The Playbook to Build Wealth With An Average Income

The Playbook to Build Wealth with an Average Income. Brent, I am so excited to talk about this because we say that building wealth is available to everyone and we really do believe that. We really do mean that. There's a lot of people out there that don't have huge incomes, that don't have the six figure incomes. We think that even if that describes you, even if that's where you are right now in your financial journey, it is still possible for you to build meaningful wealth. Let's reach people where they actually are. If you look at where the median income is per household here in the United States, it's a little under $84,000. Now look, I get it because we used household. That means if you're married, that's two people. Yeah, it's going to be tough. A lot of people are going to be out there telling you, you can't do it at all. I think you can. It is doable if you have a plan. You have to understand if you want to win the game, you have to describe for yourself what winning looks like. You have to decide, okay, this is what the number looks like for me to be able to live the life that I want to live on my terms and do the things I want to do. We got to give credit where credit's due. The fire community has done a wonderful job of this. Once they know what their objective is, once they've defined what the goal is, what the win is, they're able to really dive in and able to stay laser focused on moving in that direction. I think the average American hasn't quite figured that out. I remember we did a make-and-a-million era with Danielle. This is the thing. I love this idea that she had where she was doing coast fire where we were like, hey, you can do this. Why don't we show you what you need to save and be hot and heavy with the discipline so that you can down the road, take your foot off the accelerator and actually make this retirement and this financial plan work. What we showed her was, okay, once the objective was clear, once we said, okay, this is what you have to do. If you do this, then you'll end up here. It made it much easier for her to think, okay, I can execute. The same is true for you in your financial life, whether you're someone with a high income or low income. You want to specifically speak to those folks who maybe feel like things are tight right now. Things aren't, there's not a ton of excess sitting around when you think about where your earning power is right now. We want to kind of walk you through what the plan looks like and how you should think about it. We thought about a little bit of a sports analogy because we think that when it comes to, especially if you have limited resources, the thing that you have to focus on first, and this may be a little bit counterintuitive, is you have to focus on defense. Now, it may not be sexy. It may not be super exciting, but you've heard the expression, defense wins championships. Well, that's true when it comes to your personal finances as well. Well, the first thing in defense is your emergency reserves because this is the margin for making those desperate decisions that get you into debt, get you high interest credit cards and all the other bad things that lead to you being stuck and not getting out of the starting blocks of building wealth. Yeah, you need to define, okay, what is my emergency fund? Is it three months? Is it six months? How do I decide and then how do I get that in place? Because, as what Brian said, if you don't have that first step in place, it's really easy for you to get derailed. The other, the next thing when it comes to defense, and this is one that we want to make sure especially at lower incomes, it becomes tempting to try to skirt this one or try to get around. We've seen young people that really like to kind of like to fly naked, not fly naked, swim naked when it comes to skinny dips. Yeah, they like to skinny dip when it comes to health insurance, but we know that a lot of bankruptcy and a lot of financial failure is due to medical expenses, unknown unknowns coming your way. So we want to make sure that if you have a low income, don't just decide, okay, I'm going to go with the cheapest health insurance possible. I have the highest deductible possible because it does you no service if you have a health insurance plan in place, but it has a $15,000 deductible. There's no way you could even possibly meet that deductible. So make sure that you're not making foolish decision. Maybe you're doing it from a noble place. You say, I want to really fund an HSA and I want to take advantage of that. But perhaps HSA is not the high deductible plan is not the best fit for you. Make sure that you're figuring out how to navigate the health insurance side of your life. Well, then this next one, all right, all right is having reliable transportation because look, I know that looking cool is important, but that's not actually what's going to build your first million dollars. That's exactly right. We know that cars can be financial napalm. That's why we have rules in place like 23 eight to make sure that you can stay inside the guardrails. And when you think about staying inside the guardrails, one of the single best things you can do, and it doesn't sound sexy. It doesn't sound super exciting, but especially if you have a lower income or limited resources, you have to figure out how to budget. How do I put together the matrix of where my dollars should go and how do I stay inside those confines? Because if I don't know where my dollars are going, I can't know if I'm wasting them or if I'm putting them in the right places. And once you put down the budget and then once you begin tracking your expenses, it becomes a little more clear, okay, this is where I can cut. This is where I can save. This is where I can triage my financial situation to hopefully get to move into the offensive side. Well, I mean, the reality is 83% of Americans say they overspend. So if you're not at least keeping track of what's going on, how are you ever going to get ahead and actually own that discipline that creates the margin so that you can actually put that money to work? And once once you. Okay. So once you've mastered defense, now you can think about the offensive side. What are the things that I can do to now start positively impacting my financial life now that I have sort of the risks in the defensive side covered? And the first thing is this might be the easiest time ever to figure out how to increase your skill set, whether it be through advances in technology, whether it be through blogs, podcasts, articles, YouTube channels, whatever it may be, there are ways that you can increase your skill set, further your education, and ultimately hopefully make you more valuable either as an employee or potentially as an entrepreneur. And then always try to find the edge. How can you make yourself stand out? And that way you can monetize that expertise and that skill set that Bo just talked about. And once you figured out how to how to monetize that, then we want you to really think through how do I how do I be opportunistic? How do I find the places where I can insert myself to give myself the highest likelihood, highest probability of a positive outcome? And this might mean changing jobs, looking at a different company. It might even mean changing geographies. I need to move to a different city or a different town where there are more opportunities. If you can sort of hone in and figure those things out as you've increased your skill set, figured out where the monetization opportunities are and then capitalize on those opportunities, it puts you in a position to begin building towards the future. It lets you keep the business up front and the party in the back, if you know what I mean, too. That's right. That's right. If you can keep the business up front, it allows you to keep your foot on the gas. It allows you to say, OK, I've done the hard parts. I found the triage. I've created the margin. Now what I'm going to do is I'm going to start devoting myself to doing the right thing and continue to plow forward. And it's amazing that even if you don't have a huge income, if you don't have a ton of margin, a ton of resource, but you have a lot of time, even a little bit can do a whole lot for you. That's why we even talk about for a 20-year-old, one dollar has the ability to turn into 88 dollars by the time that you retire. So if you can start early and stay consistent, even at low incomes, even with little margin, you can still build meaningful wealth over the long term. So did you cover keep your foot on the gas? That was what I just said. That was awesome. So guys, now look, if you want, I was hoping I was like, because look, I was like, how am I going to keep this straight is because this was all I walked in the studio at at 950. Yep. And on our microphones was the mullet, the sunglasses, the chain, the mullets, mullets are back. Mustaches are back. I think aviators never went out. And I guess gold chains are about you. You look and you look. But what the why? What the why? Because you have to know your why is the admin team. I think they thought we were there to go pick on us because they had this sitting here. Now I picked it up and embraced this. Now, I think you honored the fact that you said, Brian, I can't remember if it was a year ago, two years ago, you were never doing so we swore costume, swore costumes. They don't help their gimmick. And I was like, all right, all right, let's get in. And you said, let's dive right. So now look, because it is it is a thumbnail day, which is the only thing I had to commit to this. So we probably have messed up the half. So we'll see how this goes. Can you imagine if we did all of our thumbnails for the next month or so? See, did I screw it up? I mean, it was still pristine. Okay, Ken gives me the thumbs up. I think you should just keep the glasses in the necklace on. I think so, too. I don't know. OK, we'll roll with this. This is I can't grow a mustache, but I can sure wear some glasses. You can wear some glasses. And I love, by the way, if y'all didn't know, Bo is growing his stash out. I can't unsee it now that I see it. And y'all know that is a pet peeve. It's coming. It's summer. Hey, look, it's summertime. It's time for bare feet. Shirts off, mustaches. Oh, y'all should know there was a whole outfit for Bo, too. He just too cool for school. He didn't want to embrace it. It wasn't too cool for school. I just felt like we needed some sort of balance, you know, yin and yang is what like we love to be able to create balance. We like to restore order to the financial chaos in your lives. That's why we like to show up here every single Tuesday at 10 a.m. So we can load you up. We want to answer your questions and speak to the things that you care about. It's while we have the team out in the wings right now collecting your questions. So if you have a question that you want to weigh in on, you want us to weigh in on, you want to get our take on something you want us to speak to your situation. Make sure that you get it in the chat, that you get it in the chat right now. Because we really, we really do believe that there's a better way to do money. Are you stuck? I thought you were going to come up. I mean, because we're going to turn this into stuff. I figured we were this far in. We should ruby. Did you think I thought he might do it? Yeah, I honestly thought this was like a new you. I thought that maybe this would be it might be a new you with gold chain. Is this thing to get the chain off? OK, I was unaware that you have officially sworn off costumes. Well, I think it was an unspoken rule, especially when I had Bowen, the Robin outfit and I was wearing back. I feel like that really probably has the die. I think we did 12 costume episodes after that one. I'll tell you the pandemic was a real it was a real. It was around 2020. It was a real adventure. We had done some before. Yeah, and we went through this phase. I think that's Mac. Well, you're that's how you know it's real. So we must have we have magnets or something over here. So with that creative director, I'm going to throw it. Yes. No, I have some great questions queued up. Keep dropping them in the last one. Did that because April Fool's is tomorrow and they never let a day early keep them from doing that's right. That's right. And if you do or if you come for a tour, there was a lot of talk about mullets last week and Brian in a mullet. There were some AI images of Brian in a mullet. So they just wanted to see it in real life. Did we did we release the AI brave or the Brian Braveheart? Yeah, that was awesome. Hey, by the way, if you're in the list, you saw it. If you're in the money verse, you saw it. It's out there. If you're curious, I didn't see it on Tom's cover. Sexiest man alive. Is it? Is it? We still have to come back to it. Yeah, I think we submitted. OK, that's right. If you wonder if this is an awesome place to work, it is. This is the kind of these are the kind of shenanigans we do. And if you are someone who's out there looking for a work home, we have a few positions available. Ruby, where can they go to check out our available positions right now? Go to money.com and click on join the team. I think it says shoot. I'm going to just double check. I'm telling you the right thing about and join the team. And we have all kinds of. I mean, really, you have all kinds of positions. We do. We need advisory. We have several administrative advisory editor, writer, looking for some high quality, amazing team members who love Money Guy and personal finance. So go check that out if you're looking for a job. OK, we do have some questions queued up. Let's start with egg, bacon and cheese, K7N. By the way, Bo earlier. Earlier asked for 10 scrambled eggs. So egg, bacon and cheese. You have no idea what you're doing to. I'm so hungry right now. He legitimately did ask me to find him 10 scrambled eggs, but I was working. So I didn't. Sorry. Maybe that was my question, though. Yeah, the question says bacon, egg and cheese. The question says, hi, team. What is your advice on taking for retirement, taking from retirement accounts to buy a home? I am 40 years old, 104 K growth income single 450 K in retirement accounts. I will be in this home for more than five years. So we are starting off spicy. Should I bacon and cheese bacon and cheese take from his retirement accounts to buy a home? What are our thoughts on taking? We don't like it. We know that there are certain provisions and certain rules where you can pull out certain money and be able to use it for that. But retirement accounts are there specifically for a thing. And that thing is your retirement. So if you and I were sitting down having a conversation, one of the questions I'd want to ask you is, OK, what other resources do you have? Is there a way perhaps we maybe don't pull money out of retirement? Was there a way we could adjust our savings rate? Can we go back in the financial order of up? Brown, you got the thing up for me? Maybe we've been in step five, step six, the financial order of operations. But perhaps we want to go back to step four so that we could begin building up so that we'd have a down payment so we'd then be able to use those dollars to acquire the home. And then I want to go through all the whys of home ownership. You said you're 40, you got 104,000 income, 450,000 retirement. You said you think you're going to be in the home for five years. I want to talk a little bit about that and ask the question. OK, why home ownership? What is what's the reason behind it? Just because this is the next box that you want to check, or is there some other thing that's driving that decision making? I'd want to dive into that. Well, you know, based off of coming from a public accounting background, we always see T charts, you know, pros, negatives, and you kind of put the debits and credits in their places. And I start looking at this and I know what you're thinking. You're like, hey, this is a big pot of money. I want a house. That's a positive access to capital. But then on the cons column, look, any of this money, especially if it's traditional retirement money, there's some big friction cost to getting this money. Not only do you now look a small portion of it, you could get access to and not have the the 10 percent early withdrawal, but but you still going to pay income tax. But then the majority of it, you would even have the 10 percent penalty if you really want to go, you know, whole hog on this thing and really load it up. And so that's a negative. And so there's a lot of transaction costs to get access to your money, as big tax had wind. The other thing is you need this money for retirement. I mean, you're you're slightly ahead of the curve. If you just think about the fact of you do three times your income, you're slightly ahead of the curve. But that's actually should be something to that creates a win to your back for the future, because that means your army of dollars now are starting to get separation where they compound on top of each other. Because remember that walk towards your first million, you're essentially potentially going to gut it if you if you start using that money right now. This is when all the magical stuff happens. So that's that's another negative is that you actually need this money for financial independence in the future. So I would strongly encourage you to figure out, can you really afford this house or are you trying to force it by going out there and making your retirement accounts leaky? And I know that we've done a lot of stats and research on the fact that the majority of Americans, this is a trap they fall into, is that they go and raid their retirement accounts to fund a house, to fund a car, to fund a swimming pool in the backyard. And I'm telling you, don't do it because your future self will thank you for the discipline. Find another way to get into this house so that you can live your best retirement. Yeah. And if buying a house is that you've kind of gone through the checklist and you've answered that, I would encourage you to go to moneyguide.com slash resources. Play with our home buying calculator. Because you've already told us your age, you've already told us your income. You know that when it comes to buying a first home, we subscribe to three five twenty five. You don't have to put 20 percent down. You'll have to put three percent down so long as you plan on being in the house for at least five years and the total housing costs don't exceed 25 percent of your income. So just kind of thinking through this logically, hundred thousand dollar income, twenty five thousand dollar housing cost is kind of where you would be. And so I would use the calculator to back into based on that number, how much house could I afford and how much down payment do I need to save? And it may not be super difficult to save for that down payment at three percent, depending on the price of the home you're looking and not having to tap into the retomart accounts to do that. Well, egg, bacon and cheese. Delicious. Guess what? It's your lucky day because it's time. So since we answered your question here on the show, we would love to send you a Tumblr. Just email winner at moneyguide.com. Oh man, could today get any better? Too much for people to handle. And both. Stash it up. Stash it up. We're coming. It's a good day. All right, I'm going to move on to the next question. But if you haven't yet and you want to be part of our rapid fire segment, please submit your rapid fire questions into the chat. Just put RF at the beginning and they will be considered for a rapid fire. It does not depend rapid fire segment where Bo and Brian will answer your questions in 30 seconds or less. And they cannot say. Can I ask a question? Sure. I guess I should raise my hand. Oh, is it Vincent Boone? Why is the Stash craze catching on? Because I mean, go to church Sunday. When your pastor shows up with a stash, you know that we have reached critical mass for maximum stash hood. And I'm just trying to figure out where we go as a society from here. I didn't notice any particular. I mean, do I do? Who do I blame? Stashes. I'm just around. He was at the front porch. Brian wants to write a letter to somebody. He needs to know who to write the letter. Yeah, that's what he's going for. I mean, do you ladies like stashes? Oh, is that Miles Teller? Is that Miles Teller from Top Gun? That's what it is. That was a good call. Maybe it is a drop. And to answer your question, it depends. Your favorite answer. All right, let's move on to a long form question. She's like, we're just gonna move on. It depends. That's truly my answer. And I stand by. OK, so I don't know if you want his name on air, but your husband. Do you like it when he has a stash? Yes. Oh, boom. You see how definitive that yes was. Yes. OK, let me ask this question. But is your wife like it when you have a stash? Of course. Does your wife really? Yeah. If she was here, I could ask her. Yeah, we'll call her. Let's call her live right now. Team, get the phone out. Let's call her. We're more likely to get a kid to answer that. All right, Stony 13 has a question. Speaking of, is there a kid? Is that my son? Don't think he has a YouTube channel. OK, hey, money guys, I'm 26 with 60K per year and I'm saving 25%. Let's go. I'm swapping jobs soon and was curious how important it is to find a job with an insurance plan that offers a high, a HSA, not a high savings account, health savings account. If I am already saving 25%, what do you think? We know you love the HSA. Benefits, in my opinion, are toppings, not the main course. I was thinking of whipped cream and cherries. That's it, man. It is. You were on the same wavelength. These are the cherries and the whipped cream and the sprinkles. These are not the brownie. Because what you want to do is when you go into a funny job, well, like the brownies at the bottom and you put the ice cream on it and you put whipped cream on that. You want the lava cake. We had lunch at the Tussim Emporium down there in Orlando. That's good food. Unbelievable. I cannot recommend the desserts enough. I'm getting sidetracked, but it is a huge Sunday. Anyways, benefits are the accoutrema. They are the sprinkles and that sort of thing. They're not the main thing you want to look for when it comes to a job. When it looks to a job, you want to look for where somewhere where I fit in culturally, where somewhere where my skill set will be valued, where somewhere that I have career trajectory, opportunity, vertical movement, those sort of things. And then once you narrow it down to a number of different jobs or positions or things that satisfy those, well, then you can start comparing the benefits. But I would never let the health insurance or the health insurance plan dictate the job that I took because I think that you're focusing on the wrong thing. If you're doing that, you're kind of majoring in the minors and I think that there's a chance you can end up in a bad spot focusing on one. Yeah, I mean, if you got two great opportunities, of course, you go get to the point where you start, you go through the big long-term impacts of this position. But then when you're trying to have a, you know, at the coin toss moment, yeah, then benefits have a place. But don't let that be the driving factor. That's, you know, because we always say don't let the tax tell, wag the dog. It's the same thing with we love health savings accounts, but it is not the driver of your financial success. You need to be thinking because investing yourself is one of the best things you can do. And two other things. Don't assume because a company doesn't have a high deductible HSA option that the health insurance benefits are bad. And don't assume that if they do have a high deductible option with an HSA, that that's the one you should choose. Oftentimes we steer clients and direct them. Don't pick the high deductible plan. Don't take the one with HSA because the other options might make more sense for them. They're more highly subsidized. They have lower deductibles. There's better benefits to better fit for your family. So don't just assume because we love HSAs. That's always a default answer. It's an option in something that you should investigate, but it's not just if it's there. I'm going to do it. No, you're good. You know what? I just got stuck on. I was sitting here trying to think of a poll we could ask our audience on is, but I was like, they're both good looking men. So I was trying to figure out where the cut was because like Magnum PI and Bert Reynolds, they are, you know, I was like, who is Bo? But then I was like, no, I need to find like a nerdy mustache person. Ned Flanders is Bo Moore, you know, is trying to figure this whole thing out. I thought this was going to be HSA related. And it was. No, we saw. It's already, I mean, it's just. He had moved on. How do I yell at this guy about mustaches? Well, before we move on completely, Stony13, if you would like a Money Guy Tumblr, just email winneratmoneyguy.com. That's hilarious. Next question. Do you think we're in the fourth quarter of mustaches at least? Give me some rays of hope. I think we're in the renaissance, the rejuvenation of them. No, but there's a season look. You can ask you can ask Magnum P. Tom Selleck. He was like, man, when that stash went out of something, he's like, oh, man, it's a shame that that went out of style. But, um, but did he get rid of it? I don't think he did. Did I don't think I don't know. I don't know. I don't know. The four inch and same. I think. Interesting. Interesting. I'm sorry. I'll bring one. Maybe I forgot. I took off the gold chain. Let's bring this thing back. Reel it back in, Brian. Reel it back in. Next question is from quilt audit. It says morning, I'm meeting with someone in my church to talk about finances with her specifically to help her budget better. What would be the best place to start? What kind of doc should she prepare? What should she bring to this meeting? I was just curious if you were going to sit down and somebody said, hey, I want help with my personal finances. Where would you start? You go to money.com slash resources and you could it's an all terrain, all weather vehicle to tell you what to do with your next dollar. We've got you covered with the financial order of operations. I love you. Would you add to that? Yeah. So I would say if I was going to sit down with someone from church and I was going to help them out the starting point that I would want, I'd ask them to prepare a network statement. I want to know, hey, a list of all the things that you own and all the stuff that you owe, right? We have a great template. You go to money.com slash resource. I know that a free one you can actually email it to her, text it to her. She can then fill that out. Well, what you're going to uncover when she lists out all the things that she owns and all the things that she owes, you're going to see the types of investment account she has access to the types of retirement plan she has access to. You're also going to see the debts that she has. So that's like step number one. I want to know sort of like starting point. Step number two, I would then say, hey, bring me your last month of credit card statements or baked transactions or wherever. However, however you spend money, I want to see where your spending is going or maybe you tell her, hey, do a little bit of work. Let's go down a little free app. There's a ton out there. You can use Monarch money. You can use YNAB. You can use any of these and just start tracking where your dollars are going. And then let's look at it after a month after you've done it because what I want to see is, man, holy cow, you realize that you have 25% of your money every month going towards eating out or towards transportation costs or towards whatever that is. And then I'll begin to triage that. And then once I figured, OK, how much should be going into this bucket and this bucket and this bucket and this bucket? I'd figure that out. So then I'd figure out the margin. Then once I figured out the margin, boom, I'm coming to the financial order of operations. How do I think about where I should be deploying these dollars? Am I getting my employer match? Have I knocked out all the high interest debt? Do I have a fully funded emergency fund? Am I putting money in my Roth? And I would walk it through that sort of three step process to get her on solid foundational footing moving forward. Look, the reality is, is most people's because you're going to eat at this lunch. So you're only going to have probably 20, 25 minutes of productive, get it in there. That's why you're going to need to have something that speaks after the lunch. And that's why I love the free download. But also, real as the backbone of millionaire mission is the financial order of operations. If you ever want to know the origin story, how it all came to be, how you go deep into it. And then this also allows the ground rules to come into play because even before you get to step one, there's some things that help you set the table of being good with money. So I think that I would use that as something just to kind of a parting gift. So after the lunch, more action can occur. Love that. That's great. And quack, quack, quack. You almost took the words out of my mouth. Quill Audit, if you would like a Money Guy Tumblr, since we answered your question, just email winneratmoneyguy.com. Let's do one more long form question before we move into our, is this not depend rapid fire segments? Of course you do. Did you see the meme of the week? If you're not on our email list. Did you see the meme of the week, Brian? So one, you should follow us on all the socials, isn't that right, Matt? We should follow us on all the socials. Matt rocking a stash too over there. I know it's true. I'm overtaken over here. But the meme of the week that was on socials and also in our newsletter, and I think it was in our little email this morning, just fantastic. It was a representation of Rebe during the rapid fire segment, and it was Chef's Kiss. Or was it during the whole livestream? Maybe it's during the whole livestream. There we go. Brian, I love being a business owner, but I think people underestimate how fast things move from, I've got an idea to, all right, now we actually have to build this thing. That's right. The idea is the fun part, but then you've got logistics, operations, marketing, all the stuff that actually makes the business run and work. And that part can really slow you down and it might even keep you from starting at all. Exactly, which is why having the right tools and the right partner can make all the difference. That's where Shopify comes in. Shopify is the commerce platform behind millions of businesses around the world and 10% of all e-commerce in the U.S. from startups to popular brands like Chubbies and Allbirds. And they really make it simple. You can create a clean professional online store with ready to use templates, and their AI tools help handle things like product descriptions and even improving your images. They make it easy to build your brand, but they can also help you grow. Their email and social media tools can help you get your brand in front of the right customers. And everything works together. So you're not bouncing between a bunch of tools on different platforms. You got inventory, payments, analytics, everything's all in one place, making your life easier and your business run smoother. That's huge because it means you can spend more time focusing on the big picture and less time getting stuck in the weeds. That's how you actually build something that lasts. Start your business today with the industry's best business partner, Shopify. And start hearing. Sign up for your $1 per month trial at Shopify.com slash Money Guy. Go to Shopify.com slash Money Guy at Shopify.com slash Money Guy. You got it. All right, let's move on to Jim's question. It says, how do I convince my spouse who is very risk averse to invest a portion of our cash reserve in the stock market? We have no debt and two years of expenses covered by our savings. I max my IRA only. I mean, look, this is something when I was writing Millionaire Mission, I was trying to get people to understand what feels safe in the short term can actually be risky in the long term. That's right. And what is risky or feels risky in the moment in the long term can actually be an incredible wealth building opportunity. And that's exactly what the financial markets are. And you've got it. Jim, you've done the right thing. And that's why I love you use once again the financial order of operations will help you because you'll be able to show your wife. Look, we don't have high interest debt. We've got emergency reserves set up. We need to now make this money start working harder than we can with our back, our brain and our hands so we don't get beaten down by inflation so that we can actually grow this money over the long term. And that's what actually starting a Roth IRA and then buying some index funds is going to do. And that's what I would sell the vision of where you want to be and sell the vision of, hey, don't you want to actually be able to let our money work harder than we can? So we can go do trips. We can do whatever your thing is that you all love doing as a couple. Share that vision so that you can build some collaboration there. Yeah, I'm curious how old you guys are because to have two years of expenses saved up in cash is a lot unless you're like right at retirement or pre retirement. So I'd want to know that. And I love Brian's idea of starting with the why. Like what are we saving for a while rebuilding? So let's say that you define, hey, we want to be retired one day and we need to save a million bucks. Just making up a number. I would use math to show my spouse, hey, if we're just going to save on our savings account and this is how much we can save. This is how many months, how many years, how many decades it's going to take us to get to a million dollars by just saving in cash. And what you're going to find is, holy cow, we're not going to hit a million until we're 75, 85 years old. And then I would show her, hey, do you realize if we started investing these dollars and we could earn a conservative, let's say, 7%, 8% annualized rate of return by investing in low cost index funds. Do you realize we would then be able to reach that goal 10 years, 20 years, 30 years sooner by doing that? And I would show her that, hey, we have the same goals. Let's talk about the different paths we could take to approach that goal. And then let's agree with one another. What's the most appropriate path? What's the most efficient, most effective path to get there? And I'd see if that kind of clicked and made a light bulb go off. Do we have on our website, you know that because we use it on show content all the time, the rolling 20 year periods of investing? I don't think we, I don't think that's a deliverable. Okay, that's more of a show topic type thing. But it's one of those magical things is that also a great thing for people who think that investing is risky. And that's why we say don't invest unless you can do it for five to seven years is because yes, in the short term, there might be some volatility. But if you can stay invested for that five to seven years, there's actually incredible track record that this is pretty consistent. And that's another thing I talk about in the book is the law of accelerating returns. And if you don't think we're living in those terms with how things just seem to be speeding up on innovation and the growth of the world. And you're able to make money off of that as long as we don't make the robots that kill us. We're going to be able to grow this thing and make even more money off of the ever expanding economy and pizza pie. Love that. Well, that's great. But look, and it doesn't matter if the robots kill us at that point. That's not great. You know what I mean? You can't control that. That's outside of the control feature. There's no plan for that. It's really no, yeah, that really doesn't matter to the question. That's for the government. That's for other people who should be thinking about these things. Not you. Jim, you don't have to think about the robots taking over the world. But you can think about what Brian and Bo shared while you email winneratmoneyguy.com to cash in on your Tumblr if you would like one. All right, it's Brian and Bo's favorite part of the show. I was about to try to delay this. I'm going on a tangent, but let's go ahead and do this. It does not depend rapid fire segment where they will answer. That awful last week. I just want to say. I was very, very poorly last week. I thought about it all week. I could barely, I could barely focus on the. Oh, the glass sunglasses are going back on. This is a job for the Maverick. Let's get in there and do this thing. So just a refresher on the rules. Goose, are we ready? Brian and Bo will have 30 seconds combined to answer the question and they cannot use the words, it depends. And I will be trying to listen. Don't get too cute with it. Don't say other phrases that mean it depends. Okay, I will flag that. Now I'll throw them a bone at the end and we will have our, maybe it does depend segment where they can say all the things they didn't get to say in the 30 seconds. So with that, let's dive into question number one, 30 seconds on the clock. When it comes to 401k max out step, should we opt to max out Roth or traditional or a mix of both? Don't say majority of people, you'll be Roth. I mean, I gotta think that just time, if you maximize the value of time and young people, I love Roth because, you know, most employers now offer Roth. I think that's where a large portion of the population would do really well. Agreed to disagree. By the time you're maxing out, you're putting $24,500 into your side deferral. If you're able to save that much money, you're likely going to be higher income, which is likely going to put you in a higher tax rate, which means that you're probably going to max out on the pre-tax side. You're not wrong. We got a disagree and time is up. All right. Question two, why do you never mention public transit as a possible form of reliable transportation? Because we're two-sided boys. There are a lot of places where it is possible. I know. Whenever I go to Europe or even DC or New York, I'm like, this is awesome, especially with the way mobile apps make it work. We have to start the clock. So this will be a lot less expensive than 8% of total income. Start the clock. Agreed. Public transportation or like a walking community is an amazing opportunity for folks who can live in that place. We neither one of us have ever lived in a place like that. So it doesn't come to mind initially. That's just a little personal bias that we have. Yeah. I mean, I grew up when they built Fulton County Stadium and then even the Ted later, they didn't have Marta go to it. So I mean, we're from the side of the Georgia. It's public transportation was never done well. So it's not part of our life. You know where public transportation was done? Questions over. I get that. You know, are they mastered public transportation really, really well when we were in college at the University of Georgia? Right? Like that. That was the. I was part of that infrastructure. I know you were one of the bus drivers. I was one of the bus drivers. But it was great. It was amazing how convenient it was to hop on a bus, get wherever needed on campus. You knew the schedule. If I lived in a city where that was like an opportunity, that was a thing. It'd be fantastic. If I could make a gazillion dollars driving a bus, I might still be driving a bus. Listen to the Beastie Boys. All right. Way to fuck the system there, Bo. Let's get back to our 30 seconds. That was a tangent. I was a tangent. Next question is, what is the money topic Bo and Brian differ on the most and who's right? Well, I mean, paying off debt. I mean, that's what we've, we fought on it for a long time. Made it in the book because I was Bo kept telling me I was bad with money or math because I was trying to pay off my low interest mortgage. And I was right. What's really interesting is we actually do align on, I would say, almost 100% of things financially. Because it's not like there's a lot of it's fairly black and white cut and dry. There's not like a ton, there's not a ton to disagree on. Which question was that? So I'm going to put a number. Three. I'm making some notes too. Just when we come back, he's making notes on things to disagree with. When we come back to that, I do want to say 2008. Okay. Oh. Next question says, if I retire before age 55, should I do 72T or a Roth ladder? Say it again. If I retire before 55, should I do 72T or a Roth ladder? I don't like Roth ladders. Gosh, I want to say more. 72T is complicated, but Roth is going to be your favorite savings. It's going to be your favorite child. So it's going to be the first in, last out. Nope. Okay. We'll come back to it. 72T. When the market is going down sharply. I'm so sorry. We're still at time. When the market is going down sharply, what are some financial mutant actions to take? Always be buying. Yeah. I mean, always be buying. If you have a, if your dollar cost averaging, cause you have a lump sum, you can, once you get over 20%, every 5% drop, you can accelerate another month forward on your plan. Well done. Look for opportunities. Yeah. I try to be opportunistic. Great. We still had time. Yeah. You took the time. We're master communicators. Well, I put myself in there with master communicator. You could have both. All right. Next one is the real hard hitting question. Comb or brush? I use both. Neither. Ooh. Are you going to use fingers? Yeah, dude. I just mess it up. No, I use, I use a comb to part the hair, get the right part cause I'm not an animal. And then after I dry the hair, I got to run a brush through it to give it the poof. You know what? Do y'all, y'all use utensils or your hand, your fingers and hands, right? We're getting quite the variety of answers. Wow. Your fellow men. Are you a comb or brush or are you fingers? Neither. I was just saying neither. He just wakes up and just shakes a little bit. Yeah, I just, you know, wet the hair real quick, toss a lit, put some, like, you know, this little, by the way, a money guy listener is the one who hooked me up with my hair stuff. Pull a bit out of there. A money guy listeners who hooked you up. Yeah, man. Somebody sends you product or something. It's the best product. It's the best product I've ever used. Let's move on to the next question. What should I do first? Pay down my mortgage at 3.25%, 29,000 or my student loan at 6.1%, which is 444,000. Student loan. Yeah, student loan. One is, especially how old is this person? Doesn't matter, student loan. I mean, that one sounds easy. Let's do this. Oh, did you say 29,000 on the mortgage? That's what it appears, yes. So there's the debt snowball thing going here. They're thinking, ooh, I'll pay off the lower one. I'll get that out. Quick. I think it's going to be suboptimal, especially when your interest rate on the student loan is twice as high as your mortgage and the mortgage is appreciating and it's super low interest, even though almost as low as the risk-free rate for sure student loan. Yeah, I agree. Next question. Which step of the food would you place paying back a 401K loan that you took out before you were financially enlightened? Yeah, I mean, that's, yeah, it's probably, that's more of a, it depends on the interest rate. I don't need to know more details. All right, you both lose the time. Thank you, Caleb. Why do I lose it? I didn't say it depends. You were a team. You were a team. Moving on. Last time I got called for the pens, he got to answer. I am changing. I was thinking, I was thinking three and nine. All right, next question. How do you know when it is the right time to tax loss harvest? When you have losses inside your taxable account. Yeah, I mean, is that it? Short and sweet? Yeah, I mean tax law, yeah, as soon as the market starts getting fined, the silver lining. Sometimes you might have a position that you really like that you don't want to get rid of. I don't want to sell it on the stock. It goes down. I still believe in the stock. I don't want to sell it potentially miss out on the 30 day window. So I'm not going to loss harvest that, but indices that are easily replaceable. Good call. When you got some losses. Somebody put justice for Bo in the chat. Right? Remy is, geez. All right. A couple more. Best strategy for handling mileage reimbursement. The rate is generous and we always have extra. On taxes or like from the employer? I think from the employer. Yeah, it's from the employer. Best strategy on handling it. Track track. I mean, I'm sure there's apps that are out there. He always has extra for you. Always has extra what? Money. Track your mileage and report it and get your expense. I automate the process. I don't understand the question. I mean, if there's apps out there that will help you out. I just want to make sure you get every mileage that you're entitled to. Great. Last but not least, what really went through your head when you walked in and saw the mullet wigs on your desk this morning? I was, I was like, what, I was like, what crazy thing are they trying to do? Especially when I saw the mustache for Bo. But then when I found out the admin team did it in April's full, I was like, yeah, come on, let's get in. I thought it was our writing team that did it. And when I found out it was the admin team, I was like, oh, okay, that's on brand. You figure out the angle that the writing team was going with or where we were. I mean, let's face it, they're sitting on bouncy balls right now outside that. Our admin team. They're not serious. They're not serious. Our admin team is sitting on bouncy balls right now. That's what they do. Health as well. They're not serious people. Hey, by the way, we desperately need a new administrator. So if you love to be an administrator for a financial body firm and you like building your core strength at work on a big bouncy ball, go to moneyguy.com. You committed to buying another one for the office. Oh, I'm sure. That's the other thing. I know this is not part of the 30 second. You know, these are corporate credit cards that are buying this stuff. We are totally stretching the deductibility of all things when I see mullet wigs. One of our admins just messaged and said, let us live. So that's your message from them. All right. That finishes our, it does not depend rapid fire segment. So now we will move on to where maybe it does depend segment where you can say what you didn't get to say on the very first question about 401k, you guys disagreed. You have anything else to say on that? No, I was fighting to not say it. Yeah. So I said that if you're at a higher income, do you be able to max out your step six? That means that you've already maxed out step five. That means you're putting 7,500 in a Roth, 7,500 in a Roth, either 4,000 or 8550 or whatever odds are on your HSA. And now you're doing 20. I think the math, we did the math when we did a Manny case study. You have to make an $137,000 as a household for 25% and have you max out all those. So the odds are you're going to be in a higher income situation, which is likely going to justify you doing pre-tax if you're maxing it out. So my logic train was that only the top 10% are going to be able to be in that situation. The 90% are, you know, probably benefit from doing a Roth. So I went with the numbers because the real answer is Bo's answer, which is it depends. But I was like, 90-10, let's go with the 90. I knew there was going to be a lot to say there. There was... But Bo's, I am saying Bo is right. I know he loves hearing that. He's a master communicator. But it is the 90-10. I was just trying to play the numbers. I was curious, for public transportation, what percentage of even like the United States has that? That's what I was wondering too. That's a great question. I do think that I was under the impression that generally speaking... I think more governments have done things like... That's not an option for a number of people. Public transportation had to be something that was really thought about in like the 1800s. Sure. Because now land and everything is so expensive. If you try to go put this stuff in like cities now, goodness gracious. It's really difficult, yeah. I mean, there's projects out there in California and others that have shown that it's a disaster to do it now. So you... These are decisions that you wish people would have made back when land was cheap. Because I was just thinking about why do we not talk about it more. And I think you're not wrong that there is some personal bias there, right? Like we've always lived in person. But I do think... I think that that's pretty common, right? It's a lot of most people, yeah. I think it is a majority. In millionaire mission, I do talk about like on housing, that I think people who live in high-cost living areas, one of the hacks that you can break the housing rule of 25% is when you have public transportation and you don't have a car payment. There are ways. So we do try to address it when I can talk in a format that's not, especially not 30 seconds. Right. But it is awesome. I was just in New York City not too long ago and it is crazy how like, you think you're going to get a ride share and then you're like, why would I do that? That would take way longer. Remember, we went to New York. I know. Remember when we went to New York and we gave Beau the New York treatment? We did. And we were like, hey, we can Uber and it would take 45 minutes to get everywhere. Or we can pull out our cool apps and just ride the public transportation. It's great. So, I mean, maybe we should talk about it more, but... Quick Google search. Approximately 55% of Americans have access to public transportation while 45% have no access at all. Yeah, but that stat, you have to be careful of stats because we just talked about City of Atlanta has public transportation. But it's not effective. It doesn't go anywhere. Yeah, yeah, yeah. It's just like around here, we have buttocks, shuttles, riding everywhere. In my mind, I'm thinking New York City's up and down. So those stats would say you have, but you don't really have public transportation. Right. You've got the government trying to wink and nod that, hey, we got a bus out there. No, that's not really... Nobody rides that. Number three, you said 2008, it was what do the guys differ? I think I know what we're going to do. Yeah, well, I think when Bo and I first started working together, because look, we all have a recency bias. And since Bo graduated when the market was literally getting its teak kicked in, I think that for the first few years that you were managing money, or you had some nervousness to it. Super conservative allocations. You're super conservative. But the market always lost gold. And at that point, I was like, it's okay. And I think you probably thought I was a cowboy. And I think we've now moderated where we're the same, even though I'm getting older and probably more conservative. It's just one of those... We all are shaped by what we've lived through. Yeah, that's right. The other one that I wanted to add just to... There was a question around, hey, for FIRE, should I do 72T? For those of you that aren't familiar, 72T is a way that you can access pre-tax assets prior to 59.5. You have to take substantially equal periodic payments. But there are some rules associated with it. You got to make sure you do it right. You can't run a foul. Or should I do a Roth conversion ladder where I convert to Roth, let it sit for a while, then I'm able to pull the basis out. We both ended up saying, hey, likely you want your Roth dollars to stay in the Roth accounts as long as possible so you're maximizing the tax-free growth for as long as you can, because that's the real benefit to Roth. So if you're giving us a binary option between conversion ladder or 72T, we're probably going to say 72T. However, we don't really love 72T either. We'd rather see you plan for it, build an after-tax account, or maybe have access... A lot of people don't realize if you are working at an employer and maybe you have this big IRA rollover over here from previous employers, and you're planning on retiring at 55, you can always roll pre-tax assets into your current employer's 401K before you retire, thus opening your ability to access the assets from 55 to 59.5. So there are other ways to get access to those dollars that aren't quite as complicated. We'd love you to do one of those as opposed to either one of the Roth conversion or 72T. Yeah, and I'm not against Roth ladders. It's just that when I've seen it, people come to us and they tell me, hey, I've built up this big Roth so I can do a Roth ladder and pull that basis out. The reality is, is then we look at all of your accounts and we look at what your tax rates and other things, and we're like, yeah, I mean, I know that that looks good on paper and it's a cool content piece, but you realize that money grows tax-free. If you die with that money, it gets to continue to grow tax-free, and you're not going to die broke. I've seen how much money you have built up. And it's just in practice when I look at people's actual assets and I'm trying to create a real plan that's because personal finance is personal. Usually we don't go start rating the Roth account first. That's right. It's usually first in because it's step number five of the financial order of operations, last out because it is your favorite child when it comes to your assets. Because that's one, even Bo, like right now you've told me, you pulled me inside, go, hey, I know your income's tax rates high, but what are you doing? You ought to be doing Roth contributions even to your... There's a number of reasons why it makes sense for you. And you're right. I mean, that's why I keep thinking about, yeah, I'd rather pay a little bit more tax to this so that my daughter who's going to be living off this stuff, because that's the other thing. I have an autistic daughter who, you break the 10-year rule on spreading beneficiaries out if you have somebody who's developmentally challenged like my daughter is, she's going to be able to basically stretch this out over her lifetime, which is pretty incredible. Yes, I'm going to pay more taxes now, but creating an alternative stream for her is pretty powerful stuff. It's a good planning, isn't it? It is good planning. There was one question where Brian said it depends and somehow you as just a dictator decided, oh, this is the way the game works now. No, somehow you're both disqualified. And you lost points. And I lost points. She wouldn't do that to me. That's where I know I'm still Rebe's favorite. So my question is, what was that question? Because I feel like I might have had something to say there. You did. It was, which step of the foo would you place paying back a 401K loan that you took out before you were financially enlightened? Okay. Why do we dislike high interest debt? Because the high interest rate works against you aggressively and we want your money to work for you, not against you. I would argue that a 401K loan, irrespective of the interest rate, irrespective of the fact that you're quote, unquote, paying yourself interest, you have taken valuable soldiers in your army of dollar bills off of the battlefield. So I would argue, let's get that 401K loan paid off as though it were step three. So I want you to knock that out, get that paid off, let your dollars start working for you, and then begin progressing through the financial order of operations. That's what I would have said had Rebe been kinder and more equitable. But she wasn't. I will try again next time. By the way, we had some great brainstorms. Rebe walked out of the room, so he probably won't get implemented. Oh, my gosh. You're dropping some dimes in the content meeting. If they fill you in, we've got some great ideas. It's going to make the rapid finance. It terrifies me because I'm naturally not good at this already. But if we can implement this, you guys are going to absolutely love what we add to this. If Rebe signs off on it. Did you all tell her the idea? It's good stuff. Rebe walked out of the room and it's like, ooh, bosses left. I'm flattered, I think. I think I'll go with flattered. All right. We do have some time left, so let's get back to some long form personal finance. Are you ready? Oh, let's do it. All right. The Winkinator21 asks, hi, money guy. Where would an ESSP, or does he mean ESPP fall into the foo? Or are those two different things? You can go. I'm thinking ESPP is a good thing. It's an employee stock purchase point. Yes, that's what I was assuming. ESPP. So where would that fall into the foo? I am putting 15% of my take home into the program, which means I can't max out my retirement. It depends. I can say that now. You can say it. I know. I read this one when you said it. It depends on how your plan operates. For those of you that aren't familiar, ESPP is an employee stock purchase plan where your employer says, hey, we want you to participate in being an owner of this company. So we're going to allow you to buy shares in our company. Now, here's where it matters how the plan is structured. Oftentimes, what they'll do, especially if it's a publicly traded company, is they'll say, hey, we're actually going to let you buy a discount. If you want to participate in ESPP, we're going to let you buy at a 15% discount. Or we're going to look at a trading window from day one of the quarter to day 90 of the quarter, and you get the lowest price in that window, or whatever that is. If something like that is happening inside of your ESPP plan, we would argue that's a lot like free money. Like, if I get a 15% discount, or if I get to buy at a lower price than market, that's my employer providing an opportunity for me to have some free money. And so we want you to take advantage of that aggressively. But. But. We love these employee stock purchase plans because it really is that good that you get a discount, and then a lot of times they'll let you buy at the lower of the price at the beginning or the end of the quarter. That's why you got to get in and get there and get that. But. Here's the asterisk that goes at the end of that. You have your human capital. This will be part of your investment capital. You need those things to kind of decouple at some point because you're trying to build financial independence outside of your human capital. And if you have all your eggs in one basket, it can be great, or it can be disastrous. And part of what we're trying to help you build is something that protects you, whether it's raining outside, whether it's cold outside, whether it's sunny outside. We want you to have an all terrain plan. So that's why we love these type of opportunities. But we always say there are limits or create a system to where this is cleansing itself out to where maybe every year you automatically are then flipping it in to sell it and turn it into diversified holdings that can start building your army of dollars outside of the company you work for. Because that's just a risky thing. You've heard me tell the story of Lucent Technologies and other things when I worked in Atlanta. I saw a lot of people that on paper were worth a lot of money and it pretty much went to nothing because they had their human capital and their investment capital sitting in the exact same place. Love that. Love that. Well, hey, if you don't want to stop chatting, don't want to stop thinking about personal finance, even when we turn the cameras off today, no problem. Just go to moneygod.com. Not only do we have tons of free resources and calculators that go deeper on some of the topics we've talked about today, we also can send you to the Moneyverse, our private Discord server where you can keep chatting with each other, asking questions, giving input and perspective and experiences and we even just posted a poll up there about your savings rate today so you can compare notes with other mutants and talk about your goals. So if you want to do that, go to moneygod.com. All of that is on moneygod.com. We're trying to make it better and better, more searchable for you every single day so be sure to check it out if you haven't yet. Now look, if you stuck around, because I think that we at least give Beau the opportunity, you've hung out with the wizard. What was your favorite ride at Universal City? You know what, I saw, so I took my wife and I took our oldest girls down to Universal, down in Orlando. Yup, and it was unbelievable, so much fun. The girls are big, we're all the roller coasters. I got to see a number, I saw a bunch of you in the Nashville Airport, a number of you in the Orlando Airport, so some of you at the parks, thank you so much for saying hello. It was wonderful to get to meet you, wonderful for you to say that you watched the show, so thank you for that. It was awesome. I think the easy answer to your question is Hagrid's is just ballin'. It's an unbelievable ride, right? Like it's so good. But also, big fan favorites, Velocicoster was a big fan favorite, and Hulk was a big fan favorite, so all my kids, my kids crushed them all, right? And the real question that everybody wants to know, do you check a bag or did you gate check a bag or did you do carry-on? So here's what we did. I, going down at being in the Nashville Airport, I had four carry-ons, my kids and I, so we took all carry-ons. We volunteered to gate check at the first notice, and it was one, we gave them the bags, sat down, it was so easy. We get land in Orlando, we take it to, and just, you know what, the Lord was smiling down on me as soon as I walked to the carousel, all three of my, well three of the four were just in order, and I just pulled them right off. So somebody, you got the baggage claim. Y'all are so slow off that plane that it was already in the baggage claim. I had a bunch of kids, dude. Yeah, and it was, so it was literally so easy. And the way back, it was not a full flight, so we just carried them on, and it was great. That's a financial mutant hack. Free check bag. It is, you know what, because I think Southwest now charges what, 35 bucks? Oh, they did, Delta and all of them charged me. It is a hack. It is a hack. If you want to check your bag, gate checking is probably the cheapest way to do it. It's a hack. It's amazing. It's the same way with like, your parents living in the basement. You want it to be a choice. You don't want it to be mandated. I mean, don't you, that's the reality of the situation. That's actually really funny. I love gate checking if you want to use a financial mutant hack. Sure. I don't like when the airlines tell me, hey, you sir, you're now at this point in the line, we're going to take your bag, even though you like to, SEAL Team Six, get off the plane and run to the cars as fast as you possibly can. You know, they, they, I like it when Boak and at his leisurely pace, get off the plane. But I want my family to attack and go and get the heck out of there as fast as possible and not have the airline hold me back. I will tell you, I, when we got on the plane, because they were like, so we volunteered at the first call. Hey, if anybody wants to gate check, I was like, oh, me, we do. So I did, and then they did like three or four more calls. We got on the plane so much overhead space. I even see you a picture. I see you a picture. It was completely empty Ben. So I do think they're, I think they're kind of. They're kind of fire airlines. We've caught on. I don't know why I haven't figured out their game completely unless it's speeding up the process. But those overheads are not really full. They are fibbing to us and we've got to work on that. But I couldn't help myself. I wanted to know about Universal. I wanted to know about the gate check because that was something that just populated a lot of our live stream last week. How I got my, because like I saw some money guy folks on the plane, but unfortunately they were right as I was trying to Karen out on the flight attendant. So it is what it is. I'm your host Brian. Join with Mr. Bo. We'll see you next week. Money guy out. The Money Guy show is hosted by Brian Preston and Bo Hansen. Brian and Bo are partners with a Bound Wealth Management. A Bound 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. A Bound 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.