down by the river?

• 15:01Speaker 04

  No, it was not down by the river, uh, with seven other entrepreneurs and I was, I was in the back and I'm checking my emails and an email comes in and it's our, our parenting guide. I was like, it just released. And so I just kind of mentioned, hey guys, I just released this and somebody was like, hey, I've been meaning to ask you. And they asked me some question about kids and getting them excited and custodial Ross. And they were like, but hey, I just, I'm trying to figure out how to connect it, how to make it. I'm like, well, one, let me give you a copy of this parent guide and two, let me show you this. And literally on the van, there was the, there was the guy driving, the guy in shotgun, then everyone else just kind of crowded around me. I pulled out my phone and I went to moneyguy.com slash resources and pulled out our wealth multiplier. And I started saying, okay, how old's your kid? All right, 13. You said your kid's got some birthday. How much money does your kid?

• 15:43Speaker 04

  For, let me show you what that $4,000 your 13 year old could turn into. I was like, you know, it's even cooler. I'm going to go to our compound interest calculator. You said your kid, he's cutting grass right now. How much, he makes 40, 20 bucks. Let me show you what happens if he saves, and I'll, and you, their eyes were just like this big. If you have people in your life that you want to get excited about personal finance, that you want to show them and see the light bulb go off, that is exactly what our tools and the website were for. And it's not, they're not just lipstick. I actually did this in real time with real human beings and it was awesome. So.

• 16:16Speaker 05

  Shout out to you for living the perfect, like example, money guy scenario.

• 16:21Speaker 04

  Literally.

• 16:21Brian Preston?

  Don't joke at a visual though of Bo like adult church camp. Like they're all in this, they're all in this van, riding down to every time a semi rides by, they're like trying to get the semi to blow the horn.

• 16:33Speaker 04

  Oh, that's hilarious.

• 16:34Brian Preston?

  I, I just, it cracks me up. I had all kinds of visuals going off there.

• 16:38Speaker 05

  That's fantastic.

• 16:38Brian Preston?

  What type of vehicle was it?

• 16:40Speaker 04

  It was a big, uh, it was like a big, like touring van. You know what I mean? Where like you got, it's like, I guess probably 12 seats, but in the back you can put all the storage stuff.

• 16:48Brian Preston?

  So is this like hospitality type van where you know, have like leather seats and a big TV up front?

• 16:54Speaker 05

  Was it nicer than the van that we took on a retreat once?

• 16:57Speaker 04

  It was nicer than the van we took on retreat, but it wasn't like, you know, it just, it just gets you from A to B.

• 17:03Brian Preston?

  It was like a box truck. We basically just told everybody, bring your own folding chair and jump in.

• 17:07Speaker 05

  You did. And you were like, don't pack too much. There's only so much room.

• 17:10Speaker 04

  Uh, the parenting guide is awesome. I, I am so excited because do you recognize how much we can change the world? If we begin by changing the kids, the next generation? What's so funny is as I was explaining this to all the people, there was this, hey, why isn't, why, why don't they teach you this? In elementary school, what do they teach you this in high school? Why don't you graduate college knowing, if I would have known all of this back then? Man, we have an awesome opportunity to be able to do that. I hope that we change the future financial mutants of the world. Gets me super stoked.

• 17:42Speaker 05

  Agreed. Agreed. And with that, we are going to dive into answering your questions. So drop them in the chat if you have a personal finance question. We're going to kick it off with Michael. He says, I bought a car with 26 eight before becoming a financial mutant. I am two years into the loan term. Should I count it as a learning experience and keep the car? Or adjust and sell according to the rules? Tricky question, but great one.

• 18:10Speaker 04

  Financial triage is what's going to happen.

• 18:12Speaker 05

  Yeah. What if you're finding money guy? And you've already made some mistakes. You're kind of trying to back into where you start in the foo and in the car buying rules.

• 18:19Speaker 04

  Now, I want to, I want to figure this out. So I'm going to kind of reverse and just near some math here. So you said you bought a car with 26 eight. So 20, you put down greater than 20%. Okay. I love that. The eight, based on the six year amortization you did, the eight was. Fancy car. Right. Like the, now, now here's what I don't know. How close to the eight was it? Cause he didn't, you know, it could, this could have only represented two or 3% of his gross pay. He just knows that it's not more than eight, which I like. The very first thing that I would do is I would recalculate how much I'm paying on the car. If I were going to get it inside that 36 month timeframe. So we said, what? You're two years into the loan term? What would I have to do?

• 19:01Speaker 04

  How would I have to change my situation to have this car paid off in the next year? So that way I did it inside of 36 months. And am I able to do that without going above and beyond the 8% of monthly gross income? Now, if the answer is no, then I want to start thinking through, okay, well, how much do I owe on this? What's the interest rate? Should I potentially pay more on it so that I can have it paid off in one month? Maybe I have emergency reserves or cash somewhere else. I don't know that you have to like sell the car. Now, you may, and that may be something, but I don't want you to just default that the only two options are? Keep this bad decision going and rock and roll with it, or sell it? I think there's probably somewhere in the middle that could potentially make sense.

• 19:45Brian Preston?

  I mean, yeah, if you don't course correct now, you're basically dragging this bad decision on for another four years. And it's the time lost that drives me crazy on this is because if you go look at our wealth multiplier, especially, did he, did he share, Michael share his age with us?

• 20:02Speaker 04

  I don't think, I don't have his age.

• 20:03Brian Preston?

  But it is, I'm assuming, this sounds like an early decision. That wealth multiplier is definitely impacted in four years is too long. So self-correct ASAP. And if you know, that's one of those things, I'll give you a little grace that if you look at this and go, man, I don't think I can correct this in 12 months, but maybe I can in 14. But if you look at it and go, no, it's going to take every bit that I would, I just, there's no extra money in my budget to get this thing back under 23.8, then you might've bought too much car. And I know Beau said, we don't want you to sell. That's not your first default, but if you go through, if you go through the actual exercise and do the math and triage your situation, and this is what's keeping you from funding a Roth IRA and actually building your army of dollar bills, then yeah, sometimes you have to do some tough love.

• 20:48Brian Preston?

  And remember, part of the hedonic treadmill, when you have good decisions, you're supposed to spread those out as much as possible. So you get all, you know, you squeeze every ounce of goodness and enjoyment and dopamine hits when you're, when you're buying like new cars, new houses and those type of things. But when you're dealing, facing bad things in life, like you made a lot of consumption decisions, then I would tell you, cut, cut, just cut it off, you know, just because you'll get back to your base level happiness that much sooner if you make the hard decisions earlier and often so that you don't just string along the bad hardships that you'll have getting your financial life in order.

• 21:25Speaker 05

  Michael, thank you for the question.

• 21:28Brian Preston?

  Can I show you something, Beau? This is gonna be kind of a fun little game to play.

• 21:33Speaker 04

  Oh, wow.

• 21:34Brian Preston?

  Yeah, we'll see.

• 21:35Speaker 04

  That was not thought through. That was not thought through at all.

• 21:39Brian Preston?

  I feel like we have a countdown.

• 21:40Speaker 04

  You know what? I got you, bro.

• 21:42Brian Preston?

  I got you. I got some backup. We might be, it's a final countdown to see how long I have battery power.

• 21:48Speaker 04

  He might be going digital to analog in the middle of this.

• 21:51Brian Preston?

  Look, I have a college daughter. I can't say that much longer because she's graduating in May.

• 21:56Speaker 04

  You might have an adult, like a fully adult.

• 21:58Brian Preston?

  We still, I get notifications like when her, her, her battery on her phone is like at 5%.

• 22:04Speaker 05

  Really?

• 22:05Brian Preston?

  And then, you know, and then, and then I will, you know, we, anybody who's got teenage kids, you know, you'll, you'll, you'll know what I'm talking about, what apps we're talking about. But, um, and, and whenever we're in content meetings with Rebi, she is guilty of also.

• 22:17Speaker 05

  Not whenever. It just happens to me from time to time.

• 22:20Brian Preston?

  I am the opposite. I am like fully charged. You know, it's just like, I'm not worried about battery life. You know, we'll just go buy a new product before we worry about the whole battery life. But today, you know, we're running, we're in the final countdown.

• 22:31Speaker 04

  So you drive.

• 22:32Brian Preston?

  3%.

• 22:32Speaker 04

  You drive a battery powered automobile, right? How low will you let that, like, like when I, when I, when I was growing up, my grandparents, my grandpa never let it, let it get below half a tank. If it was half a tank, he was about to run out of gas. So we'd always fill up at half a tank. How, you do that with the, with the Tesla?

• 22:49Brian Preston?

  What I do is, you know, I'll charge it up to 80% and then that will last like three or four days. And when it gets down to like 35%, 40%, I'll plug it in at night and then it's back to 80% good for another three or four days.

• 23:02Speaker 04

  What's the lowest you've ever let it get?

• 23:04Brian Preston?

  Actually, you were in the car with me when we went to Kentucky. We went to Kentucky and there was supposed to have been a destination charger at the hotel. And we pulled up to the destination charger. There were destination chargers there, but when we plugged them in the car, they had zero power to them. You know, they had, they had cut the power to these things. So they were not working. So we did our speech in Kentucky at Murray State and then we.

• 23:28Speaker 04

  Set our prayer.

• 23:29Brian Preston?

  And I think it got down to, it was one or 2%. You know, it was scary.

• 23:33Speaker 04

  We have another, a fellow friend, content creator here in town. They actually broke down the side of the road in his, uh, remember that? Remember that story?

• 23:41Speaker 05

  I don't know if that's called breaking down, but yes, he ran out of charge.

• 23:44Speaker 04

  He ran out of juice on the side of the road. That's as, as broke down as you can get in an electric car.

• 23:49Brian Preston?

  Yeah.

• 23:49Speaker 05

  You guys are funny.

• 23:51Brian Preston?

  We made it though. And there was, what was the name of that restaurant we ate at?

• 23:55Speaker 04

  The restaurant?

• 23:55Brian Preston?

  It was a rip off of Waffle House, but it was.

• 23:57Speaker 04

  Oh, the American diner. Isn't that what it was?

• 24:00Brian Preston?

  It was pretty awesome.

• 24:01Speaker 05

  We were not there. That was all you.

• 24:03Speaker 04

  Out of this world.

• 24:04Brian Preston?

  Instead of you having to choose between grits and hash browns?

• 24:07Speaker 04

  They just give it all to you.

• 24:08Brian Preston?

  It was an and, it wasn't or, it was and, you get both. I think you also got sausage and bacon.

• 24:13Speaker 04

  They did so good.

• 24:14Brian Preston?

  I mean, it was like everything.

• 24:15Speaker 04

  It was so good.

• 24:18Speaker 05

  All right, we're gonna go on to the next question. It's from OG laminated foo. I think we've got a charger for Brian, so nobody panic. We will make sure he stays fully charged and able to answer your questions. But the question from OG laminated foo says.

• 24:36Brian Preston?

  I love that name.

• 24:36Speaker 05

  I'm a 24 year old college student preparing a speech for my classmates on financial literacy and the power of compound growth. What message would you focus on to actually help change their futures? Speaking of changing the lives of the next generation, Bo, what would you say?

• 24:57Speaker 04

  Okay, so the number one thing that I would try to get across, because whenever I give a speech or a talk, I always want to think about when the audience leaves, what are the small nuggets I want them to take? I'll generally have like a big nugget that I want them to take, and then a few little like small nuggets I want them to take. In this particular case, OG, the big nugget I would want them to take away at 24 years old is just do something. You don't have to do everything right. You don't have to do all the things right. You ain't gonna get every decision perfect. But if you can just start doing something, the 24 year old that starts doing something, even if it's not perfect, is gonna be way better off than the person who waits until 30 and does everything perfect.

• 25:38Speaker 04

  Just because time matters that much. So I would just get the idea across, hey, if it's 20 bucks a month, 40 bucks a month, 50, whatever the number is, just start doing something to begin saving for the future.

• 25:51Brian Preston?

  I would remind them of the three ingredients to wealth. There's your presentation is because you have to. Nobody builds wealth if you can't get component and ingredient number. One discipline, you have to live on less than you make. If you can live on less than you make, that creates margin, which leads to having money, which is ingredient number two. And if you put that money to work with enough time, the most valuable of your wealth building ingredients is that magical component of time, especially for somebody in their twenties is because you realize that compounding interest and compounding growth really is the eighth wonder of the world. And it's magical because your money can truly work harder than you can with your back, your brains, brain or hands.

• 26:36Speaker 04

  Backs, your brains and your hands.

• 26:38Brian Preston?

  You know, but only Bo has multiple brains that work as fast as, as his brain does. But I'm like, we're working at like 40, 30% and we're hoping that it's enough to pull us through.

• 26:49Speaker 05

  You guys are funny. Thank you, OG laminated foo for the question and the username.

• 26:52Brian Preston?

  Crisis averted, by the way. Remarkable, remarkable. By the way, I thought it would show a charge sign, but now I'm just seeing the number going up. It's like, you know, so this thing's coming to life.

• 27:04Speaker 05

  That's good. That's good. I'm glad to hear it. Well, hey, before we dive into our next question, submit your rapid fire questions, drop them in the live chat. Put RF at the beginning of the question. So we know that you want them to answer it in 30 seconds or less. I do have a little twist for it today, so we're going to try that. So stay tuned. We'll do a question or two more.

• 27:23Brian Preston?

  That's probably why she was in the office.

• 27:25Speaker 05

  Into rapid fire.

• 27:26Brian Preston?

  Instead of sitting in that early content meeting.

• 27:28Speaker 04

  What's the twist?

• 27:29Speaker 05

  You'll find out when we start the rapid fire segment.

• 27:32Brian Preston?

  Probably hammering in spikes on whatever.

• 27:34Speaker 05

  Little twist, but I think you'll like it.

• 27:36Speaker 04

  What would you do if she actually brought up the shot caller? She's like, hey, we ordered this off Amazon.

• 27:39Speaker 05

  It has been discussed.

• 27:41Brian Preston?

  I mean, I'm the one that put on the sunglasses last week in the, in the, the mullet.

• 27:44Speaker 05

  I feel like Brian is down for an adventure.

• 27:47Speaker 04

  After, after that show, we both donned the mullet and the, and, and, uh, and the other accoutrement. Did we put that on socials, Matt? Was that out on social?

• 27:58Speaker 04

  Yeah, so you're not on socials, you're not subscribed to the newsletter, you miss out on all those little extras.

• 28:03Speaker 05

  Our Saturday newsletter has some great behind the scenes stuff and all of our awesome financial content, so I love that.

• 28:10Brian Preston?

  Social media, they put out the sexiest man alive with me and a mullet. It is now the picture of one of my group threads.

• 28:17Speaker 05

  Oh, yes.

• 28:18Brian Preston?

  I go on a golf trip once a year with all my neighbors from Georgia and I love that trip. It's coming up in like a week and a half, two weeks, but now that's what they're, they totally pick on me.

• 28:30Speaker 05

  The memes are strong with our marketing team.

• 28:32Speaker 00

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• 28:37Speaker 06

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• 28:50Speaker 01

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• 29:58Speaker 05

  All right, let's go to Seth McFoo's question. Lots of good usernames today. He says, "I'm starting a document for my wife with everything she will need to know if I pass, like life insurance, accounts, etc. Any suggestions for how to structure this? What should I include? We're 30 years old in the messy middle with all caps." I think you guys have a lot to say about this.

• 30:21Brian Preston?

  But it's funny, Bo, you and I just had a conversation about some of this yesterday. I'll tell you, Seth, one of the things that has been great for, of course, let me start off with level set foundational, do a net worth statement. Net worth statement is going to be magical as a communication tool, because it also leaves behind the breadcrumbs of what you have. Now, let's get into the nuts and bolts of how you get access beyond your life if you just so needed to. We use a password manager, my wife and I do, and I wanted to make sure she could get into all of our primary accounts if something should happen to me. And the thing is, everybody's now using, you know, two factor or multi-factor.

• 31:02Brian Preston?

  And she was like, "Well, how am I going to get into like, think about your custodian or think about your bank?" What I have found, both my bank and my primary custodian allowed me to add my wife's phone number in addition to my phone number as, you know, those, you know, for security purposes. So now, if she was trying to use the password manager to get into the account, we've actually added that to where she is not going to be kicked out because she couldn't pass the multi-factor.

• 31:33Speaker 04

  Yeah, I don't have a ton to add to that, because I do the exact same thing. I do a net worth statement. I want to list out all the stuff that we own, all the assets, all the liabilities. I also put on there where they are, so I don't just have like Roth IRA. I've got like fidelity Roth IRA. And I'll even put like the last four of the account numbers. So if she's trying to shuffle through account statements or whatever, I want her to have some sort of identifying information to be able to find, "Okay, this is where the checking, you know..." And that's all about the institutions we use. Where do we bank? Where's our checking account? Where are our investment accounts? Life insurance, where's the actual life insurance policy? Where's the digital record of that? And then I also go through with her, hey, I get hit by a bus. Who are the first phone calls you're gonna make? Right?

• 32:17Speaker 04

  Like, that's just something, I want her to know, hey, something happens to me, number one, very first phone call? Call Brian. All right, once you call Brian, then I kind of work through the, you know, down that list. And I think it's just more, because I am the one who, who, who navigates the majority of our financial life. I mean, we make decisions together, but I'm kind of like the, the implementer, if you will. I want her to know how she can get to and get access to everything that she's gonna need. And so I just put it on, and it's actually all on the net worth statement, and then all in the footnotes page. So she has all that information in one place. And then I go over like any, uh, you know, we also use a password manager, but also stuff like, you know, safes and that kind of stuff. Like, I make sure she understands, how do I get in there? What do I need to know?

• 33:02Speaker 04

  Where are the documents housed? All those parts and pieces.

• 33:04Brian Preston?

  Yeah, that's why, if you, and by the way, if you're like, oh my gosh, I don't even know where to start with a net worth statement. We have a free one, if you go to moneyguy.com/resources. We do have a free one. And if you want the same one Bo and I use, if you go to learn.moneyguy.com, we actually have a net worth tool. Um, and, and don't skip out on the footnote page, because that's where you lay out all the life insurance, the kids' accounts, and all the other things that Bo was covering. And I even, we have a section where I have the, the, you know, people we work with, you know? And that can be your life insurance agent, it can be your property and casualty insurance agent, it can be CPA, it can be your, you know, attorney that did all the estate documents for you. That stuff is very helpful, so that you're leaving behind, um, you know, breadcrumbs.

• 33:46Brian Preston?

  And then I always tell people, if you, this is more so if you got stuck with a situation where you just don't know what somebody had and they passed away. Tax returns are a great forensic tool to go figure out where all the financial resources and assets are as well. But that's, that's kind of when you're left holding the bag on something. This is, I'd rather you be proactive, so that, you know, you can get into the accounts, you know what's going on, and everybody has peace of mind.

• 34:11Speaker 04

  Another silly one, and I just, this happened this past year. Not only because, you know, I'm helping out a client who unfortunately, you know, lost her spouse. And one of the things that she's, it's like, we pay off all of our credit cards. And I kind of knew like the ones that I used, but I didn't know all the credit card. Like all the different companies I need to reach out to and stuff that was in his name and in the business name. And so I just started kind of keeping an inventory. Hey, just so you know sweetheart, this is all the stuff that we're attached to. Right? Like, so again, if something happens, these are all the places you need to go to know to look for stuff.

• 34:42Brian Preston?

  Did you do that under the liability? Like even if you're paying your credit cards off or did you put that under footnotes?

• 34:46Speaker 04

  I did it in footnotes because I didn't want to like, I didn't want to like clutter up my net worth statement.

• 34:50Brian Preston?

  Plus you're paying it off monthly.

• 34:51Speaker 04

  That's right.

• 34:52Brian Preston?

  Because I actually, that's something I probably need to add to mine. I don't have that on there and that's smart.

• 34:56Speaker 05

  That is smart. And yeah, I agree. It's not really a liability if you're not carrying with it.

• 34:59Brian Preston?

  Password manager would hopefully help on that a little bit just because I've, I've labeled stuff in the share file, but, but.

• 35:05Speaker 04

  It's more just wanted to know, like, hey, okay, there's five credit cards.

• 35:09Speaker 05

  Yeah. No, those were great thoughts. Great questions, Seth McFoo. I love that you're thinking through that and setting your household up for success. We'll do one more question and then dive into rapid fire. This question is from Tumblr enthusiast. So everyone is really going for the usernames today. My wife and I, both 27, are in step five.

• 35:31Speaker 04

  Let's go.

• 35:31Speaker 05

  An S growth shortage made our new payment 33% of our gross income. Should we move on to step six or prepay principle to eliminate PMI? And drop from 6.5% to 5.75%?

• 35:46Speaker 04

  All right. You gotta let me think about this one a little bit.

• 35:49Brian Preston?

  Well, let me, while you're, while you're thinking about, there's another variable that's also going in. Cause we've, we've even talked, there's several reasons. Housing's hard. Remember, we even have a show coming up that we're going to be releasing to help people kind of know how to navigate this in this unique time. But also, because you're 27 and, and it's not uncommon that people stretch things when they're at the beginning of their career. Cause especially like a house. I'd ask you, what's the opportunity that if you? Took three years of your upcoming income. If you levelized out your income, are you closer to 25% then? Meaning that, cause like I come from a, you know, public accounting background. So my pay went from like apprenticeship where I was not making a lot of money.

• 36:31Brian Preston?

  And then I started getting big jumps when I got my certifications and other things. I'd be curious if you have something in your career that's going to help minimize this because of upcoming income. And then I'd ask for other things that might, in the current situation, mitigate the situation. Is like, if you live in a high cost of living area, but you have great public transportation. And so you don't have the 8% that most people have on 238 going to a car loan. That can help get you through, give you a little grace on this as well. But I will tell you that if you go through that exercise and you don't have it, we got a bigger problem then.

• 37:07Speaker 04

  Yeah, one, at 6.5% or 5.75%, either one of those, I don't consider high interest debt. That's not really part of the question. I just want to throw that on there for a home. I don't consider that to be high interest debt. I am a little curious, assuming that your mortgage payment was inside of 25%, the escrow adjustment, jumping it up 8% seems significant. So I don't want to really dive into what was it that changed? And perhaps your insurance got a whole lot more expensive and more expensive insurance caused the escrow underfunding. So I may want to go shop my homeowner's insurance and say, okay, man, what, what happened? Why was that the case? I did this for myself recently, the last two years. I went and shopped all my property and casualty insurance.

• 37:51Speaker 04

  And I was able to save thousands of dollars a year by shopping my insurance. And as a result of that, because my homeowner's was part of it, when I got my escrow notice, I got a refund check for over escrow and my payment went down. So it's kind of a, a nice thing. If it went up because your property taxes went up a ton, I'd ask, okay, is that right? Is that accurate? Is that reasonable? Is that something that I should appeal? A lot of people don't realize this. If you feel like you have received an inaccurate, I don't want to say unfair, that's the wrong word to use, but an appraisal that does not match market, you can actually appeal the property tax record. Say, hey, this, you said my house went up in value this much. I don't believe it did. This is what the tax rate should be. And I would try to dive into why it was such a significant increase year over year.

• 38:36Speaker 04

  And then exactly what Brian said, if it's unlikely I'm going to get any reprieve there and my income will not grow to the situation where it's affordable. Now I gotta begin to make some decisions.

• 38:46Brian Preston?

  Yeah.

• 38:48Speaker 05

  Those were great thoughts. Tumblr enthusiast, thank you for the question. All right, we are going to dive into our rapid fire segment. Remember, the rules are Bo and Brian have a combined 30 seconds to answer your question, and they cannot use the phrase "it depends" or any similar phrases, or their time is canceled.

• 39:08Speaker 04

  Both of our times or one of our times, Rebi? Just asking for the audience.

• 39:14Speaker 05

  We will make the statement that it is both of your times. If one of you says "it depends", you lose the opportunity to answer.

• 39:21Brian Preston?

  Rebi, I just want you to know, I appreciate being your favorite.

• 39:24Speaker 04

  I bet you do.

• 39:26Speaker 05

  Thanks, Brian, thanks. And add a twist. If you can work in a dad joke into your answer.

• 39:34Brian Preston?

  Goodness.

• 39:35Speaker 05

  Since Brian started us off strong, if you can do a pun, a dad joke, any kind of joke, you get 10 points, and whoever has the most points at the end of the round wins.

• 39:45Speaker 04

  It's gonna be hard enough to do it in 30 seconds, but now we gotta add humor into it? I'm up for the challenge.

• 39:50Speaker 05

  Let's just see what happens. All right, and remember at the end, we will let you have our "maybe it does depend" segment where you can, you know, bellyache, explain whatever you need to say that you didn't get to say. I will give you that. All right, ready to dive in?

• 40:06Brian Preston?

  Hmm.

• 40:06Speaker 05

  I'll read the first question, and then 30 seconds will be on the clock. First question, have you guys ever second guessed the order of the foo? If so, which step was it and why?

• 40:21Speaker 05

  And if not, why?

• 40:22Brian Preston?

  I mean, mortgage debt has been the hardest thing recently, just because when we saw interest rates go up to 7%, that was one of those things like, "Eee, that hurts a little bit", but then Bo and I had a conversation, and I felt very comfortable that, no, we don't we don't consider mortgage debt even as higher debt, because you can have the option to refinance.

• 40:40Speaker 04

  We struggled a little bit early on. How do you prioritize Roth versus HSA? Are those different parts of the foo? And we just decided, no, no, let's just put them all in the same bucket.

• 40:49Speaker 05

  Nicely done. Next question. Why is ESPP in step-

• 40:54Brian Preston?

  Where was the dad joke?

• 40:55Speaker 04

  I didn't have one.

• 40:56Speaker 05

  So far, no one has done it.

• 40:58Speaker 04

  I'm 0 for 0 now.

• 41:00Speaker 05

  You're both at zero points. Here's the next question. Why is ESPP in step two? Wouldn't it be bad if the stock went down below 15% stock- the 15% stock discount? I can put 15% of my pay into this, but it would block a lot of my other- a lot of other of my savings. What do you think? Why is ESPP in step two?

• 41:22Brian Preston?

  Remember, it's usually on a lot of these ESPPs, it's the- it's the lower of the beginning of the quarter or the end of the quarter. So if it went down 15%, you'd probably be the beneficiary of the lower purchase price. And then, remember, don't, don't miss- don't do oof. That's not a very good dad joke. Tufu. And the fact that we want you to have a process to where you're actually turning that money in- into other investments. Oh, did I take it all?

• 41:49Speaker 05

  That was so sad.

• 41:50Brian Preston?

  I am so sorry, Bo.

• 41:51Speaker 05

  He gets to say nothing.

• 41:52Brian Preston?

  I am so sorry. I'm so sorry.

• 41:55Speaker 05

  Team, does he get credit for that dad joke? Did we get enough? Did we get the full dad joke? Yes? Okay, we're getting odds. Brian gets 10 points.

• 42:02Brian Preston?

  Can we give Bo a 30 seconds? Can we go 15? Oh, y'all are mean.

• 42:07Speaker 04

  I was like, man.

• 42:08Speaker 05

  Wait, what do you mean mean? You're a mean frog at the time.

• 42:12Speaker 04

  I was like, alright, we're at 20.

• 42:14Brian Preston?

  You're answering the first- next one first. You can take as much time as you want.

• 42:19Speaker 05

  Alright, next question. I am 25 years old and recently got married. I have two times my income in life insurance through work, but should I be looking for- looking at a term policy as well?

• 42:33Speaker 04

  Oftentimes, yes. A good rule of thumb is that you should have 10 times your annual income in term life insurance coverage. That's, again, that's a rule of thumb. It's not like a hard, fast rule, but that's a good place to start.

• 42:49Brian Preston?

  So let me go ahead and give you a secret to marriage. Yes, ma'am.

• 42:56Brian Preston?

  That was my dad joke.

• 42:59Brian Preston?

  It's bad when you have to label your comedy.

• 43:03Speaker 05

  I thought he was gonna bring it back to life insurance, but that did not happen. Zero points for that one, but I really respect the effort. Thank you for playing along.

• 43:14Speaker 05

  And next question. What is your favorite step of the foo and why?

• 43:22Brian Preston?

  I like step five. I like tax-free growth. And I like when I wrote Millionaire Mission, the Armageddon reference at the beginning of the chapter.

• 43:33Speaker 04

  Step seven. Do you know why step nine is afraid of step seven?

• 43:38Speaker 05

  Why?

• 43:39Speaker 04

  Cause seven, eight, nine.

• 43:42Speaker 05

  Nicely done.

• 43:43Brian Preston?

  Your brain is amazing. That is beautiful.

• 43:46Speaker 05

  Ten points for both.

• 43:47Brian Preston?

  That is brilliant.

• 43:49Speaker 05

  All right, next question.

• 43:50Brian Preston?

  This is why you're a CFA.

• 43:52Speaker 05

  Hi, team. I have access to both a 403B and a 457B. After capturing my employer match, how should I prioritize contributions? How does the 457B that has a Roth option change the three bucket strategy?

• 44:08Brian Preston?

  I would. Without saying the bad D word. I would go 457 because you can get access to it before, you know. It doesn't have an early withdrawal age to it.

• 44:21Speaker 04

  And oftentimes 403Bs also have Roth options. So I would want to see, did my 457 and 403B both have Roth options? But holding them side by side, I would err towards the 457 as well because you get access earlier.

• 44:37Brian Preston?

  We didn't get to put a dad joke. And the only thing I would.

• 44:41Brian Preston?

  That one I might need to put and say a little bit more.

• 44:43Speaker 05

  All right, we'll make a note. Next question.

• 44:47Speaker 05

  Do you see yourself ever signing up for a prediction market for entertainment purposes only, of course?

• 44:55Brian Preston?

  The only way, I had, I had an associate show me the arbitrage that you can run on these things, but then I found out how quick the providers jump in and limit your bets when they realize that you're running systems. No.

• 45:08Speaker 04

  Prediction markets, I just, it's more like gambling. It's, I don't see it a whole lot different than like going to the casino and doing that sort of thing. So that's something that you get utility out of and it's not causing you to go in a bad direction. That's fine, but it's not for me.

• 45:24Speaker 05

  Nice succinct answers.

• 45:26Brian Preston?

  I was, I was, we didn't have the time to put a dad joke in there.

• 45:28Speaker 05

  He was trying. Brian, I feel like at the very end, he's like, two seconds. What joke can I add? All right. Next question. What are your thoughts on investing $500,000 from a 401k fund in a private real estate fund? I still have 1.5 million left in a 401k.

• 45:48Speaker 04

  Investing the 401k assets in a private real estate fund?

• 45:52Speaker 05

  Yes.

• 45:53Speaker 04

  There's a lot of nuance there because when you're using qualified assets and you try to invest in private equity, there are some unique things that take place.

• 46:06Speaker 05

  The nuance, you were, I really should flag you for that.

• 46:09Speaker 04

  No.

• 46:11Brian Preston?

  Personal finances, personally, you, I mean, we'll leave the porch light on for you.

• 46:18Speaker 05

  He was basically like, I don't know, go to aboundwell.com, they'll tell you. I love that. All right. Next question. If I want to buy a house in the next five years, what's the best place to put the down payment and why?

• 46:34Brian Preston?

  Well, you know, it's better to attract bees with honey. Nevermind.

• 46:40Speaker 04

  You're just going with sayings.

• 46:41Brian Preston?

  This joke thing is not working out for me.

• 46:45Speaker 04

  Cash is king for expenses that are going to happen inside the next five years. If you're 60 months in, I think building up in liquid cash for known expenses is likely the, the, the best decision.

• 46:58Brian Preston?

  Why did chicken cross the road? Get to the other side. The dad jokes is killing me. This is not what I wanted. Like when we brainstormed all the ways we can make this more fun.

• 47:09Speaker 05

  I think he got 10 points.

• 47:10Brian Preston?

  Dad jokes, you'll at least need a book that I could study up on before.

• 47:14Speaker 05

  10 points for Brian.

• 47:15Brian Preston?

  That's horrible. I should not get those 10 points.

• 47:19Speaker 05

  You know what? Maybe next time we'll tighten up the rules. All right, last one. If you have the full cost for a house, should you put 20% down and invest the rest? Or pay in full and invest the would be mortgage payment?

• 47:35Speaker 04

  Mathematically, you will come out better

• 47:40Speaker 04

  investing the larger balance earlier because it has longer time to grow. If you're just gonna pay it in full and then invest the monthly payment, you're gonna have a lot. It's gonna be hard for that monthly payment to ever catch the lump sum that you invested.

• 47:52Brian Preston?

  If, since I can't use the D word, if you're under 45, you know, finance it. If you're over 45, pay cash.

• 48:02Speaker 05

  All right. All right, that concludes our It Does Not Depend rapid fire segment. We are, honestly, you guys came very close. I probably should have flagged your dancing around It Depends, but I'm gonna give you some grace today. I don't know why, just feeling nice.

• 48:16Speaker 04

  Speaking of dancing, you know how to make a Kleenex dance?

• 48:21Speaker 05

  I do. Do you?

• 48:22Brian Preston?

  Put a little bug?

• 48:24Speaker 04

  You put a little buggy in it.

• 48:28Speaker 05

  Unfortunately, that does not count towards your points because it was not in an answer.

• 48:32Brian Preston?

  I love it because we didn't, I felt like that was, we did not have a lot of, I don't have a lot of dad jokes in me.

• 48:37Speaker 05

  I really liked seeing you try though, which was the point.

• 48:39Speaker 04

  Honestly, seeing you try was probably my favorite part.

• 48:41Speaker 05

  I will say Brian did win with 20 points while Bo had 10.

• 48:46Brian Preston?

  I watched, when I was on my last spring training old man trip with my buddies, we, we watched some fighting at the end of the night, you know, on one of the channels. And I watched this boxer, the other guy was a better boxer, but this guy understood the rules and he was just, every time they'd lock up, he was over there just, you know, barely tapping him on the face. He ended up winning because he had so many, his, his punch rate and his accurate, you know, inaccuracy or percentage was higher. I feel like that's all I did. I was the guy who was, every time we'd lock up,

• 49:16Speaker 05

  He tried enough times.

• 49:16Brian Preston?

  I wasn't really getting any shots in. Nobody thought I was funny, but I was playing the game.

• 49:21Speaker 05

  You did play the game and I appreciate that. All right, there were a couple that you said you wanted to come back to in our Maybe It Does Depend segment. Uh, question two, Bo, you didn't get to answer, so I will give you a chance. It was about why are

• 49:32Brian Preston?

  I wonder why you didn't. You must have passed out.

• 49:34Speaker 04

  So, uh, yes, ESPPs, um, don't all operate the same? You said, oh, well, what if the, what if the stock goes down 15% in value? A lot of folks will choose to invest in their ESPP. They will take advantage of the 15% discount, buy the stock. They will immediately then go sell. Now, that's going to be a short-term capital gain. You have to pay ordinary income tax on the discount element, plus on any gain that you, that exists. But even doing that, you're coming out ahead. Because remember, it was free money. It was 15%. You pay ordinary income tax on the 50%. You're still net positive. I do see if you have a plan where you have to hold the ESPP for a year, you have to hold it for 18 months, there could be some risk there and you have to kind of assess

• 50:15Speaker 04

  that on your own. But if you have the ability to just liquidate automatically, I'm not as concerned about the stock price because I know right off the jump, I'm going to be in the black.

• 50:27Brian Preston?

  The other one that was, was a question number four.

• 50:29Speaker 05

  Yep, I have that one about the 403B and 457B.

• 50:32Brian Preston?

  Sometimes your employer will structure it to where the match will be associated with the 403B and then the 457 is kind of an additional add-on plan. So that's why if you have match, free money from your employer, get in there and get that free money. And then you might want to consider switching over to the 457. But, uh, but that wasn't put into the way the question was asked. That's the it depends is because I don't want you to miss out on the, the dollar for dollar match from the employer, just so you get into the better, better structure for early access of the 457.

• 51:03Speaker 05

  Yeah, good thoughts. Um, we did have a couple at the end. While we don't give specific investment advice, there was a lot there that really did depend, right? The 20% down or invest with investing or put the full, anything you want to say about that one?

• 51:16Speaker 04

  Yeah, that one was hard. Okay, so mathematically, if I had a million dollars, not a million, $100,000 to invest a day, or, you know, $500 to invest every month, it's going to be really hard for that $500 a month to catch that $100,000 invested. So mathematically, that likely makes the most sense. However, if you're at the Agencies and in life, we do want to factor in risk and overall financial goals. If you are near retirement or towards the end of your accumulation journey, you have this big portfolio already built up. There's nothing wrong with paying cash for houses. We have clients do this all the time. They'll retire or think about relocating. They'll sell a house and then they'll go to buy a house in another place. We don't say, hey, put 20% down and finance 80% and invest that.

• 52:01Speaker 04

  We said, no, no, pay cash for the house, but it's very much situationally dependent on where you are and what your ultimate financial goals are.

• 52:09Brian Preston?

  If you visualize the journey to wealth building is that say from age 20 to 45 is the make wealth phase. And then from 45 all the way to when you land the plane for retirement is the maintain wealth phase. It is the thing that people miss out on. If somebody came into a windfall of a half, half a million dollars like this example laid out, and you put it all into the house and then your behavior never started creating your army of dollar bills. You didn't really make the wealth. You, you, you kind of went and bought a house. And then how are you going to live off that money when you actually reach the retire? And when you reach retirement is that you have to sell the house. And a lot of people, you know, we're trying to take away as many variabilities and things

• 52:53Brian Preston?

  that, that you have to make hard decisions when you get close to retirement. Because hopefully you're getting rewarded for the good decisions you made at a much younger age. So that's why I like for a young person, let's build your armies, army of dollars. You actually make the wealth. It's not assured that so many Americans never actually build the wealth. Now, if you're getting this and you came into this 500,000 and you're 50 years of age, then yeah, let's, let's de-risk this thing. You're probably at a good place, pay cash for it at that point. Cause also the wealth multiplier is much lower. The opportunity cost is so much lower from a risk standpoint. That's the thing that drives me crazy is when I find out 30 year olds aren't funding their Roth IRAs, aren't maxing out their 401ks, but they pay cash for a house.

• 53:37Brian Preston?

  Okay, that's great, but man, oh, man, what, look at what that could have become in the long term. And you think that you've de-risked, but the risk, there's still a risk. The risk is you never built wealth.

• 53:49Speaker 04

  That's right.

• 53:49Brian Preston?

  That's the thing that I think is never taken into account. I, I understand what risk is and I, and I, but there's a balancing act on also making sure you, you build wealth in the background. So your army of dollars and you can actually own your time that much sooner. This is why I don't do good on rapid fire. That was probably two and a half minutes.

• 54:09Speaker 05

  That's alright.

• 54:09Brian Preston?

  On a 30 second question.

• 54:10Speaker 05

  Hey, you answered the question.

• 54:12Brian Preston?

  And then the last one that I had was the person with $2 million in their 401k. We definitely would, that would depend. I would want to custom look at your financial plan, Monte Carlo simulation, look at all your goals. And then tell you, and then I'd want to do the due diligence to find out.

• 54:28Speaker 04

  Not all private placements are created equal.

• 54:29Brian Preston?

  Yeah, I mean, some of them are good, some of them, but a lot of them aren't. You know, a lot of people are sold off the sexy sizzle of this is what rich people do. I'd need to do some due diligence. How much of the managing partners or the general partners of their money is in the deal? How much of their mom's money is in the deal? There's all kinds of questions I go into. And what's the, what's the percentage cost that they're charging you on annual operating? There's all kinds of things. And then how does that fit into your own personal goals?

• 54:58Speaker 05

  Mm-hmm. That's good stuff. That's why you guys are so good at what you do. I like it. All right, we do have time for at least one, maybe two more questions. So are you ready to dive in?

• 55:07Speaker 04

  Can I share one thing?

• 55:09Speaker 05

  You can.

• 55:10Speaker 04

  You know what's really hard about dad jokes? Um, my, my kids and I, or my family, we went on a.

• 55:15Brian Preston?

  See, this is why Bo had a head start on me. He has books.

• 55:18Speaker 04

  Well, that's what, that's what I was going this. Uh, we, my family went on this vacation, right? Just us, little state park. It was awesome. It was wonderful. And we ate at Cracker Barrel because we're awesome. And at Cracker Barrel, there was a joke of dad books right there. And my kids were like, dad, dad, dad, we want to get all these candy. I'm like, no candy. But they're like, dad, we'll get this. And I'm like, alright, we'll get the joke book. And so we got it. And I love a good joke. I love dad jokes and they're fantastic. My kids also love reading them and they don't listen to the show. So this won't hurt their feelings. They are horrible at delivery. So do you know how bad it is? Like when they'll like read the joke and they'll say the punchline, but they kind of say it wrong. And then I connect the dot with the punchline was supposed to be.

• 56:01Speaker 04

  And then I'm just sad because they missed a huge opportunity to deliver the joke. We did this all the way from Kentucky to Tennessee.

• 56:09Speaker 04

  That part was just, that part was for free.

• 56:11Brian Preston?

  That's what you're supposed to teach them.

• 56:12Speaker 05

  They're practicing.

• 56:13Speaker 04

  I know, I did.

• 56:14Brian Preston?

  Sound inflection, your voice and other things. This is the mentorship.

• 56:18Speaker 04

  I know, that was what we're, we're.

• 56:20Speaker 05

  Guys, let's try it again.

• 56:21Brian Preston?

  That's seven, eight, nine. That was done.

• 56:24Speaker 05

  I thought that was actually really good.

• 56:25Brian Preston?

  I mean, I was impressed. I was like, oh. Not worthy. I was really impressed with that because it fit within the financial order of operations too.

• 56:34Speaker 05

  Right. It was good. I mean, Bo only took one swing, but it was, it was a good one.

• 56:38Brian Preston?

  Hey, I've done no tangents today. Can I, can I give one tangent? I wore this shirt on purpose because it is Masters Week.

• 56:44Speaker 04

  Oh, it is Masters Week.

• 56:45Brian Preston?

  I get very excited about Masters Week. Um, so I don't know. That was my tangent.

• 56:50Speaker 05

  That was it?

• 56:51Speaker 04

  That's the shortest tangent you've ever gone on is that I'm excited for Masters Week.

• 56:55Speaker 05

  You're allowed to say that.

• 56:55Speaker 04

  Love that.

• 56:56Speaker 05

  Great. All right. Let's go to another question. Guys, we've got another good username. It says, what's up, Foo? That's who's asking this question. It says, I'm.

• 57:05Speaker 04

  I'm sorry, what was the username? I missed that, Revi.

• 57:07Brian Preston?

  What's up, Foo?

• 57:08Speaker 04

  I just, I had the way she delivered it. I was kind of, she was, she was.

• 57:11Brian Preston?

  What's up, Doc?

• 57:11Speaker 05

  Are you going to coach me on my delivery?

• 57:13Speaker 04

  No, no, no. You was awesome. I was actually a fan.

• 57:16Speaker 05

  Okay. Let's get to the question. It says, I'm 35. I have about 40% of my investable assets in an old employer 401k. If I move it to my new 401k, the money will be uninvested for about a week, about a week. Don't like that. How do you think about this?

• 57:34Speaker 04

  Yeah, this happens sometimes. Sometimes when we move assets, uh, companies will require you to liquidate, cut a check, mail a check, check gets deposited, check gets reinvested. And I have clients ask me, hey, I'm so nervous about time out of the market. I'm so nervous. I'm so nervous. At the end of the day, it's a little bit of a coin toss because think about this. What if you sell today? And the market's up and over the next four days, the market goes down and then you buy back in. You basically got some free return. You basically like accidentally timed the market in the right way. Now, it could also go the other way. You could sell today and the market's low and then when you buy back in, the market's high. Hopefully, what you're hoping is that this does not happen in like a week of extreme volatility. But by and large, even if that did happen, if you fast forward a year.

• 58:19Speaker 04

  Three years, five years, 10 years, 20 years out into the future, it probably will not have mattered. Those four days probably will not have made a significant difference.

• 58:29Brian Preston?

  So what's up, Foo, is I agree with Bo exactly. This is noise. This is not something. But now with that said, here's what you can do to set your mind at ease. I want you to completely, you know, research what the actual process is. So then you can actually create contact points. Like if you know, okay, I'm going to have to place the trades to sell. And then, okay, how many days before the now the money, the check will be sent? You can then follow up. You can call back and say, okay, was the check cut on the day that you guys told? Okay, was it sent? And then you can expect, then when it's supposed to arrive, you can call to make sure that the receiving custodian actually received it. You can shepherd the process so that less stuff is likely to fall apart.

• 59:13Brian Preston?

  That's what we do. That's one of the reasons that people are like, aren't you worried AI is going to take your job? I'm like, no, have you seen how our admin team has to go shepherd transactions through? I think that element and plus all the government regulations and other stuff that goes with it, that part is going to be hard to just automate away.

• 59:35Speaker 05

  That's great.

• 59:35Brian Preston?

  Doesn't mean they won't add tracking. There's definitely things that they could do, but having somebody call and go, hey, put my stuff to the front of the line, is not going to go away.

• 59:45Speaker 04

  And when in doubt, always, if you can, try to transfer assets in kind. A lot of times you can, hey, what I want to do is I want you to move. If I've got a 401k at Fidelity, I'm moving it to an IRA rollover at Fidelity. Oftentimes, if the investment options in there are publicly traded, it's not like pooled vehicles. They can do an in-kind transfer. Well, I owned S and P 500 over here. I can move it over here. It's just a much more efficient way to transfer. Whenever we bring on a new client and they have assets somewhere else, we transfer everything in kind that we can so that we can do the tax analysis to determine, okay, what's the appropriate way to diversify, to reallocate, whatever, understanding the tax consequences,

• 1:00:26Speaker 04

  but also minimizing that friction of actually being out of the market for any period of time. So ask your provider if transferring assets in kind is an option.

• 1:00:36Speaker 05

  That's great. Good stuff. I think we have time for one more.

• 1:00:39Brian Preston?

  Yeah, let's do it.

• 1:00:39Speaker 05

  Let's do it. This one is from HomeReno238, and you will see why that is his username. 238 for windows? If windows will be 30 to 40K, more than we would spend on a car and would last longer, can we use the 238 rule? I'm in step six and over 1.2 million dollars saved, under 40. Wow, he really like, I mean, he is making his case here. The 238 rule is normally for buying a car that you really just need for your family and you can't pay cash for. So what do you think about doing that?

• 1:01:15Brian Preston?

  I mean, I see, but this is, this is like you find out that, you know, apple and oranges are both fruit. So you're like, okay, since they're both fruit, I'll use the same, they're not, they're not the same. I mean, it's.

• 1:01:28Speaker 05

  You can't make like an orange pie.

• 1:01:30Speaker 04

  I'm trying to follow the analogy. I'm trying to follow the analogy.

• 1:01:32Speaker 05

  You can make an apple pie, but you can't make an orange pie.

• 1:01:34Brian Preston?

  What I'm saying is, is that just because the 30 to 40,000 dollars is similar to the purchase price of a car.

• 1:01:39Speaker 04

  Right.

• 1:01:39Brian Preston?

  It's a different transaction, even though it looks like it, you know, it's, they're both, you know, transactions about the same size. But I love the, you're essentially a financial mutant creating games or, or systems to pay this off in a reasonable time. You've built a 1.2 million dollars in your under 40 years of age. You do whatever you want on, on paying for those, those windows. I mean, it's perfectly fine, especially if that's a communication tool with your significant other.

• 1:02:06Speaker 04

  Yeah, I, I think that there's nothing wrong with financing home improvements, especially that these like, uh, energy improvements like windows and that sort of thing. It's not like you're putting in a, a pool or something like that. Uh, so I don't think it's crazy. You can determine based on your own financial situation, what's the appropriate way to finance that? Should I finance it over three years? Should I put 50% down? How should I think about it? Nothing wrong with that, uh, but I love the idea of you doing the improvement and paying it off quickly as opposed to dragging it out over the course of the rest of your mortgage.

• 1:02:36Brian Preston?

  But don't expect to see a new slide on the Money Guy Show with the 238 for windows.

• 1:02:44Speaker 05

  You heard it here first. It will not be an official rule for buying windows with leverage. Okay.

• 1:02:49Brian Preston?

  Did I at least salvage the fruit analogy?

• 1:02:51Speaker 04

  No, no, I got it. I got it.

• 1:02:52Speaker 05

  I got what you were saying.

• 1:02:53Speaker 04

  You know, Rebi helped me. I don't know if you heard it because I was kind of listening out. I was listening with you this ear and her with that ear. She's like, you wouldn't, you wouldn't say just because apples and oranges are fruit, you can make an apple pie using oranges. And like that, I kind of got that.

• 1:03:05Brian Preston?

  Yeah. It's funny you say it because marmalade is like my least favorite jelly. And that's a southern thing that people always show up with marmalade. I'm like, why would you put this and ruin toast with marmalade?

• 1:03:16Speaker 05

  Wow.

• 1:03:17Speaker 04

  Toast?

• 1:03:17Speaker 05

  Finding words.

• 1:03:18Speaker 04

  Nah, we eat biscuits around here, brother. Not toast.

• 1:03:20Speaker 05

  What kind of southerner are you? What are you doing?

• 1:03:21Brian Preston?

  No, but biscuits, you sop up stuff. I'm not putting, I don't put, I don't put jelly on my biscuits either because I'm using them to sop it up.

• 1:03:28Speaker 05

  Oh, man. Well, this has been fun. This has been a great live stream. Just because we turned the cameras off today does not mean the fun or the personal finance talk stopped. Just go to moneyguy.com to see our full archive of content, plus tons of free resources to help you continue the conversations. A special shout out to our brand new parenting resource, A Guide to Parenting for Financial Mutants. Moneyguy.com/resources is where you can find that and more for free. So be sure to check that out and we'll be back next Tuesday, live at 10 a.m. Central here on YouTube.

• 1:04:00Brian Preston?

  And I want to thank the production team for helping me avoid crisis. I mean, we got down to about 2% on the battery. I'm happy to report we're sitting at 14%.

• 1:04:09Speaker 05

  Wow.

• 1:04:09Brian Preston?

  So well done, team.

• 1:04:11Speaker 05

  What a redemption act.

• 1:04:12Brian Preston?

  Guys, just like we pulled this thing up, we were flying it straight towards the, the ground. You can pull up your personal finances and live your best life with the Financial Order of Operations. I'm your host, Brian, joined by Mr. Bo, Money Guy team.

• 1:04:25Speaker 05

  Out. 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.

• 1:05:04Speaker 07

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• 1:05:39Speaker 07

  It's time to cozy up with Panera Bread. Let's get toasty, cheesy. Oh, hello broccoli cheddar soup in a bread bowl. How about melty? Okay, Chipotle Chicken Avo Melt. It's dipping bread and soupy goodness season. Oh yeah, we are so back. It's Panera season. Order now.