The Playbook to Build Wealth With An Average Income

[00:05] The playbook to build wealth with an average income. But I am so excited to talk about this because we say that building wealth is available to everyone and we really do believe we really do believe that we really do mean that and

[00:18] don't have huge incomes that don't have the six-figure incomes and we think that that's where you are right now in your financial journey it is still possible for you to build meaningful wealth. >> reach people where they actually are. If

[00:33] you look at where the median income is per household here in the United States per household here in the United States it's a little under $84,000. Now look I that means for if you're married that's two people yeah it's going to be tough

[00:47] there telling you you can't do it at all. I think you can it is doable if you >> Yeah you have to understand if if you want to win the game you have to want to win the game you have to describe for yourself what winning looks

[01:02] 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 and and we got to give credit where credit's due the fire community

[01:14] 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 like stay sort of laser-focused on moving in that

[01:29] direction but I think the average American hasn't quite figured that out. >> Yeah I remember we did a a making a millionaire with with Danielle and and that she had where she was doing coast fire where we were like hey you can do

[01:43] this where hey 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.

[01:56] >> And what what we showed her was like okay once the objective was clear. Like once we said okay this is what you have to do and if you do this then you'll end up here it made it much easier for her to think okay I can execute and the same

[02:09] is true for you in your financial life whether you're someone with a high specifically speak to those folks who maybe feel like things are tight right now. Things aren't uh there's not a ton of excess sitting around when you think

[02:23] 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 and we thought sports analogy cuz uh we think that when it comes to

[02:37] 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

[02:52] 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 margin for making those desperate decisions that get you into debt get you

[03:07] high interest credit cards and all the other bad things that lead to you being 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

[03:20] what Brian said if you don't have that first step in place it's really easy to get derailed. The other the next thing that we want to make sure especially at lower incomes it becomes

[03:35] it becomes tempting to try to skirt this one or try to get around it. We've seen young people that really like to kind of like to fly naked uh not not fly naked dipping Yeah they like to skinny dip when it comes to health insurance but we

[03:50] know that a lot of bankruptcy and a lot of financial financial failure is due to medical expenses unknown unknowns coming your way. So we want to make sure that decide okay I'm going to go with the cheapest health insurance possible have

[04:05] the highest deductible possible cuz 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

[04:19] 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

[04:33] >> Well and 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

[04:45] first million dollars. >> That's exactly right. We know that cars can be financial napalm that's why we have rules in place like 238 to make sure that you can stay inside the guardrails and and when you think about

[04:59] 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

[05:14] where my dollars should go and how do I stay inside those confines cuz if I don't know where my dollars are going I can't know if I'm wasting them if I'm once you put down the budget and then once you begin tracking your expenses it

[05:27] 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 >> Well I mean the reality is 83% of Americans say they overspend so if

[05:41] 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 >> And once once you okay so once you've mastered defense now you can think about

[05:54] the offensive side. What are the things that I can do to now start positively have sort of the risks and the defensive side covered and the first thing is this side covered and the first thing is this might be the easiest time ever to figure

[06:08] 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

[06:23] your education and ultimately hopefully make you more valuable either as an entrepreneur. >> I always try to find the the edge. How can you make yourself stand out and you that way you can monetize that expertise

[06:37] about. >> And once you figured out how to how to monetize that then we want you to really think through how how do I how do I be opportunistic? How do I find the places where I can insert myself to give myself

[06:52] probability of a positive outcome and this might mean changing jobs looking at a different company it might even mean different city or a different town where

[07:04] sort of hone in and figure those things out as you've increased your skill set opportunities are and then capitalize on those opportunities it puts you in a future. >> keep the business up front and the party

[07:20] >> keep the business up front and the party in the back if you know what I mean too. >> That's right. >> right. If you can keep the business up front it allows you to keep your foot on the gas it allows you to say okay I've

[07:33] done the hard parts I've 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

[07:45] 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. It's why we even talk about for a 20-year-old $1 has the ability to turn into $88 by the time

[07:59] 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 So did you cover keep your foot on the gas?

[08:14] >> So guys now [laughter] look if you want I I was how am I going to keep this straight is because this was all I walked in the because this was all I walked in the studio at at 9:50 Yep. and on our

[08:29] the mullet the sunglasses and the chain. >> mullets mullets are back. Mustaches are back. I think aviators never went out and I guess gold chains are back. You you look You look pretty fantastic.

[08:44] >> what the why cuz you have to know your why is the admin team I think they on us cuz they had this sitting here. Now I picked it up and embraced this. you said Brian I can't remember if it was a year ago

[08:57] two years ago you go we're never doing costumes again. We swore off costumes they don't help they're gimmick and I was like all right all right let's get >> let's dive right in. >> So now look I did cuz it is it is a

[09:09] thumbnail day which I did the only thing I had to commit to this so we probably have messed up the hair so we'll see how this goes let's see. >> imagine if we did all of our thumbnails for the next month or so?

[09:21] Did I did I screw it up? I mean did did it all it's still pristine okay Ken glasses and the necklace on. >> I think so too. >> All right I don't know okay we'll we'll roll with this this is

[09:34] wear some glasses. >> You can wear some glasses and I love 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 summer time it's time for

[09:50] hey look it's summer time it's time for uh bare feet shirts off mustaches that's >> y'all should know there was a whole outfit for Bo too. He just too cool for wasn't too cool for school. I just felt

[10:02] know, yin and yang is what we like to We love to be able to create balance. We like to restore order to the financial chaos in your lives. It's why we like to show up here every single Tuesday at 10:00 a.m. so we can load you up. We

[10:16] to the things that you care about. That's why we have the team out in the 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

[10:30] your situation, make sure that you get it in the chat. That you get it in the chat right now cuz we really we really do believe that there's a better way to do money. I thought that I thought I thought you

[10:43] we're going to put We're going to turn this into stuff. So, I don't Reebie, didn't you think? I thought he might do it, yeah. I'm not I honestly thought that maybe this would be It might be a new you with go- gold chain.

[10:58] Is [laughter] this thing Can't get the chain off. Okay, I was unaware that you have officially sworn off costumes. >> Well, I I think it was an unspoken rule. Robin outfit and I was wearing Batman and then

[11:11] was done. >> I think we did 12 costume episodes after that one. I'll tell you what, the the pandemic was a real It was a real >> around 2020. It was a real adventure. We had done

[11:25] some before. And we went through this phase. it's real. >> [laughter] something over here. Uh so, with that, creative director

[11:38] Reebie, I'm going to throw it out Yes, no. I have some great questions live stream chat. >> did that because April Fools is tomorrow and they never let a day early keep them from doing something fun.

[11:52] There was a lot of talk about mullets last week and Brian in a mullet. There in real life. >> Did we Did we release the AI Braveheart Brian Braveheart? Oh, yeah. That was

[12:05] email list, you saw it. If you're in the moneyverse, you saw it. If you're moneyverse, you saw it. If you're curious right. Um if you wonder if this is an awesome

[12:21] 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 can they go to check out our available positions right now?

[12:33] >> Go to moneyguy.com and click on join the team, I think it says. Shoot, I'm going telling you the right thing. Um about and join the team and we have all kinds of I mean, we really do have all kinds of positions listed right now.

[12:52] high-quality amazing team members who love Money Guy and personal finance. So, go check that out if you're looking for a job. Um okay, we do have some questions queued up. Let's start with egg, bacon,

[13:04] and cheese K7N. Um By the way, you know Bo earlier Bo earlier Bo earlier asked for 10 scrambled eggs. idea what you're doing to Bo right now. >> hungry right now. He legitimately asked

[13:18] to find him 10 scrambled eggs, but I was working, so I didn't. Sorry. Maybe that want to hear bacon, egg, and cheese. The question says, "Hi team, what is your advice on taking for retirement taking from

[13:33] retirement accounts to buy a home? I am 40 years old, 104k gross income, single, 450k in retirement accounts. I will be in this home for more than 5 years. So,

[13:45] we are starting it off spicy. Um should egg, bacon, and cheese bacon and cheese take from his retirement accounts to buy a home?" Uh what are our thoughts on we know that there are certain provisions and certain rules where you

[13:59] can pull out certain money to be able to use it for that. But, retirement accounts are there specifically for a thing and that thing is your retirement. having a conversation, one of the questions I'd want to ask you is, "Okay,

[14:12] what other resources do you have? Is there a way perhaps we maybe don't pull money out of retirement, but is there a way we could adjust our savings rate? for me? Maybe we've been in step five, step six

[14:26] perhaps we want to go back to step four so that we could begin building up so we'd be 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 a

[14:41] 104,000 our income, 450,000 retirement. Uh you said you think you're going to be I'll talk a little bit about that and ask the question, "Okay, why home ownership? What is What's the reason behind it? Is it just because

[14:54] this is the next box that you want to check or is there some other thing I'd want to dive into that. >> Well, based it off of come from a public accounting background, we you always see

[15:07] T-charts, you know, pros, negatives. And you you kind of put the debits and credits in their places and and I start looking at this and I know what you're big pot of money. I want a house."

[15:19] That's a positive access to to capital. But then on the cons column, look, any of this money is especially if it's traditional retirement money. getting this money. Not only do you Now, look up a small portion of it you could

[15:33] get access to and um not have um the the 10% early withdrawal, but but you're still going to pay income taxes. But then the majority of it you would even have the 10% penalty if you really want

[15:46] to go um you know, whole hog on this thing and really load it up. And and so, that's a negative and then so, there's a lot of transaction cost to get access to Um the other thing is is you need this

[15:58] you're slightly ahead of the curve if you just think about the fact of you do three times um your your income. You're slightly should be something to that creates a wind to your back for the future cuz

[16:12] starting to get a separation where they compound on top of each other. Cuz 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

[16:25] all the magical stuff happens. So, that's that's another negative is that financial independence in the future. figure out can you really afford this house or are you trying to force it um

[16:39] by by going out there and making your retirement accounts leaky. Um and I know research on the fact that the majority of Americans this is a a trap that they fall into is that they go and raid their retirement accounts um to to fund a

[16:53] 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 um so that you can live your best retirement.

[17:07] checklist and you've answered that, I would encourage you to go to Play with our home buying calculator cuz you've already told us your age, you've that when it comes to buying a first home, we subscribe 3525. Uh you don't

[17:22] have to put 20% down, you don't have to put 3% down so long as you plan on being in the house for at least 5 years and the total housing costs don't exceed 25% thinking through this logically, $100,000 income, $25,000 housing cost is

[17:37] 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

[17:49] payment at 3% depending on the price of the home you're looking and not having do that. >> [snorts] Guess what? It's your lucky day because it's tumbler

[18:02] So, since we answered your question here on the show, we would love to send you a tumbler. Just email [email protected]. much for people to handle. And Bo stashed it up. Stash it up. We're

[18:17] It's a good day. All right. Um 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

[18:29] put RF at the beginning and they will be considered for our 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 Can I ask a question? Sure. I

[18:43] guess I I should raise my hand. Is it Benson Boone? Why Why Why is the stash craze catching on? Cuz I mean, go to church Sunday, you know that we have reached critical [laughter] mass for for maximum

[18:57] stash-hood. And I'm just trying to figure out where we go as a society from here. I didn't notice any particular Who do I blame for this? I'm just I don't know. I'm yelling at the front

[19:10] the letter to. That's what he's going for. >> [snorts] >> I mean, do you ladies like stashes? Oh, is that Miles Teller? Is that Miles Teller from Top Gun? It's Top Gun and

[19:22] Miles Teller. I can't I don't know. Maybe that is a drop. And to answer your question, it depends. Your favorite answer. All right, let's move on to a long-form

[19:34] All right, let's move on to a long-form question [clears throat] while people It depends. That's truly my answer and I stand by Okay, so I I I don't know if husband. Do you like it when he has a stash? Yes.

[19:47] Oh. Boom! You see how definitive that yes was? Yes. Okay, let me ask this when you have a mustache? Oh my god, I do like it better Does your wife If she call her. Let's call her live right now. Hey, team get the phone out. Let's call

[20:01] We're more likely to get a kid to answer that. that. All right. Stoney13 has a question. >> [laughter] >> Don't think he has a YouTube channel.

[20:13] Okay. Hey Money Guys, I'm 26 with 60k per year >> Let's go. >> I'm swapping jobs soon and was curious how important is to find a job with an insurance plan that offers a high

[20:29] account, health savings account. If I am already saving 25%. What do you think? We know you love the HSA. Uh benefits, in my opinion, are toppings, not the main course.

[20:42] whipped cream and cherries. >> That's it. Man, it is a These are the cherries and the whipped cream and the sprinkles. These are not the brownie. Uh cuz what you want to do is when you go into find a job, well

[20:54] you put the ice cream on it and then you put whipped cream on that and then >> cake. We were at the We had lunch at the Two or had dinner at the Two Sum Emporium down there in Orlando. Unbelievable. I cannot recommend the

[21:06] desserts enough. It was that I'm getting sidetracked, but this huge sundae. Anyways, benefits are the accoutrement. They are the the sprinkles and that sort want to look for when it comes to a job. When it looks to a job, you want to look

[21:20] culturally, where somewhere where my skill set will be valued, where 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,

[21:35] benefits. But I would never let the health insurance or the health insurance plan dictate the job that I took because the wrong thing. If you're doing that, you're kind of majoring in the minors

[21:49] could end up in a bad spot focusing Yeah, I mean if you got two great 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

[22:03] at the coin toss moment Yeah, then benefits have have a have a place, but factor. That's that's don't let you know cuz we always say don't let the tax tail wag the dog. It's the same thing with We love health savings accounts, but it is

[22:17] not the the driver of your your financial success. Um you need to be 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

[22:31] 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

[22:44] might make more sense for you. They're deductibles. There's better benefits. It's a better fit for your family. So don't just assume because we love HSAs, that's always the default answer. It's

[22:57] an option and something that you should investigate, but it's not just uh if investigate, but it's not just uh if it's there, I'm going to do it. on. I I was sitting here trying to think of a poll we could ask our audience on

[23:13] good looking men. So I did I was trying to figure out where the cut was. Because like Magnum P.I. and Burt Reynolds What? They are you know, I was like who is Bo? Who is Bo? But then I was like no, I need to find a like a

[23:26] Bo more you know out. >> I thought this was going to be HSA related and it was Oh yeah, I was already I mean I was just

[23:38] mustaches a little bit more? >> Well, before we move on completely, Stoney13, if you would like a Money Guy tumbler, just email [email protected]. That's hilarious. Um next question.

[23:51] mustaches at least? Give me some rays of hope. I think we're in the Renaissance, there's a season. Look, you can ask you can ask Magnum P.I., Tom Selleck. He was out of style he's like oh man, it's it's a shame that that went out of style.

[24:06] But um But did he get rid of it? I don't think he did, did he? You know four inch and seem to mustache, [laughter] I think. Interesting. Interesting. I'm sorry. I'll I'll I'll bring Brian, maybe I I

[24:21] Let's bring this thing back. Reel it back in, Brian. [laughter] Reel it back >> [gasps] >> Next question is from Quilt Audit. It says, "Morning. I'm meeting with someone in my church to talk about finances with

[24:33] 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 were going to sit down and somebody said, "Hey, I want help with my personal

[24:46] finances." Where would you start? >> you go to moneyguy.com/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

[24:59] What would you add to that? >> Yeah, yeah. So I would say if I was church and I was going to help them out the starting point that I would want, statement. I want to know, hey, a list of all the things that you own and all

[25:12] great template. You can go to moneyguy.com/resource. actually email it to her, text it to her. She can then fill that out. Well, lists out all the things that she owns and all the things that she owes, you're

[25:26] account she has access to, the types of retirement plan she has access to. 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

[25:41] credit card statements or bank transactions or wherever however you spending's going." Or maybe you tell her, "Hey, do a little bit of work. ton out there. You can use Monarch Money. You can use YNAB. You can use any

[25:54] And just start tracking where your dollars are going and then let's look at it. After a month, after you've done it, cuz what I want to see is, "Man, holy your money every month going towards eating out or towards transportation

[26:09] then I begin to triage that. And then once I figured, "Okay, how much should be going into this bucket and this bucket and this bucket and this bucket?" out the margin. And then once I figure out the margin, boom, I'm coming to the

[26:22] 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 emergency fund? Am I putting money in my Roth? And I would walk it through that

[26:36] sort of three-step process to get her on solid foundational footing moving >> Look, the reality is is most people's you cuz you're going to eat at this So you're only going to have probably 20, 25 minutes of productive

[26:50] That's why you going to need to have something that speaks after the lunch. And that's why I love the free download, but also realize the backbone of Millionaire Mission is the financial order of operations. If you ever want to

[27:03] to be, how you go deep into it. And then this also allows the ground rules to to step one, there's some things that help you set the table of of being good Um so I think that I would use that as a something just to kind of a parting

[27:18] gift. So after the lunch, more action can occur. Love that. quick. Ah, you you almost took the words out of a Money Guy tumbler since we answered your question, just email

[27:33] [email protected]. Let's do one more long-form question Let's do one more long-form question before we move into our rapid fire segment. Is Did you see Did you see the meme of the

[27:45] see the meme of the week, Brian? I did If you So one, you should follow us on We follow on all the socials. Matt is Matt rocking a stache, too, over there. This thing I'm about to be I'm overtaken over here. But uh the meme of

[27:59] the week that was on on socials and also in our newsletter and I think it was in our little email this morning, uh just fantastic. It was a representation of Reebie during the rapid fire segment and it was chef's kiss. Or was it during the

[28:14] >> Maybe it's the whole live stream. There we go. 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

[28:30] market? We have no debt and two years of expenses covered by our savings. I max my IRA only. I mean I look, this is something

[28:42] I was trying to to get people to understand what feels safe in the short term can actually be risky in the long term. Um and what it is risky or feels

[28:55] 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 right thing. And that's why I love you you use, once again, the financial order

[29:08] will show 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

[29:20] 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 why I would sell the vision

[29:32] of where you want to be and and sell the vision of, 'Hey, don't you want to actually be able to let our money work harder than we can so your thing is that y'all love doing as a couple.' Share that vision so that you

[29:46] can build some collaboration there. Yeah, I I want to I'm curious how old you guys are cuz to have 2 years of expenses saved up right at retirement or pre-retirement. So I I'd

[29:59] want to know that. Um and I love Brian's idea of starting with the why like what are we saving for why we're building? 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.

[30:14] I would use math to show my spouse hey if we're just going to save in 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

[30:27] 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

[30:42] 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

[30:56] approach that goal and then let's agree appropriate path what's the most efficient most effective path to get clicked and made a light bulb go off. >> Do we have on our website you know that

[31:10] cuz we use it on show content all the time that the rolling 20 year periods of think that's a deliverable. Okay it's more of a more of a show topic type thing but it's one of those magical things is that also a great thing for

[31:24] risky. That's why we say don't invest unless you can do it for 5 to 7 years is because yes in the short term there might be some volatility but if you can stay invested for that 5 to 7 years there's actually an incredible track

[31:37] record that this is is pretty consistent it's a and that's another thing I talk about in the the 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

[31:50] world and you're going to be 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 to grow this thing and make even more money off of the ever expanding economy and pizza pie.

[32:04] Love that. Well that's great. But look and it that point cuz that's what you know what I mean you [laughter] can't control that that's outside of the control feature. There's no plan for that.

[32:16] yeah that really doesn't matter to the question but that's for other people who should be thinking about those things not you. Jim taking over the world but you can think about what Brian and Bo shared while you

[32:30] email [email protected] to cash in on your tumbler if you would like one. part of the show our >> I I was about to try to delay us by and do this. >> It does not depend rapid fire segment

[32:44] >> [clears throat] >> did awful last week. I just want to say I did very poorly last week. I thought about it all week I could barely I could >> Okay. Oh the glass sunglasses are going back

[32:58] thing. >> So just a refresher on the rules Goose >> 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

[33:12] cute with it don't say other phrases that mean it depends okay I will flag bone at the end and we will have our maybe it depends segment where they can

[33:24] say other 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

[33:39] Don't say it. Majority of people you'll be Roth IRA. I mean I got to think that just time if you maximize the value of time and young people I love Roth cuz you know most employers now offer Roth I think that's where a

[33:53] really well. Agree or disagree by the time you're maxing out you're putting into your salary deferral if you're able to save that much money you're likely likely going to put you in a higher tax rate which means that you're probably

[34:06] going to max on the pre-tax side. You ain't wrong. We got to disagree and time is up. All right question two. Why do you never mention public transit as a possible form of reliable transportation? Cuz we're too suburban.

[34:19] possible. >> whenever I go to Europe you know even DC especially with the way the mobile apps make it work. >> to start the clock so this will be a lot less expensive than 8% of total income.

[34:34] Start the clock. Agreed we public transportation or like a walking community is an amazing opportunity for folks who can live in that place. We place like that so it doesn't come to mind initially that's just a little

[34:48] 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 south the Georgia public transportation was never done

[35:02] well so we we it's not part of our life. >> You know where public transportation was done questions over I get that. You know where they mastered public When we were in college at the University of Georgia right like that

[35:15] I you know I was part of that infrastructure. I know you were one of But it was great it was amazing how convenient it was to hop on a bus get the schedule. If I lived in a city where that was like an opportunity that was a

[35:30] >> If I could make a gazillion dollars driving a bus I might still be driving a Listen to the Beastie Boys. >> All right. It was good stuff. uh the system there Bo. Let's get back to our 30 seconds.

[35:44] >> that was a tangent I I was a tangent. >> [laughter] >> Next question is what is the money topic Bo and Brian differ on the most and debt. I mean that's what we we fought on it

[35:58] for a long time made it in the book because I was Bo kept telling me I was bad with money or math um because I was trying to pay off my low interest mortgage. And I was right. Um

[36:10] >> what's really interesting we actually do align on I would say almost 100% of things financially cuz 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.

[36:24] So I can put a number >> Three. Three. I'm making some notes too. Just when we come back He's making notes on things to discuss. >> back to that I do want to say 2008. Okay.

[36:36] Okay. Oh. Um next question says if I retire before age 55 should I do 72T or a Roth ladder?

[36:49] Say it again. If I retire before 55 should I do 72T or a Roth ladder? I don't like Roth ladders um gosh I want to say more but um gosh I want to say more but um 72T is complicated but um Roth is going

[37:02] to be your favorite savings and it's going to be your favorite child so it's going to be the first in last out. I I Nope okay we'll come back to it. 72T >> When the market is going down >> I'm so sorry. When the market is going

[37:17] down sharply what are some financial mutant actions to take? Always be mutant actions to take? Always be buying. averaging cuz you have a lump sum you can once you get over 20% every 5% drop

[37:33] you can accelerate another month forward on on your plan. Well done. Look for opportunities. >> I I try to be opportunistic. Great. We still had time.

[37:45] >> Yeah you cut us off we had 15 seconds. He would master communicators well I put myself in there with master communicator >> [laughter] >> All right next one is the real hard hitting question. Comb or brush?

[37:59] I use both. Neither. Ooh. Are you using your fingers? Yeah dude. I just mess it up. No I use I use a comb to part the hair get the right part cuz I'm not an animal and then after I dry

[38:13] the hair I got to run a brush through it to give it the poof. You know what are do y'all y'all use utensils or your hand your fingers and hands right? answers from >> Wow. your fellow men.

[38:26] >> Are you a comb or brush or you fingers? Neither. I was going to say neither. He just wakes up and just shakes a little bit. Yeah no I just you know wet the hair real quick tussle it put some like you know this little by the way a

[38:39] me up with my hair stuff uh pull a bit out of there. Yeah man. Somebody sends you product or something? It's the best product I've it's the best product I've ever used

[38:52] best product I've ever used by >> 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

[39:04] $444,000? Student loan. Yeah student loan. this person? Doesn't matter student loan. I mean that one's that one's kind of easy let's do the student loan. >> did you say 29,000 on the mortgage and

[39:19] so there's a debt snowball thing going here they're thinking ooh I'll pay off the lower one I'll get that out of the I think it's going to be sub optimal the student loans is twice as high as your mortgage and the mortgage is

[39:31] appreciating and it's super low interest even low almost as low as the risk free rate for sure student loan. Yeah agree. Next question which step of the FU would you place paying back a 401k loan that

[39:44] you took out before you were financially enlightened? depends on the interest rate. I don't I don't need to KNOW MORE DETAILS.

[39:56] YOU CALEB. WHY DO I LOSE IT? I DIDN'T were a team. Moving on. Last time I got called for depends he got to answer. I answered the same

[40:09] Three hours like 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.

[40:25] Yeah, I mean tax law yeah, as soon as the market starts getting find the silver lining. Sometimes you might have a position that get rid of. I have this individual stock it goes down I still believe in the

[40:37] 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 when you got some losses.

[40:49] >> Right. [laughter] Remy is jeez. Woof. All right. A couple more. Best strategy for handling mileage reimbursement. The rate handling mileage reimbursement. The rate is generous and we always have extra.

[41:08] the employer. >> Best strategy on handling it? Track track your mileage >> that are out there doing that for you. Always has extra what? Money.

[41:21] track your mileage and report it and get your expense reimbursed. Automate the >> there's figures apps out there that will help you out and make sure you to. Great.

[41:34] Last but not least, what really went through your head when you walked in and saw the mullet wigs on your desk this morning? what crazy thing are they trying to do? Especially when I saw the mustache for

[41:49] Bo. Um but then when I found out the admin team did it and April's fool 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.

[42:01] that the writing team was going with or where we were I mean let's face it now outside the Our [laughter] admin team serious they're not serious people. now. That's what they do. Health is wealth. They're not serious people.

[42:16] Hey, by the way we we desperately we desperately need a new administrator. So financial advisor firm and you and you like building your core strength at work on a big bouncy ball, go to moneyguy.com.

[42:30] the office. Oh I'm sure that's the other thing. I you know I know this is not 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, face

[42:45] >> just messaged and said let us live. >> [laughter] >> 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 our maybe it does depend

[42:58] segment where you can say what you didn't get to say. On the very first question about 401k you guys disagreed. Do you have anything else to say on >> Bo was fighting to not say it depends. >> Yeah, so I I said that

[43:12] if you're in a higher income to 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 8,550 or whatever the numbers are in

[43:24] 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 be making $137,000 as a household for 25% to have you maxing out all those.

[43:36] So the odds are you're going to be in a higher income situation which is likely 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

[43:52] benefit from doing a Roth. So I went with the the numbers cuz the the real answer is Bo's answer which is it depends but I was like 90/10 let's go I knew there was going to be a lot to say there. Um there was No no no no no

[44:05] no Bo is I am saying Bo is right. I know he loves hearing that as a master communicator. Um but it is the 90/10 I was just trying Well I was curious for public transportation what percentage

[44:20] That's what I was wondering too cuz I do think that I was under the impression >> governments have done things like cuz for us. public transportation had to be something that was really thought about

[44:34] in like the 1800s. >> Sure. Um because now land and everything is so expensive. If you try to go put this stuff in like cities now goodness gracious. I mean there's projects out there in California and others have

[44:46] shown that it's a disaster to do it now. So you these are decisions that you wish was cheap. >> about why do we not talk about it more? is some personal bias there right? Like we've always lived in personal finance.

[44:59] >> I think that that's you're pretty common right? Yeah, most people. In millionaire mission I do talk about like on housing that I think people who live in high cost of living areas one of the hacks that you can break the housing rule of

[45:11] 25% is when you have public transportation and you don't have a car payment. Um there there are ways so we do I try to address it when I can talk seconds. >> Right. But it is awesome. I was just in

[45:24] New York City not too long ago and it is crazy how like you think you're going to longer. Like it's awesome. New York treatment? >> And we were like hey we can Uber and it

[45:37] would take 45 minutes to get everywhere or we can pull out our cool apps Yeah. and just ride the public transportation. I mean maybe we should talk about it approximately 55% of Americans have access to public transportation while

[45:50] 45% have no access at all. >> that that stat you just like we just talked about city of Atlanta has public transportation But >> go anywhere. It's just like around here we we have

[46:03] buttle shuttle service In my mind I'm thinking New York City somewhere. So those stats would say you have but you don't really have public transportation. You've got the government trying to wink and nod that hey we got a bus out there.

[46:16] No, it doesn't that's not really nobody rides that. We um uh number three you said 2008. It was what does what do the guys differ I Yeah, well I think when both when Bo and I first started working together cuz

[46:29] I first started working together cuz look we all have a a recency bias and since Bo graduated when the market was literally getting his teeth kicked in. few years that you were managing money or or you know you you had some

[46:43] conservative and I was trying you know and at that point I was like it's okay cowboy and I think we've we've now moderated where we're the same even more conservative. It's just one of those we all are shaped by what is we've

[46:58] other one that I want to add just to FIRE should I do 72T? For those of you that aren't familiar 72T is a way that that aren't familiar 72T is a way that you can

[47:13] half. You have to take substantially equal periodic payments but there are make sure you do it right you can't run a foul or should I do a Roth conversion sit for a while then I'm able to pull the basis out. We both ended up saying

[47:28] hey likely you want your Roth dollars to 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

[47:41] 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 you if you

[47:56] are working in 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

[48:09] retire thus opening your ability to access those assets from 55 to 59 and a half. So there are other ways to get access to those dollars that aren't quite as complicated. We'd love for you to do one of those as opposed to either

[48:23] >> I know I'm not against Roth ladders it's just but 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

[48:36] tax rates and other things and we're like yeah, I mean I know that 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

[48:51] you're not going to die broke. I've seen how much you money you have built up and it's just in practice when I look at people's actual assets and I'm trying to finance is personal usually we don't we don't go start

[49:06] raiding the Roth account first. It's not usually that it's usually first in cuz it's step number five of the financial order of operations, last out because it is your favorite child um when it comes to your assets cuz that's one even Bo

[49:21] like right now you've told me you pulled me inside go hey I know your income's but what are you doing? You ought to be doing Roth contributions even to your cuz I'm now in this tax bracket so it makes

[49:34] keep thinking about yeah I'd rather pay a little bit more tax to this so that daughter who's going to be living off this stuff cuz that's the other thing is I have an autistic daughter who you know that's you break the 10-year rule on

[49:48] spreading beneficiaries out if you have somebody who's developmentally going to be able to to basically stretch this out over her lifetime which is pretty incredible. Yes, I'm going to pay more taxes now but creating an

[50:01] alternative um stream for her is is pretty powerful stuff. It's a good planning isn't it? It is good planning. Um there was one question where I somehow >> Somehow you as just a dictator decided

[50:17] oh You should have told Bo. This is the way the game works now. No somehow y'all are both disqualified if Brian >> Can't you lost points? And I lost >> [laughter] >> Uh so my question what was that question

[50:30] >> You did. It was which step of the food would you place paying back a 401k loan? >> Oh this is so before you were financially enlightened. Okay, why do we dislike high interest debt? Because the high interest rate works against you

[50:47] 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

[51:01] 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

[51:16] dollars start working for you and then begin progressing through the financial order of operations. That's what I would have said had Reebie been kinder and more equitable. I will try again next time.

[51:30] Reebie walked out of the room so he probably won't get implemented. So we were dropping some dimes in the content meeting. If we if they if they fill you >> tell you our we got some great ideas that's going to make the rapid fire. Now

[51:43] it terrifies me cuz I'm naturally not good at this already but if we can implement this you guys are going to absolutely love what what what we add to this if if Reebie signs off on it. That's Did y'all tell her the idea?

[51:58] It's good stuff. Reebie walks out of the room and it's like woo boss has left. >> [laughter] >> We can apply flattered I think. I think I'll go with flattered. All right. We do have some time left so

[52:11] personal finance. Are you ready? Oh let's do it. All right. The Winkenator 21 asks, "Hi Money Guy, where would an ESPP or does he want ESPP fall into the food? Are those two different things? You can

[52:26] >> ESPP is employee stock purchase plan. >> Yes that's what I was assuming he meant. Uh so where would that fall into the food? I am putting 15% of my take home into the program which means I can't max out my retirement.

[52:41] >> say it. I know I breathed a sigh of relief when you said it. I was like okay. It depends on how your how your plan operates. Uh for those of you that aren't familiar uh ESPP is an employee stock purchase plan where your employer

[52:54] 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. Often times what they'll do especially if it's a publicly traded company is

[53:08] actually let you buy at 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 at a trading window from day one of the quarter to day 90 of the quarter and you get the

[53:20] lowest price in that window or whatever that is. If something like that is happening inside of your ESPP ESPP plan we would argue that's a lot like free money. Like if I get a 15% discount or if I get to

[53:33] 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 but but Here's we love

[53:46] it really is that good that you get a with 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 here's the asterisk that goes

[54:00] 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

[54:12] 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

[54:25] 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 you you maybe maybe every

[54:41] 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 a it's just a risky

[54:53] story of Lucent Technologies and other things when I worked in Atlanta um 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 had their human capital and their investment

[55:07] same place. Love that. Love that. Well hey if you all don't thinking about personal finance even when we turn the cameras off today no problem just go to moneyguy.com not only we do do we have tons of free resources

[55:22] and calculators that go deeper on some of the topics we've talked about today we also can uh send you to the money verse our private discord server where you can keep chatting with each other asking questions um giving input and

[55:35] perspectives and um we even just posted a poll up there about your savings rate today so you can compare notes with other mutants So if you want to do that go to moneyguy.com/moneyverse. All of that is

[55:47] on moneyguy.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 cuz I think that we at least give Bo the opportunity

[56:01] you've hung out with the wizard. What was your favorite what was your favorite ride at Universal? You know what I saw I saw I took my my wife and I took her oldest girls down to uh Universal down in

[56:13] Orlando uh you know yep and it was unbelievable so much fun. The girls are I got to see a number I saw a bunch of you in the Nashville airport so a number of you in the Orlando airport so some of you at the parks. Thank you so much for

[56:28] meet you wonderful for you to have said that you you watch the show so thank you for that. Uh it was awesome. I think the easy answer to your question is Hagrid's is just balling. It's an unbelievable ride right? Like it's so good but also

[56:41] big fan favorites Velocicoaster was a big fan favorite uh 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

[56:54] did you check a bag or did you gate check a bag or did you do carry-on? So here's what we did. I uh going down at being in the Nashville airport I had four uh carry-ons my kids had nice so we took all carry-ons.

[57:06] took all carry-ons. Uh we volunteered to gate check at the first notice and it was one we gave them the bags we went sat down. It was so easy. We get land in Orlando we take it to and just you know what the Lord was

[57:19] smiling down on me as soon as I walked to the carousel all three of my ba well I just pulled them right off. So somebody you got to baggage claim. Y'all are so slow off that plane that it was already in baggage claim.

[57:31] >> dude. We yeah and it was so it was literally so easy. And the way back uh it was not a full flight so we just carried them on and it was great. >> That's a financial mutant hack. Really? It is a you know what they cuz I think

[57:44] They got that in all of them. It is a hack. It is a hack. [laughter] If you want to check your bag gate checking is probably the cheapest way to do it. If it's the same way with like your parents living in the basement. You want to be a

[58:00] mean don't you that's the it's the reality of the situation. I love gate checking if you want to use it as a financial mutant hack. I don't like when the airlines tell me, "Hey, you sir you're now at this point in the line

[58:13] 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 Bo can at his leisurely play pace get off the plane but I want my

[58:26] family to attack and go and get the heck out of there as fast as possible and not tell you I uh were like so we volunteered at the first call. Hey if anybody wants to gate check

[58:39] 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 sent you a picture. I sent you a picture of all it was completely empty bin. Uh so I do

[58:52] think they're I think they're on fire airlines. We've caught on. You I don't game completely unless it's speeding up the process but um those overheads are not really full. They they are fibbing to us and we've got to work on that. But

[59:07] know about Universal I wanted to know about the gate check cuz that was something that just populated a lot of our live stream last week how I got my cuz I I saw some money guy folks on the plane but unfortunately they were right

[59:20] as I was trying to Karen out on the on the the flight attendant. [laughter] Um so it what is what it is. I'm your host Brian joined by Mr. Bo. host Brian joined by Mr. Bo. We'll see you next week. Money Guy out.