Pod Insights Money Guy Show X% of Americans Don't Have $1,000! About this episode Bankrate is back with their annual survey of how Americans would pay for an emergency...and the results are not promising. We then jump answering questions from Financial Mutants like you!
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:05 Brian Preston? It's that time of year where bank rate reminds us of the horrible stat of how many people can come up with a thousand bucks.
0:13 Speaker 01 Brian, I am so excited to talk about this because I really believe, deep down in the fiber of my being, that we can improve this. And I think that every single time we turn on the cameras, every time we do this, we're helping change this statistic a little bit, even if the numbers don't necessarily substantiate that.
0:31 Brian Preston? I love the optimism because, you know, we're always glass half full around here, optimistic. But if you just take a stroll down memory lane and actually look at the historical data, guys, I mean, if we were setting a bus schedule, you would probably have great customer service ratings on how consistent you are. Like, that bus is always coming in on time. Because if you can set a clock to the fact that Americans, according to bank rate, it's right around 60% of people have trouble coming up with a thousand dollars.
1:06 Speaker 01 Now, we thought that coming out of the pandemic, like coming out of 2020, 2021, we saw the numbers decreasing, right? Like, it was 60%, and then it went down to 56%, 57%. And we thought, you know, maybe, maybe the general public is catching on. They're saying, you know what, having an emergency fund makes sense. Making sure that I can cover a disaster makes sense. But I don't know that that's what has been reflected in this most recent year.
1:33 Brian Preston? I do want to set the stage because this has happened twice now as we show this data. This is kind of like a golf score. Lower is better because that means people can actually come up with the money. So if we are, in 2024, the number was 56%. We're shooting for this number to go below 56%.
1:54 Speaker 01 And yet, when Bankrate did this survey last year, they found out that 59% of Americans, it's back up to almost at 60, could not come up with $1,000 for an emergency. And that's a devastating place to be because there are all kinds of unknown unknowns that can come our way and in today's day and age, it's just not hard to have a $1,000 emergency happen to you.
2:21 Brian Preston? Well, let's do better than that because I hate taking, I like turning bad news, let's take these lemons and definitely turn it in, eliminate or find the silver lining. We wanted to kind of go ahead and equip you with how do you come up with a thousand bucks? How do you make sure you're not in this bad situation? First of all, you're watching The Money Guy and likely you've subscribed to The Money Guy Show. That already, I'm just assuming that's the 41%.
2:44 Speaker 01 Moving in the right direction.
2:45 Brian Preston? But just because of statistical numbers and we're kind of good at math, not public math, is that you know people, you know people that need help with this. So we put together a list of some of the latest and greatest things that you can save money.
2:59 Speaker 01 Here's the first one, maybe do a review or an audit of all the subscriptions that you're paying for. You know, back in the day, we used to cut our cable so that it would save us money. But then, we cut our cable and we replaced it with YouTube TV and then Hulu and then Paramount Plus and then we have Netflix, then we have Amazon Prime and then we have on and on and on and on.
3:18 Brian Preston? Taylor Sheridan, who would have thought that this guy was going to make me go figure out a hack so I could get the Paramount? I didn't even know what Paramount Network was.
3:26 Speaker 01 Oh, you do now though.
3:27 Brian Preston? But here's a good, let me go ahead and give you guys a clue. I found out that my Amex subscrib, you know, my Amex credit card lets me get a free Walmart. Okay, Bo, we're doing a live show, but you keep your, just keep your audio on.
3:41 Speaker 01 I'm like, listen to you twice.
3:43 Brian Preston? That goes, that goes good. But so Walmart Plus, where they're trying to compete with Amazon, you can get a free subscription of that through Amex.
3:52 Speaker 01 So they're even.
3:53 Brian Preston? And then if you have Walmart, you get Paramount free.
3:56 Speaker 01 So if you are going to have subscriptions, if you are going to participate in that and that is something that you find value and it adds utility to your life, find the best ways to do it. One, cut down on the ones that you don't need and two, if there are less expensive ways or there are hacks around how to get it for a lower price, make sure to, that's one way to potentially come up with $1,000.
4:17 Brian Preston? We put on here, the content team put meal prep, cheap meals, shop at cheaper grocery stores. I wanted to steal some of the thunder that came from Millionaire Mission. Cause on page 42, I have the $200 a month challenge. And one of the things, cause it's kind of an echo of what we did on the content here is that I recommend doing a pantry audit. Do you know how many times, now look, at the house right now, we're without mayonnaise and the whole family's ticked off. Cause I bought a deli sandwich from Publix this weekend.
4:45 Speaker 01 Okay.
4:46 Brian Preston? And they didn't put enough mayonnaise on there.
4:48 Speaker 01 You need some more mayonnaise.
4:49 Brian Preston? And they were like, can we get, and I went and opened the fridge and I was like, oh, I guess the pantry audit was too effective because we have no mayonnaise in the house. But there was a season where we had like two ketchups, three yellow mustards. And it's because you go to the grocery store, you know, you're cooking a meal and you just buy condiments, you buy other things without doing an audit first of why should I go buy more of this if there's already this stuff sitting in the pantry or in the fridge?
5:13 Speaker 01 Yep. It's little decisions like that. Maybe it's just tracking your expenses. If you're not watching where your dollars are going and being intentional with that, it's not going to be surprising that all of a sudden you find at the end of every pay period or end of every month, you're having a hard time just making the ends meet because money is running away from you. So maybe you should try something creative like a no spend challenge. Hey, here's what we're gonna do. Uh, we're gonna buy groceries on Monday or on Sunday, and then from Monday to Friday, we're not gonna spend any money. No out to eats, no coffees, none of that, just for a season to see if we can get that thousand dollars built up so that we can begin moving along in the financial order of operations, building towards a fully funded emergency fund.
5:51 Brian Preston? Look, I hate budgeting and doing all that stuff, but you have to do it initially. If you're not disciplined, living on less than you make, you'll never have the opportunity to own your financial life. So lean into these little things in the beginning so that you actually can truthfully be the master of your time that much sooner and work because you want to, not because you have to.
6:14 Speaker 01 And Brian, you've already said this, uh, one of the things that you are already doing, one of the decisions that you've made to move you in the right direction of making sound financial decisions is just tuning in to this financial. Financial show, just listening on how you can do money better. And we want to make sure that we continue to equip you to be able to do that. And one of our favorite ways we get to do that is every Tuesday morning at 10 a.m. We want to load you up. Whatever financial questions you have, we want to speak to those so that you can indeed do money better. So right now, we have the team out in the wings collecting your questions. If there's something you want us to weigh in on, make sure you get it in the live chat right now. So with that, Creative Director Rebi, I'm going to throw it over to you.
6:59 Brian Preston? Before you jump into a question.
7:00 Speaker 01 I'm going to throw it back to Brian.
7:01 Brian Preston? No, no, I want to talk to Rebi.
7:03 Speaker 02 I'll throw it back to Brian.
7:04 Brian Preston? I've talked to you enough, but you're already... By the way, I'm on five hours of sleep, so this is you getting five hours of sleep, Brian, tonight?
7:10 Speaker 01 That's a good...
7:10 Speaker 02 It's exciting.
7:11 Speaker 01 Five hour Brian's a good Brian.
7:13 Brian Preston? Spicy title. We got a lot of spicy comments over the, um, the food's changing last week.
7:19 Speaker 01 Uh huh, yeah, yeah.
7:20 Speaker 02 Oh, yes.
7:21 Brian Preston? And I, look, I just want to be a moment of transparency. We knew that this was like an April 1st type thing. And that's why I love the, I can't, I don't know if it was Nick or Megan, they did the dot, dot, dot, and then wrote course.
7:33 Speaker 01 Uh huh.
7:34 Brian Preston? It was like the first part, they kind of finished the sentence.
7:36 Speaker 01 That was supposed to be the delivery.
7:38 Brian Preston? Yeah, it's, look, we get it. We don't do, we try to make clickable, not clickbait. We saw your comments, but we just realized we're not changing, we're not, we're not going. Some of you guys, I think you thought we, we've gone a whole different path.
7:52 Speaker 01 Well, what's it, uh, we went to the dark, and that does, we went on the dark side? Isn't that what they say in the Star Wars world?
7:57 Brian Preston? Yeah, something like that.
7:58 Speaker 01 Something like that.
8:00 Speaker 02 Yeah, you missed it.
8:02 Brian Preston? You know, you know who said that? Bubba Thet.
8:04 Speaker 01 Bubba Thet.
8:04 Brian Preston? No, I'm just kidding. That's, that's a Bo-ism right there. And it knows, almost putting Star Trek terms into Star Wars. And then, by the way, today, what is today, Rebi? What is something that's got us excited about today?
8:16 Speaker 02 Well, yes, um, if you missed it last week, Brian is totally right to bring this up. We had a title that said, "We're changing the food..." dot, dot, dot. And while the nine steps are the same, we want to come clean. Um, the course, the food course, everything that's in it, how it's presented, it is completely brand new. It's updated and it is launching today. You can go purchase it. And start watching and reading today. So if you go to learn.moneyguy.com, you'll see all the information on how to get your hands on that new Foo course. And if you've bought the Foo course in the past and gone through with the old version, you will be granted the new one today. So you can watch for emails about that, or you can log into your old course with your
8:58 Speaker 02 username and password, and you will see that show up at some point today. You may already have it. The team's working on that in the background. It'll happen today. So go check that out.
9:07 Brian Preston? Another thing, just being completely transparent. I felt like, because we showed a before and after, we did that in the show me. I felt like my belly was practically speaking in the first one. So it's also fun to see the transformation of how much belly fat I've lost.
9:22 Speaker 01 Glow up, man.
9:23 Brian Preston? Well, it's just that, I mean, I was amazed. So this course is, because the first course was good. I don't want to take anything away from it, but I gotta tell you, the content team, Bo, you, I don't know if you were embellishing it, but it almost brought a tear to your eye that, just to see.
9:39 Speaker 01 It was amazing.
9:40 Brian Preston? We have reached a level of content creation and production value that this is kind of what we aspire to. Because, you know, the thing is, when you start building something, you get to a point, you make the best version of what you can do, and then you hope that it reaches the goal. But something is better than nothing, because this message is so strong, it needs to be out there. This one is the culmination, and it just, it really goes in places that excites me.
10:09 Speaker 01 I agree, completely.
10:10 Speaker 02 Love it. Well, on that note, we do have a list of questions piling up here on my screen. So we're going to kick it off with a question from FoolishMortal.
10:20 Speaker 01 I see what you did there.
10:22 Speaker 02 It says, "Good morning, Money Guy team. Looking to build a house this fall, and I know you say 25% of your gross income, that's part of our housing rules. The trouble is, my wife will likely reduce her work at some point in the future when we have kids. What income should we use for that 25%? It would be safest to use just my income, but we'd like a nicer house. Would saving up some money and then recasting before she reduces her income be a good strategy?"
10:54 Brian Preston? I'm glad that he's asking this question now.
10:56 Speaker 02 Yeah. It's the right question to be asking.
10:59 Speaker 01 It shows that you are a financial mutant in terms of the way you think. Because, okay, let's get sort of back to the basics. Why? Do we suggest and why do we implement the rules that we do? And one of our rules when it comes to home buying, by the way, if you can go to moneyguy.com/resources, we have a whole home buying checklist. We have a home affordability calculator. If you like foolish or kind of in this area trying to make this decision. One of the things that we say is that when it comes to your housing costs, you need them not to exceed 25% of your monthly gross income. Why do we say that? Because we know that life is expensive because in addition to what you're paying for housing, you might have an auto payment or student loan payments. You gotta pay for utilities. You gotta pay for groceries. You gotta have clothes.
11:43 Speaker 01 You gotta have gas in the car and this and this and this and this. And what happens is if you allow your housing costs to be too high and all of a sudden now your housing costs are 35, 45, 50% of your gross income. Well, you begin to recognize that you crowd everything out. Not only are you crowding out the things like necessities that you have to have, like gas, bills, utilities, but then you also crowd out your ability to build for the future. You crowd out your ability to save in the way that you should be saving. So the rule is not there so that you can say, okay, here's what I'm gonna do. I'm gonna go buy the house right now today and it's gonna satisfy 25%. I can check it. If you know for sure that your wife is gonna take a step away
12:25 Speaker 01 and you know that the income is gonna go down, you as a financial mutant need to think through, okay, when I'm in that moment, when I'm living that life and that is my reality, what's our income gonna be? And if we build this house and we take out this mortgage and we have this much blowing out to a mortgage every single month for the next 360 months, am I going to be happy that I made this decision? Or is it gonna stress me out and cost me future financial goals that I may have? So when I hear this, Brian, I'm immediately thinking I would do it off of the reduced income amount, not the present day income amount.
13:02 Brian Preston? Well, I've got, because I want to give some life advice and then boil it back down to, I always get nervous about saying any of the boiling words, but to some things, actionable things to do. The first thing I wrote down was children. By the way, children are a blessing, but...
13:24 Brian Preston? Do they make life more or less stressful, especially when they're babies? Beau, you have a little one in the house.
13:30 Speaker 01 I'll take that one, Alex. What's more? For 10 million.
13:33 Brian Preston? So definitely, the alligator is eating the more. If you're looking at greater than or less than. So it's definitely more. And you think about the other thing, when you're dealing with stressful situations or moments in life, big life changes. Margin can be the peace of mind that gives you flexibility, lets you then not have to make desperate decisions. So having, controlling your fixed expenses becomes so much more important than going on the hope and the prayer that, yes, we like nicer things, don't we all? And then hoping that life works out. And that's why my transition point is, here's the first actionable thing to do.
14:16 Brian Preston? I would definitely do, put on your 3D glasses and do the three plan. The 3D plan, meaning that you go put your dream plan, maybe, you know, your wife quits working, but you get a big promotion, or you have some new income stream that comes your way. It's all hunky dory and everything works out beautifully. There's the down-to-earth plan. This is what you think happens. Your wife's income goes down, goes away, or down for a period of time. Your income stays about the same, you deal with it. And then have the do-do plan. Don't skip the do-do plan. You've got to play up the fact that maybe, you know, bad things happen all at once. It rains, it pours. Maybe not only does your wife, you know, take some time away from working, but you also either get demotion or your income goes way down.
14:59 Brian Preston? Plan accordingly, so you can kind of see what those scenarios are going to look like. And then here's the three things I quickly wrote down on the levers I think you can control. You can either save more right now. Hyper-focus on saving more, so you can put down a larger down payment, so that the 25% is still more functional. You can delay the decision until your finances catch up to where you can truly afford this and some of these life events have settled in. And then the other thing is, and this is the one, this is the cold water one. I don't like this one, but I have to give you all three of them, is you need to adjust your expectations. I mean, because I just don't want you, and that's why I like doing the 3D glasses plan, is it gives, it lets you look at all three of the scenarios
15:44 Brian Preston? across the spectrum, and you kind of choose what works out best for your family.
15:49 Speaker 01 I think that's great.
15:51 Speaker 02 Wonderful. Well, foolish mortal, thank you for that question. It was honestly a great question to be asking in your season of life. So, thanks for being here.
15:59 Brian Preston? Can I have one more sidebar?
16:01 Speaker 02 If you must, yes.
16:02 Brian Preston? I don't know if they can hear us. I have to be careful because the studio, you know, even though it's a great sound studio, the content, I mean, the admin team can hear us right across the door.
16:11 Speaker 02 What are you gonna say?
16:12 Brian Preston? We almost had a mutiny if we offered to do. So that's why I've realized we're gonna have to figure out how we share whether we're doing tumblers or not because we went a little rogue last week and I thought it was all good fun.
16:25 Speaker 01 Yeah, we got in trouble for it.
16:26 Brian Preston? We got in trouble.
16:27 Speaker 02 We had some inventory things going on behind the scenes.
16:30 Brian Preston? We're working on it.
16:31 Speaker 02 It's fine.
16:32 Brian Preston? We even, it was one of those team meetings where it's like we're cutting out M&Ms and we're doing this and even the tumblers came up in the team meeting. So I want y'all to know, this reached, us bringing it up made it all the way up into the team meeting last week. So, we're working on it for you guys. So I apologize we don't have tumblers this week to give away.
16:54 Speaker 01 But you know, we do have great financial information.
16:56 Speaker 02 Always.
16:56 Speaker 01 We give away in abundance.
16:58 Speaker 02 Abundance.
16:59 Brian Preston? I like that. Optimus. Glass half full.
17:02 Speaker 02 Speaking of, we have a question from Alec M. Up next. It says, "Does it ever make sense to prioritize mega backdoor Roth, if available, after the 401k match if you're behind in your after-tax bucket? I have the ability for a Roth 401k, but prefer the flexibility. I want to pursue FIRE." What would you say to Alex?
17:26 Brian Preston? Oh, see, I just gave a lot of context there.
17:29 Speaker 01 Alec, we're, okay, so we gotta, all right, you asked a big question.
17:32 Speaker 02 She needs some more information.
17:33 Speaker 01 We gotta unwind it a little bit. So, let me explain what mega backdoor Roth is really quickly. When you contribute to a 401k, most people think there are only two ways to contribute. You can do pre-tax contributions or you can do Roth contributions. There actually is a third way to contribute to a 401k called after-tax contributions, which are available to some plans. You don't get a tax deduction. You put the money in the after-tax bucket and then that money grows tax-deferred. And when you go to Pull it out, you pay taxes on the earnings, you don't pay tax on the contribution you put in, that's the after-tax bucket. Well, some plans will allow you to convert those after-tax dollars to Roth. Well, because they're after-tax, it's a completely tax-free conversion.
18:14 Speaker 01 You can either do it in-plan and it sits in the Roth bucket in your 401K, or you can do a conversion and roll it out to a Roth IRA. So it's a way to do some mega backdoor Roth. It's super, super exciting. If you think about like Section 415 limits being at like $70,000 a year, a lot of folks can do 25, 30, 35,000 in this mega backdoor. So that's what the mega backdoor is. Now, Alex said, is it ever okay to do the mega backdoor after the employer match? And I feel like what we just did, Brian, is we skipped from the very beginning of the financial reward of operations, all the way to the very end. Do you have, can you hold the, can you hold the thing up for me?
18:52 Brian Preston? Sorry, I'm, I'm five hours.
18:54 Speaker 01 So employer match is a step two, Brian. That's like a free money thing. I don't think in any circumstance ever mega backdoor, he asked about after-tax brokerage, it does not come in after step two. It comes in much later in the food. Wouldn't you agree?
19:08 Brian Preston? It's probably more of a step seven. It's six and seven.
19:12 Speaker 01 That's right. It's a much later thing. So the question is, should I ever do it right after employer match? I would argue, there are other things that you ought to be doing after employer match. Now, once you kind of get through step five, Roth IRAs and HSAs, and then you get to step six, maxing out your employer-sponsored retirement plan, and then you get to step seven, now, how does Alex decide, okay, should I do mega backdoor? Do I prioritize that, or do I prioritize after-tax? Because he said, hey, I feel like I'm behind in the after-tax. I feel like I'm behind in the tax.
19:42 Brian Preston? He gave us both. He kind of, he pulled this thing tight from both sides in the fact that if you're behind, but then you're also part of the FIRE movement, you're going to have to hyper-focus. Did he say he was behind, or are we making that part up?
19:55 Speaker 01 He said, if you're behind.
19:57 Speaker 02 He didn't say that specifically.
19:57 Brian Preston? The question is dropped off the screen.
19:58 Speaker 01 He said, if you're behind in the after-tax bucket.
20:01 Speaker 02 So I guess he is behind in the after-tax bucket specifically, yeah.
20:04 Brian Preston? Okay, because after-tax bucket, the reason we like for anybody who's part of the FIRE movement or FINE movement, the next endeavor, is that you're probably going to need some type of bridge account that replaces some of that income that you're no longer getting with your earned income. And the easiest bucket out of the three buckets, when we're talking about tax-deferred, tax-free, or after-tax, is that after-tax bucket. So I can understand why somebody feels like, hey, I've got all these. And by the way, this is why this is a step seven element, is because it's all these earlier ones are either to keep your life out of the financial ditch, avoid high-interest debt, get the free money. When you get to step six and then seven, a lot of this was tax advantage. It was driven by saving money
20:47 Brian Preston? on taxes so you could build for the future. When you get to step seven, now you're saying, how do I need this money? If I'm leaving the workforce early, I need to probably account for that. So I think, Alec, what I think about in your situation is, if you know you're leaving the workforce early, you've got to start modeling, what does that actually look like? So you can begin with the end in mind. And that's why, if you go to learn.moneyguy.com, we have the Know Your Number. You can actually, and what's cool about the Know Your Number course is, you can put in the different accounts, the different structures, and you can see how much you're going to need to save and build for. You can change inflation rates, you can change investment return rates. Play around with it, and then you can quickly decide, you can squeeze the balloon on different accounts, because maybe it's a combination
21:32 Brian Preston? of both. Because I would love, I love where your mind's at, because you're going to love Roth money over the long term, because that tax-free growth opportunity is priceless. There's a reason the government is restricting how much you can put into these accounts. So you'll definitely want to leverage and take advantage of that opportunity. But you still need that bridge account to get you to the normal retirement distribution ages, whether it's 55 for 401Ks, or 59 and a half. By the way, 55 for 401Ks is only if you depart while you're working for that company. So you might be stuck at the 59 and a half. Completely unless you annuitize it or do some other, you know, planning structure. But you got to, I love where your mind's at, but you've got to do, there's, there's some work.
22:14 Brian Preston? Homework and these variables, like I said, they get there. It's like a fingerprint. It's going to be different for every person. I look at your structure. I look at your goals. I look at your desires, but hopefully I gave you enough of the elements that you can start figuring out how to piece this together yourself.
22:28 Speaker 01 I'm just gonna throw one other thing on there because we have some like wicked smart listeners and fans out there in the audience and they say, oh, well, you could, no, you could do mega backdoor and there's still a mechanism through which you can access those dollars prematurely. We did a great show and I'm gonna, riding team, I'm looking at you guys because I don't remember the name of. We did a great show about like ways, like unconventional ways to retire early. That was not the name of it. If you search that on Google, you will not find it. Three ways to retire early.
22:55 Brian Preston? That's a much better title.
22:57 Speaker 01 We walked through some of these unique strategies. If you are part of the FIRE movement that you might want to consider. So that's a really quick little YouTube or Google search. That might also help you as you try to define, okay, what makes the most sense. For me, the last thing I'm gonna throw in here, Alec, this is a great example of one of those times where you're navigating into some more complex waters. Okay, the decisions I'm making today will likely have long-term impacts on how I retire and what FIRE looks like and when I leave the workforce and how I'm gonna access those dollars. This is a prime example of when it might make sense to realistically take the relationship to the next level. You've only likely done this once. If you work with an advisor who's counseled folks in this same stage of life, there's a really good chance they've done this tens, if not hundreds of times.
23:40 Speaker 01 So it might be great to get a second set of eyes, a second opinion. Uh, so we would love for you to consider taking the relationship to the next level if you're at the stage where that might make sense for you.
23:52 Brian Preston? I'm done with that one, but I did have something else to say.
23:54 Speaker 03 I saw your, I was like, is he gonna say something?
23:56 Brian Preston? I know. I was thinking, I'm looking over at the, the writing team, um, you know, making a millionaire. I was sad because by the way, hopefully we, we put your expectations that this is right now an every other week show. But man, I was, I was kind of like, I was like, maybe it's so cool.
24:12 Speaker 02 I think you were the one who was the most sad.
24:13 Brian Preston? Megan's Millionaire was out this Monday too.
24:15 Speaker 02 About it only being every other week.
24:16 Brian Preston? And you guys, the first, the first episode, thank you. I mean, it has done very well. We were very pleased with it. And I think y'all could see that it's something special that we're doing with, with the people who, who take the opportunity to be as transparent as they are and come on our show. I would love, because we, we're trying to mix it up. We have like our second episode. Is it okay if I preview that the second episode, what they, what their vacation is? Okay. I don't, I'm trying to make sure that after the, the camera cuts off, y'all go, what the heck are you doing, Brian? So we have a teacher who graciously came on and we were able to really help, help him out with a debt issue. That was really cool. So you guys can see that we're trying to mix it up.
25:00 Brian Preston? And one of the things I was thinking for the writing team, I would like to have a fire or find, you know, type person on the show at some point. That would be a cool thing to kind of address some of the things that, that Alec just covered. And so we are, and that's why if you want to apply to being on, Megan's going to kill me because we've already had like a thousand people apply. But um, what, what's the, what's the website for doing that?
25:22 Speaker 01 Moneyguy.com slash apply if you're interested in potentially telling your story and having us kind of do a deep dive on your financial circumstance. It's a lot of fun. Oh, it's awesome.
25:31 Brian Preston? Now you'll, now you'll get a million, I mean a thousand and a half. I said a million, a thousand and a half.
25:37 Speaker 02 Great. All right. Next question. Ready for it?
25:40 Speaker 01 Yes, ma'am.
25:41 Speaker 02 Joshie J. says, I've recently converted my first home into a rental property. It is a highly cash positive endeavor, which is great. But I've never maxed out my Roth, but this will be the year. Did I do this out of order?
26:00 Speaker 02 What do you think?
26:02 Speaker 01 Yes.
26:03 Brian Preston? But you don't know that.
26:07 Speaker 01 Here's what I think is interesting, and this is what I love about wealth building and building towards financial independence, is that no two paths and journeys are the same, and that's what's awesome. There are a lot of financial folks out there who'll tell you, "Hey, the only way to build wealth is to do this, and you have to pay this off in this time, and you have to do this thing and this thing." We recognize that it's a little more fluid than that. What we tried to construct in the Financial Order of Operations, Brian, we hold the thing up. What we tried to construct for you is a path that probabilistically will have the highest likelihood of successful outcome down the road. And so, one of the things we love to see young people just starting out do is max out Roth IRAs and fund HSAs.
26:50 Speaker 01 That's why we put it in step five. But if you're in a situation where, okay, you bought this first house, and you got into a house because that was a high-level priority for you, and now you have decided that you're going to move into a new house, and that house has turned into a rental property, and that rental property is very positive in the cash flow, that's a wonderful thing. That's not something where, "Oh, how dare you have gotten it out of order." But I would encourage you, now that you're at this stage, you probably have missed some opportunity. There probably are some years of Roth contributions you won't get back. So, you can't go back in time and get those. What you can do is not miss this year, and as of right now, you can technically not miss last year. So, if you've not been funding that bucket, now you have this, like, grotesquely positive
27:33 Speaker 01 cash flow coming to this rental property, and you have tons of free capital and free liquidity, I would take a look at the Financial Order of Operations. You can go to moneyguy.com/resources and download your free copy. And I would say, okay, where am I? Where do I have holes? And where do I need to go start to bolster this up so that I can make up for getting a little bit out of whack?
27:53 Brian Preston? I think you're just the bad cop.
27:54 Speaker 01 Oh, that was such a good answer!
27:56 Brian Preston? It was a great answer. But here's, I want to give Joshie J., sounds like a rapper name, a little grace here, in the fact that what if Joshie J. Bought a town home with his significant other and you know, and they thought they were going to be in this town home for the next five years before they had kids and then you know, things happen and 18 months in, pregnant, you know, like, oh my gosh, you know, probably this, this town home because of the stairs where the nursery is going to be and other things, it just doesn't line up.
28:30 Speaker 01 You've read the whole movie script for Joshie J.
28:32 Brian Preston? I've already helped Joshie J. I'm, I'm filling in gaps for him and now they realize, you know what, but this house is appreciated because of the, the inflation post pandemic. And, and I don't want to take advantage of the tax-free growth and this thing's, as he's already, it's fabulously from a cash flow, or maybe he's just doing it for a moment in time, you know, he's going to take advantage of the cash flow for two or three years and then he's going to go take the tax-free gain. I don't know, I'm writing this script in all kinds of ways, I don't need to, but at the end of the day, it, I always say, you have to take people what they come. I mean, when I financially do financial triage on somebody, I know there's mistakes. I've made lots of mistakes. I didn't all figure out. I've tried to give you the shortcut with the financial order of operations. So you
29:15 Brian Preston? don't have to make the mistakes I've made, but I'm never going to be one that tries to club you over the head with the foo and tell you, okay, you're, you've made a horrible mistake. I'm going to try to now tell you from a triage standpoint, how do we get you to your next best step? So I love the fact that maybe it is, this is better to be lucky than good sometimes. Rental property is now lucrative on the cash flow is allowing you to max out your Roth. Get back on track. I mean, I'm not going to, I'm not going, I've already done enough guestimating on how you ended up here, but now I want you to maximize every dollar that comes into your army of dollar bills and the financial order of operations is going to be really that guide or that compass to help you make it there that much faster.
30:00 Speaker 01 Love it. We said the exact same thing, actually.
30:03 Speaker 02 I was going to say, I cut two different flavors, but kind of got you to the same place.
30:07 Brian Preston? Did you see that? That thing, it almost decided to attack me. It's all these cords. Good cop, bad cop?
30:12 Speaker 01 I'm such a good cop.
30:15 Speaker 02 You can be the judge of that. All right. Matthew M. is up next. You good?
30:19 Brian Preston? I have one more thing to say.
30:21 Speaker 01 I dropped my pen.
30:22 Brian Preston? But, the Super Bowl.
30:25 Brian Preston? Did y'all see?
30:26 Speaker 02 Where are we going?
30:27 Brian Preston? Did y'all see the commercial with the mustaches that were attacking stuff?
30:31 Speaker 01 Pringles, the Pringles commercial?
30:32 Speaker 02 Oh, I think I saw part of it.
30:33 Brian Preston? I don't even know, I was so, you know, traumatized by it. I didn't even see what the product was. So, good for you for giving Pringles that.
30:40 Speaker 02 Was it Pringles?
30:41 Brian Preston? Was it?
30:42 Speaker 01 Uh, aren't Pringles, Pringles are the chips in the can, right? I'm not, was it Pringles?
30:46 Speaker 02 I don't know. I didn't, I didn't pay attention.
30:47 Speaker 01 Yeah, yeah, it was Pringles.
30:48 Brian Preston? This is the benefit of, it's like photo friend.
30:50 Speaker 01 Wasn't it, um, is it Ron Swanson? Isn't that, uh, the guy's name? Uh, Ron Swanson and James Harden, they, their mustaches got switched.
30:58 Brian Preston? Look at you knowing all the people, different genres.
31:00 Speaker 01 Look at me.
31:01 Speaker 02 I'll have to rewatch it.
31:01 Brian Preston? For a guy who doesn't, um, oh, money, we're not, you guys are bad. Yeah. By the way, Pringles, if you are looking to do a sponsorship shop.
31:12 Speaker 01 We're, I'll grow the mustache back.
31:14 Brian Preston? Obviously, Bo, Bo will grow a mustache off and make me really strangely uncomfortable, but we'll hold up a can of Pringles for you.
31:21 Speaker 02 Okay.
31:22 Speaker 01 Where were you going with that? Just, oh, I saw a commercial that had mustaches and everything.
31:26 Brian Preston? You and your 70's stash, that haunted me for weeks and the audience loved it. I don't know what got more engagement.
31:33 Speaker 02 R.I.P. to the mustache.
31:34 Brian Preston? Actually, your mustache got a lot more engagement than the members on the jacket.
31:38 Speaker 01 Members only got a lot too, though. I love it.
31:41 Brian Preston? And by the way, it's, it's, it's a very, you know, it might be, you know, just like you have Republicans, Democrats, you know, stash, no stash? It's, it's like, there's a solid division there in the country, very solid division.
31:55 Speaker 01 Some people that very much did not like it and some people that very much liked it, so.
31:58 Speaker 02 Oh, my goodness.
31:59 Brian Preston? Some stash extremists, if you will.
32:02 Speaker 02 All right. Well, um.
32:04 Speaker 01 Remy said, how'd we get here?
32:06 Speaker 02 I don't know how to transition out of that. So, we're gonna go to the next question. Matthew M. does have a question for you. It says, what will happen to my HSA fund if I leave my company's health insurance and join my wife's once we have a baby? I know how much you guys love HSAs, so can you speak to this?
32:28 Speaker 01 Uh, okay. It's a great question. Let me tell you, can I tell a personal story?
32:31 Brian Preston? Yeah, and then you tell us what the answer is, because that looks like a technical thing that Bo would know.
32:34 Speaker 01 Oh, this is a super, this is not a hard one. So, a lot of people think, oh, okay, well, I'm, I'm. I'm participating in this high deductible health plan. It makes me eligible for a health savings account. And so we're going to fund the health savings account. But man, what if I change jobs? Do I have to also move the HSA? Or if I jump onto my spouse's, do I have to do that? No. A really interesting thing that happened in our life, you know, in my wife back before we had kids, she was a school teacher. And we took advantage of the high deductible health plan in the school system that she worked. And she had HSA availability. So we started funding the HSA and that's how we funded it for our, you know, doing the family maximum, whatever. Well, she ends up retiring and we end up implementing a health and-
33:16 Brian Preston? She's not really retired.
33:17 Speaker 01 Well-
33:19 Speaker 02 Did you say she's retiring?
33:21 Speaker 01 She retired. She had a great financial advisor. She did it earlier.
33:24 Speaker 02 Heard of the fine movement.
33:26 Brian Preston? We've already seen, like today, one of your cameras went off in the house. And I was like, that doesn't look like retirement at all.
33:32 Speaker 01 That's right. And so what happened is even though we had a high deductible plan here at Abound Wealth, I was still able to, because we already had the HSA opened up. We already had the dollars invested. It was already sitting at fidelity. And even though it just happens to be in my wife's name, because it was part of her plan, we're able to fund that HSA account as a family. So you don't have to move it necessarily if you don't want to. You can leave your HSA where it is. Now, here's what does happen though. If you have HSA dollars and when you go to jump ship and you go join another health plan and that health plan is not a high deductible plan, just because you have that HSA account open and you have dollars in it, does not mean that you can put more dollars into it.
34:13 Speaker 01 You can still use those dollars and you can still satisfy medical expenses with those dollars, but you cannot put more money in if you change plans and the new plan is no longer eligible for HSA. So it's a great opportunity for folks to let those dollars continue to grow. You can use them as like a pseudo retirement plan. You can be part of the, was it 4% of Americans that are triple tax advantaging their HSAs? But just because you change jobs or move employers or whatever, does not mean they have to do that. I'm going to say one other little brief aside.
34:45 Brian Preston? Well, I was going to ask one more clarifying question. Does the plan type of your health- Wealth insurance because what if you have individual versus
34:52 Speaker 01 Oh, sure.
34:53 Brian Preston? One or above. That does have an impact on
34:55 Speaker 01 How much you can contribute.
34:56 Brian Preston? How much you can fund it.
34:57 Speaker 01 Absolutely. You know, if you are eligible to make the individual contribution or the family contribution to the HSA, and that will depend on how you guys are covered and who's actually covered under the high deductible.
35:07 Brian Preston? Because the way you, the scenario, I just want to make sure for clarification. The reason your plan works is you are a family plan.
35:12 Speaker 01 That's right.
35:13 Brian Preston? When she was, and then now that you're still on a family plan, so it all works out.
35:17 Speaker 01 That's exactly right.
35:17 Brian Preston? It's copacetic.
35:18 Speaker 01 Yep. 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.
Previous 401(k) Mistakes That Could Cost You Millions Next My First Market Crash. Is This Time Really Different? Page updated November 4, 2026 · transcript and summary are machine-generated