How Much Money Can We Give Away In One Episode?

Why We’re Giving Away Money (0:06)

Brian: Free money!

Bo: Brian, I am so excited because we love free money. We love free money so much we made it one of the early parts, the early steps in the Financial Order of Operations. And you and I have always said, man, if we ever have an opportunity, if we ever have a chance to have more money than we currently have, we’re going to jump all over that.

Brian: Well, I mean, look, there’s been some things recently in the news about a thousand bucks. You know, you think about like the Trump accounts and all these other things. And then I look back to the beginnings I had. I can remember driving on my 40-minute commute into Atlanta and listening to the radio station, and they would be paying somebody’s bills, they’d be giving away $1,000. And I was at that moment in my life where I was like, $1,000 would literally change my life. And then as we were having conversations about how this stuff works with compounding growth, and if you’re 20 years old, 25 years old, what this could become, we’re like, what are we doing? We’ve kind of reached this stage to where why don’t we actually give away some money so that we can actually pay it forward to our financial mutants?

Bo: Yeah. Today we want to do that. We recognize how impactful it could have been, how much it could have changed our lives. And we want to be able to be the mechanism that maybe for one of you out there or a couple of you out there, it might change your life. And you may be thinking, “Okay, well, $1,000 just isn’t that much money or it’s not that exciting.” And if you’re someone who is thinking that or maybe you’re saying that out loud, I’m willing to bet you’ve not been hanging out with the Money Guy Show for that long. Because if you’ve been around us for any amount of time, you know that we love talking about this idea, this concept around the Wealth Multiplier. It’s so important. We have it on koozies and we have it on different pieces of swag that you may get to see later on, because we know that for a 20-year-old when they are just starting out, when they’re just beginning their journey, every dollar that they can defer, every dollar that they can put to work, to walk away from, to invest, has the potential to grow to $88 by the time that they retire.

The Power of a $1,000 Investment (2:24)

Bo: That is how powerful. I get choked up thinking about it. That is how powerful your dollars can be.

Brian: You know what’s interesting is when I remember, it all kind of comes full circle. I remember Mr. Marrow in the Marrow Moment where he told me $100 a month could turn into a million dollars. And that’s kind of the thing you and I were talking about. Hey, if people just understood what every dollar coming into their army of dollars could do for them, they would spend different. They would act different. And I don’t like to do public math, but I think if a dollar can turn into $88, $1,000 has the potential to turn into $88,000. And we can even keep it going. For a 25-year-old, the same logic holds true: $44,000. 35-year-old: $23,000. You quickly start to see 45-year-old: close to $4,500. You quickly find out that man oh man, there is something powerful about this. But there’s also something cruel about the component of time, in that while you’re in your 20s and 30s, you literally are a billionaire of time. But if you don’t leverage that opportunity, it can get away from you.

How Repeating a Small Habit Builds Wealth (3:34)

Brian: When I was looking at these numbers, I was like, one decision can have big results. But if you can create a habit, a good habit, it does multiple things. You make the good habit as easy as possible. And by setting up an automated investment plan, you also will make the bad habits that much harder because the money will already be allocated. So we actually flipped the script on this and said, what if this was $1,000 a year?

Bo: Man oh man, that’s a different conversation. If you can wrap your head around the idea that if I can walk away from $1,000 this year, that $1,000 can turn into $44,000 by the time I retire if I’m a 25-year-old, and if I can repeat that behavior, if I can do that over and over, and I can save $1,000 every single year from now until the time I retire, that 25-year-old could have almost half a million from just making that $1,000 decision over and over and over. A 35-year-old doing that same behavior starting at zero could have over $137,000. And a 45-year-old saying, “You know what, I am going to walk away from $1,000 this year and every year until I get to retirement,” just that single decision repeated through time could turn into almost $50,000. It does not take a lot to go a long way. But the earlier you figure it out, the sooner you recognize it, the more powerful and more valuable it can be.

Where to Find an Extra $1,000 (5:04)

Brian: Well, a lot of you are like, “Okay, $1,000 is obviously powerful. Where can I go and find $1,000?” Look, I want to share some ways we’re about to cover, but I want to tell you nothing should be beneath you. Go do a pantry audit. Go look and make sure when you go to the grocery store, you don’t end up with three mayonnaises and three peanut butters. People are going to totally troll that. There’s also you can go and look at your service providers. If you haven’t shopped your property and casualty insurance, your car insurance, your homeowners, you might be surprised. You did this in the past year. You found a $1,000 savings, way more than that, by shopping around. But we wanted people, and I love when we get to bring it just like Seinfeld, you said it at the beginning: get the free money. Well, that brings it full circle to your employer match. There’s a reason we like free money so much that we put it as step two of the Financial Order of Operations. Get in there and get that free money.

Free Money Through Employer Matching (6:06)

Bo: For those of you who are brand new here, this is the idea that your employer says, “Hey, if you’re willing to put money into your 401k, into your 403b, into your retirement account, we as the employer are going to put money in on your behalf as well. We’re going to match what you do.” And even though it is literally free money sitting there waiting for you to take it, we know that 25% of employees with access to a 401k do not contribute enough to get that full match. That means one out of four employees that are able to go get a match say, “You know what, I don’t want the free money. Pass over me. I don’t want to take it.” Don’t let yourself be one of those statistics. If you have free employer money out there available to you, make sure you’re getting it all.

Brian: By the way, this is just Empower as the source at 25%. Vanguard has done research in the past where it’s been well over 30%. So this is a problem that definitely impacts between a quarter to a third of the population. Not my financial mutants, though. I know you guys would never fall into these traps. The other place we want to help you discover and find additional money is don’t sleep on the fact that when you do your annual tax return, more than likely you probably qualify for some type of refundable tax credit.

Tax Credits Most People Overlook (7:19)

Bo: What’s the difference in a refundable tax credit and a non-refundable one?

Brian: Well, a lot of times like a non-refundable, if you don’t use it, meaning you don’t have enough taxes that are going to be owed on your tax return, you just kind of forego the credit because it didn’t offset it. But if you have a refundable credit, it means that even if the credit exceeds what you’ve withheld or what you paid in taxes, the government is going to send that money to you.

Bo: And so with a little bit of planning, because a lot of these refundable credits have certain income limits and thresholds that you want to be mindful of, if you can keep diligent records and do a little bit of planning ahead of time, you may qualify for the Earned Income Tax Credit, for the Additional Child Tax Credit, for the Premium Tax Credit if you’re someone who’s on the healthcare marketplace, or if you have a student in college, maybe the American Opportunity Tax Credit. There are tax credits out there available to you that, if you qualify, if you can fit into the threshold where they make sense for your situation, it is literally free money. It’s a way to come up with $1,000 in your back pocket that you can then put to work for your financial future.

Employee Benefits You Shouldn’t Ignore (8:32)

Brian: And then, kind of expanding upon step two of the Financial Order of Operations, don’t sleep on the fact that there’s actually non-retirement employee benefits too. Think about your health savings account. A lot of employers now prime the pump by throwing a little extra money in there. The employee stock purchase plan. A lot of times there’s free money or discounts that you ought to pay attention to. Health reimbursement accounts. Maybe you don’t have the high deductible plan. Maybe you have more of a Cadillac type plan, but they offer a health reimbursement and they even put additional money in there. Those are great benefits. And don’t forget, a lot of employers will give you up to $50,000 of life insurance where it doesn’t count as compensation. That is free money, but you’ve got to kind of opt into these things to really take advantage of it.

Trump Accounts and New Savings Opportunities (9:19)

Bo: And then even recently, there’s been some recent legislation where there are new types of accounts and new types of things coming on the scene that you might be able to take advantage of. If you’re a parent or a new parent or an expecting parent, Trump accounts might be a great way for you to go out there and get a free thousand dollars for that child. And then there are even some things that are happening next year related to the Trump IRA accounts that you may be able to get a match for if you qualify. That’s probably not going to be in effect until 2027, so we’ll talk more about that as we move in that direction. But if you can stay in tune with what’s going out there in the financial world and where there are opportunities for free money, you can take advantage of those. And remember, every dollar that you can save today, every dollar that you can put away today has the potential to turn into something meaningful for you later in life. But you have to have the discipline to start the process today.

Brian: Look, I’ll say this. I think we don’t do politics on this show, but a lot of people because they see Trump accounts and Trump IRAs, they have a thought towards it. And look, you can go call it subsection 530 or whatever you want. I remember it was kind of interesting: 529s are education accounts, ABLE accounts, and this is 530, so it’s definitely in the same code section. Really nerdy stuff. But I’m just telling you, I want everybody to think about what this can do for your kids. If you have kids that were born in 2025, 2026, or 2027, don’t sleep on that free money from these Trump accounts. When you think about the power of this, don’t let a political decision get in the way. Money’s green. It’s not red, it’s not blue, it’s green. This could be a huge opportunity. And I love that a lot of these billionaires like Michael Dell are jumping in. So if you have kids as old as up to 10 years of age, there might be up to a few hundred dollars that could even help fund savings for those kids. Don’t sleep on that. Don’t let your feeling towards politics, because nobody likes politics, it’s a dirty dirty game, but that doesn’t mean you can’t take advantage of creating an army of dollars for your children and let that superpower of compounding growth do magical amazing things.

How the $3,000 Giveaway Works (11:33)

Bo: But look, we don’t just talk the talk. We want to walk the walk. If we say that we love free money that much, we ought to put our money where our mouth is. So Rebie, you had a great idea that you wanted to share with the audience. Tell them what you came up with.

Rebie: I like that I all of a sudden got credit for this idea. I’m just going to leave that there. But I am excited. We are about to start our live stream $1,000 giveaway. Here is how it works. Submit a question in the chat. We’re looking at all questions after 10 a.m. Central time. We’ll choose approximately 5 to 10 questions as we normally would to feature and answer on today’s show. And then at the very end of the show, we will randomly draw from those 5 to 10. We are going to draw three winners, and you will get $1,000 if you are among those three winners.

Bo: So like $1,000 spread across three different people? Is that the way we’re doing it?

Rebie: Each person will get $1,000. We’re going to give $1,000 to each of the three winners.

Brian: Got it. And good news, there is an added thing too. We are doing our normal live stream stuff that’s not part of the special giveaway. If you are in those 5 to 10 questions, it is also a tumbler.

Bo: What? You’re welcome.

Brian: Did I agree to this? We’re giving away too much stuff. So we’re actually giving away probably like $3,300 worth of stuff. Here’s what I think is true. I don’t think that that is right, because if right now there is a 20-year-old out there listening to this and their question gets selected, you realize that $1,000 they could potentially win has the ability to turn into $88,000. It’s an $88,000 giveaway. I mean, that math maths, right? What if there’s someone out there who’s like, I don’t know, like a 12-year-old? We have people do this. They want their kids to watch.

Rebie: You can’t win $1,000 unless you’re 18 years of age. Let’s make sure we stick to the actual rules. You have to be a US citizen and you have to be greater than 18 years of age.

Bo: I love where you’re going from a max standpoint. But your parents, if you are a 12-year-old watching this, get your parents to ask us the question. Wet blanket, Preston. Did you see where I was going? I’ve represented clients before the IRS. What I’m saying is if you do have a 12-year-old, do you realize that that $1,000 invested on behalf of your 12-year-old because you’re the parent has the ability to turn into $196,000 by the time that they get to retirement? That is how powerful it can be. A little bit can go a long way if you give it enough time. Just thanks for taking all the wind out of those sails.

Brian: By the way, a 12-year-old’s wealth multiplier is 195.99. Let’s just go ahead and call it 196. That’s $196,000. I did that math. I was seeing stars at the fact that you’re trying to give away money to kids when there are so many safety protocols on how we need to keep kids out of stuff.

Rebie: Well, now that we’ve gone down that rabbit trail and clarified that rule, let’s dive into the contest, shall we?

Q&A: Financial Mutant vs. Financial Miser (14:50)

Rebie: I do have some questions queued up. The first question is from Jordan Lee Music. It says, “Money guys, I’m only 23.”

Bo: Let’s go!

Brian: Hey, what’s the multiplier? 57.84. Jordan, you too today could win $57,840!

Rebie: “How do you guys prevent yourself from being a financial miser instead of a financial mutant? And how has your relationship with money changed over time?”

Bo: I want to answer your question in reverse. I want to start with the second half of the question and then back into the first half. For me personally, my relationship with money has changed over time. As I’ve been doing the things that I was supposed to be doing, as I’ve been saving and building, it’s allowed me to not have to worry about small decisions financially in the same way that I had to early on. Because early on, I don’t want to say that I was a financial miser, but I recognized when I was very very young there just wasn’t a ton of extra money. There wasn’t a lot of margin. Every single dollar mattered a ton. I wanted to make sure I was putting my money to work, that I had my emergency fund, that I was funding the Roth IRA. But I did give myself permission as life circumstances changed and as the family grew. I began to not be so concerned and overwhelmed with making sure that every single dollar was handled in the absolute most efficient, most optimal way possible. But I didn’t start that way. I had to develop the muscle memory of making sound financial decisions, paying myself first, hitting a 25% savings rate, and then I was able to kind of take it a little bit easier later in life. Where I think people fall into traps, and Brian, I’ve seen you counsel so many people through this, is they never actually move along that path. The way that they were when they were 20, when they were super tight, when they counted every penny and held on to every receipt, they’re doing the same exact thing at 35, 40, 45, 50. And I think that is where the financial misership shows up.

Brian: Jordan has given us a little context in the fact that they’re 23 years of age. I’m going to go ahead and just give you the cold water discussion on this: when you’re 23 years of age, I don’t want you to be a complete miser, but I do want you to be tight. Because when I look at my life, there were so many paths to success in your 20s. You kind of have to really stick your head in the sand and not create success if you just can’t understand money concepts in your 20s, because every dollar truly just has that much potential. I remember when I first graduated college, two years in a row I didn’t get to go to Mardi Gras because one year it coincided with when I was studying for the CPA and another with the CFP. I deferred it because it was so important that I better myself and stay on my career path. I think there’s decisions you can make with money as well. If you have friends trying to convince you to go do something big in your 20s, maybe you can get just as much enjoyment from living a great, simple life and still creating memories, hanging out with friends, doing important stuff. Just don’t feel like you have to be all bougie in your 20s and 30s like social media is trying to tell you, because that’s not where success lies. But as you get older and your army of dollars starts to catch traction, it’s different. There is a declining benefit in you being tight with your money. You start to work against yourself. And that’s when I had that realization probably in my late 30s. I was like, man, what am I doing? You don’t have to be tight anymore. I’ve built up all the discipline of those 20s and 30s, and it’s now being rewarded. In my 40s I officially gave away my tight wad card because I don’t feel like I live a tight wad life at all anymore. But I am very happy with myself for all those hard decisions I made in my 20s where I was watching every dollar that came in and out. That’s why I hate budgeting, but I think in your 20s you’ve got to budget. You’ve got to track it. I don’t know if we’re allowed to say mobile app names anymore because we’ve taken ad money in the past, but I use Monarch myself just to track. We’re not getting paid for this episode to say that for all the trolls out there. It is one of those things where you have to be deliberate when you’re young because there are so many paths to success. You don’t want to screw up that opportunity. But once you start creating success, let your money do the work for you and start enjoying life because you only get one life on this planet. I want you to know what creates success but also how to cherish success and own your time that much sooner and make as many memories as possible.

Bo: I just want to add one thing because you said, “Hey, I’m not a tight wad at all anymore.” I want to make sure we draw a line. There’s a difference in not being a tight wad and being a frivolous spender. Oh no, I’m still good with money. Yeah. There’s still this idea that when I spend money, when I’m going to buy something, when I’m going to purchase something, I’m still going to make sure I get good value and I’m not being wasteful and I’m not being frivolous. You cannot be a tight wad and still be a very good, solid, sound financial decision maker. Don’t assume that those two are synonymous because they’re not. It’s just early on in your journey, you might have to be super super super tight, and then as you’ve done the hard work, you get to be less and less tight while still making really really good financial decisions.

Rebie: That’s great. Jordan Lee Music, thanks for joining us. You do get a tumbler so you can cash in on that at winner.com. But don’t do that yet. Wait till the end of the show because we’re going to be giving away that $1,000 as well to one of you who is asking a question today.

Q&A: Would We Break the 20/3/8 Rule? (21:32)

Rebie: All right, next question is from Solj. It says, “Would you ever break the 20/3/8 rule if you had the money to pay cash and are able to get 0% APR while getting 3% or more in a high yield savings account?” Brian got excited and then he didn’t.

Bo: Can I confess? I’m professional, right? Not the last car, and maybe not the one before that, but maybe the one before that. My wife and I, we went and got this car and we financed it because they were offering 1.9% at the time. And we could have paid cash. But I was like, “You know what, I’m going to do it. I’m going to do the 20/3/8.” And we actually did a little bit better. We put down more than 20% and I financed it for three years. Point of the story: I hate car payments. I just don’t like them. And so what ended up happening is we ended up just deciding to pay it off early anyway. Was that the optimal financial decision? Likely not. If I have a 1.9% car loan and I’ve got 3% over here in a high yield, is there an arbitrage I can take advantage of? Sure. But is it worth the mental calories and the headache of having the car payment? Or man, was it just a whole lot easier to pay cash and not have that car payment? I’m going to argue on that side. Now, that’s different than someone saying, “Oh, if you had a billion dollar loan at 0%, would you not take it?” That’s a different thing. But for a small automobile arbitrage, I just don’t like having car payments. And I think that simplicity is valuable. That little delta there was not worth it for me.

Brian: I don’t think the arbitrage opportunity here is big enough to break the rules. I do want to give some context because I have a no-hypocrisy policy. When I bought my wife’s car, the one I’ve complained about so much, I actually kept the loan open for three months and then sent the check right in at month three or four because I got an extra 1 or 2% off the total car by financing through the dealership. I think that’s fine if you’re looking for that type of thing. But the 20/3/8 rule‘s sole purpose is for you to get reliable transportation. Think Corolla, not Land Cruiser, to get you to your job. There are points in your life where you’re broke as a joke and you just want reliable transportation. If you’re getting to the point where you’re trying to play games with it from an arbitrage standpoint, you’ve lost the context of why we even gave you this rule. Cars depreciate. They suck. Nobody gets rich off of cars. I’m talking about the cars that the typical American is buying. It’s a losing game, a depreciating asset. We gave you a rule to be a lifeline to get you to your job. If you’re sitting on piles of cash, pay cash, because that is the way you stay away from the depreciation. You also keep your ego in check because for some reason cars, I think because of what culture tells us in this consumption society, you need to look cool. There’s a reason the typical age for a Corvette buyer is like 63 years of age, but in all their ads it’s beautiful 20 and 30-something year olds, because they’re trying to put this perception on you that this is what you have to do to be cool and be the best version of yourself. And the reality is nobody cares. That dopamine hit will diminish so fast you’ll be left holding the bag with the car payment if you’re not careful. We’re trying to protect you.

Rebie: All right, Solj, stick around because you get a tumbler and you are now entered into our $1,000 giveaway.

Brian: We ought to ask everybody who asks a question their age as politely as possible so we can play games with the Wealth Multiplier.

Bo: Don’t be a jerk about it. Some people get annoyed by it. Just politely as you can.

Brian: Well, I mean, if you feel comfortable sharing, because we love the Wealth Multiplier and just want to show, because when we pull the names we could then share how much this had the potential to become and add it up. And then for clickable titles, we can say we gave away this much money.

Brian: You see what I did there? They’ll never see it coming. So Soulge is 41. What’s the Wealth Multiplier for 41? 6.62. Could be $6,620. Wow. It’s amazing when you only have to carry the three zeros.

Q&A: When Does Optimization Matter Less Than Behavior? (27:19)

Rebie: Are you ready for the next question? It’s from Jordan Hamilton 8960. We already had a Jordan.

Brian: I know. We had two Jordans. Getting that Jordan a thousand bucks. Now, employees are not eligible. We’ve told them that, and employee spouses.

Bo: Yeah, I keep seeing questions come in from “Not Money Guy Will.” I don’t know why that one seems awfully suspicious.

Rebie: All right. Jordan number two’s question. It says, “At what net worth does optimization matter less than behavior? I know it happens at some point, but when? Talk about optimization and the math of it all versus just good behaviors when building wealth.”

Bo: Oh, I mean, this is what we built a system for. Well, I want to hear you answer this because I don’t know that I fully understand the question.

Brian: Well, I mean, I think it’s because I’ve had to update some things. I don’t think we’re ready to make big announcements yet, but you do get to a point. There are so many big things coming out this year. Rebie knows. She’s had her cat herder hat on. Step eight, I mean, I think is exactly when we talk about, you know, the title is prepaid future expenses, but the good time rock and roll name is abundance goals. This is when you can kick it up a notch where it’s not so much about optimizing because you’ve already put your army of dollar bills doing what they’re supposed to be doing, going in the right categories. So now you can feel no regret if you buy a nicer car, if you let your lifestyle expand, if you start investing in residential real estate or commercial real estate and things like that. It happens after you’ve already set your financial base underneath you. The problem we have is when the typical American expands their lifestyle because they feel like they’re owed it, and they haven’t even set up their financial foundation yet.

Bo: Yeah, I agree with everything you said. But at what net worth does optimization matter? Well, it depends on your income and your behavior. I think that behavior always matters, likely more than optimization. And this is what I mean. Let’s say that you have mathematically calculated that the portfolio that makes the most sense for you is a 90/10 portfolio or a 95/5 portfolio, very very aggressive, far out on the risk spectrum. And that is the mathematically optimal portfolio for you. But behaviorally, every time the market goes down, you freak out, you lose sleep. I’m going to argue that rather than being mathematically optimal, whether you have a $100,000 portfolio or a $100 million portfolio, if behaviorally you can’t stick to the plan and you can’t sleep at night and that plan does not match where you are behaviorally, then all the optimization in the world won’t matter. Same sort of thing. You can have the most beautifully constructed portfolio where you’ve got alpha figured out and beta figured out and expense ratios figured out and all this stuff, but behaviorally, if you are not living on less than you make and you’re not saving for the future, there’s no way that optimization is going to outweigh the behavior. And then even when you get to financial independence, you can have the very best portfolio in the world, you can have all the risk metrics figured out, you can have all the liquidity available, but if you can’t spend inside the healthy sustainable withdrawal rate for the size of the assets you’ve built up, I don’t think you ever get to walk away from behavior. What ends up happening is the acceptable behaviors expand as your financial circumstance improves. But I don’t know that there’s ever a time that you can say, “Oh well, behavior just doesn’t matter anymore.”

Brian: But we can put some meat on these bones to a degree because we talk about the three stages of wealth. There’s the make wealth phase, there’s the maintain wealth phase, and then there’s the multiply wealth phase. When you are in the make wealth phase, you probably should be focusing on optimization in a lot of ways. And I think when you maintain wealth, we know most people cross into seven-figure status in their late 40s. This also coincides with when you might ask: should you prepay your mortgage debt even if it’s suboptimal to do so? It’s typically 45 to 50 is when you can start, or you’ve already been saving greater than 25% and you’re in step eight, back to my full circle. But that’s when because now you’re thinking about the risk, the emotional, all those things. It’s not about optimization anymore. And then even when you get to the multiply stage, meaning you’re no longer thinking about money as just the tool it was for you in your 20s and 30s, when you give to charities and things like that, that’s not for you. You’re stepping outside of money in that aspect because you want to pay it forward. If you’re in the make wealth phase, follow the numbers. And you’re going to find it coincides very nicely with steps one through seven of the Financial Order of Operations. Once you’re ahead of the curve and can now think about de-risking, then yes, I think that’s probably in your 40s you’re going to be able to make decisions that don’t have to be optimal, but are in what you’ve decided is best for your life and how you’re using your time and your money.

Brian: Love that. Good discussion. I figured you would say there’s not one net worth where all of a sudden behavior doesn’t matter. And you know, this is why we create products like Know Your Number. Are you ahead of the curve, behind the curve, or right where you’re supposed to be? You’ve got to use these resources.

Rebie: All right, next question is from Riverboat Rob 89.

Bo: Did you hear him open his drink earlier? He did it while I was looking.

Brian: Look, we had a friend of the firm, a client of the firm. I’m walking in, I said hello, and I saw Caleb getting all stressed out because I walked in with 17 seconds to spare. We’re supposed to be here 10 minutes early.

Bo: You made it 17 seconds early.

Brian: Okay, somebody was asking a question and I interrupted.

Q&A: Should You Use a HELOC? (33:50)

Rebie: RiverboatRob89 asks, “Should I take out a HELOC to purchase the lot next door to me? It has a garage and would add value to my property if I sell, but I’ve heard a lot of bad things regarding HELOCs.”

Bo: Okay, Riverboat Rob, we do not know your home, your lot, the unique circumstances around it, all that kind of stuff. So should you buy it? We’re not going to be able to weigh in and answer that question fully. I think the real crux of your question is: are home equity lines of credit, HELOCs, appropriate tools and mechanisms to use for something like this? Sometimes that thing might be buying the lot next door or doing a home improvement or doing a renovation. Some people like to use HELOCs to go on vacation, to buy a new car, to go on a shopping spree. I think it would be helpful, Brian, if we just kind of talked through: are HELOCs okay? Are they acceptable tools to use and when do they make sense and when do they not make sense?

Brian: Well, look, we’re in a time right now where this is going to be even an easier decision for you to make because interest rates are still somewhat higher. There has been a season where home equity lines because they were like prime minus one. That’s how crazy it got where the interest rate on them was like 2.5%. And so people started going, well I could use that to pay for my car, I could use that to bolster my lifestyle. There were a lot of bad decisions that went on with home equity lines in that era. And that’s where I think a lot of people’s negative feeling towards these tools comes from. What you’re asking for is to buy the lot next to you that has a garage. This is probably the closest reason for why you would use a HELOC because it is tied to your home. But what I would look at is: is this a short-term bridge? Is this a once-in-a-lifetime opportunity that I need this additional land and this garage, and it would add tremendous value to my life? If the answer to that is yes, then in your decision matrix you go to the next box and ask yourself, okay, this home equity line has a pretty high interest rate on it, so I need to look at this as a temporary bridge, very short term. Do you have the cash flow or the income or the discipline to where you can pay this loan off in three to five years? If the answer is no, then man, you’ve got to figure out, hey, can I get myself out of this in three to five years? Is that a lifestyle change? Do I go find additional income? Or do I just need to say no? Go through that decision matrix for yourself. But if the answer is, yeah, I’ve got some bonuses coming in, I’ve got some really realistic things that are coming up that I could pay this off in three years and it could change my life because now I’ll have more privacy and this extra storage, and you know, in the financial mutant version of things, then yeah, I think it could be a very effective tool as long as you go through that decision matrix.

Bo: Yeah. Even with that decision matrix, I’m going to say you ought to do some sort of 3D Glasses planning. Hey, if this goes really really well, how does that play out? If it goes the way I expect it, how does it play out? And if this goes really really bad, when you say 3D, dream, down to earth, doodoo plan, if it goes that way, what does that practically mean for me? A lot of people want to pay off their home so quickly because they say, “Hey, if all goes to pot, at least I own my home. Nobody can take that away from me.” Whenever you take a home equity line of credit, you’re now borrowing against your home. You’re collateralizing that asset. If you cannot satisfy that note, well, now you could potentially lose your home. It’s one of the reasons why we say, “Hey, don’t use home equity lines for debt consolidation. You’ve got a ton of credit card debt. Don’t go use your home equity line to consolidate that, because you have unsecured debt that you’re now replacing with secured debt. You are now putting your house up on the line.” You need to recognize what you’re actually doing when you take out that HELOC. You need to walk through: am I comfortable with the risks? Is this going to be relatively short-term in nature and do I have a path to get through it on the other side? Far too often I think people take out a HELOC and treat it like a primary mortgage. I’m just going to have two mortgages forever for the next 30 years. I would argue if you’re doing that, you’re likely doing it wrong. If you’re taking the HELOC out for the maximum period, the 10-year period or whatever they’re allowing you to do, I would caution you against doing that. I would rather see you save up, get ready for it, build for it, or use the HELOC and figure out how to get that note satisfied quickly so that your house does not continue to be at risk.

Brian: And look, in these unique times where interest rates have run up and prices of homes have run up, a lot of people now are looking at their current home and saying, “Maybe I should improve it so I don’t have to go reset my loan, I don’t have to go move across town.” So I do think they’re effective tools for that purpose. You just need to do the math exercise. Bo went through the checklist very well. Short term. Because it’s just too high to get yourself into a long-term HELOC right now. Was it 6 or 7%? Mine was 6.8% or something. Nobody wants to pay 6.8% for an extended period. Now look, I know there are some different tax treatments and other things with home equity lines, but go through that decision matrix we just laid out and I think you’ll land in a good place. Did Riverboat Rob tell us how old he was?

Rebie: I don’t believe so.

Brian: Riverboat Rob, look at the camera politely. Feel free to share your age so we can figure out the Wealth Multiplier in case you win our $1,000 giveaway.

Bo: Look at the camera or were you telling yourself to look at the camera? Because you said look at the camera politely.

Brian: I assume everybody’s got cameras out. Look at the laptop camera because we can see everybody out there. We can see all of you.

Bo: Rebie, I’m so sorry. We’ve got to answer questions faster.

Rebie: You kind of do. I’m glad you said it because I was thinking about telling you to be a little bit quicker.

Brian: Last show people were like, “I like the slow and low.”

Bo: But we’re giving away money on this one. More people want their chance.

Brian: I guarantee the two Jordans are like, “Man, right now there’s been what, four questions? We’ve got a 50% chance we’re going to win money.” No, actually, it’s better than that. They’ve got a three out of four chance right now. Try to get two, three more in. We’re going to do our From the Wings segment and then after the segment we will announce the three $1,000 winners. I’m going to answer a little bit quicker because I want to maximize the opportunity for people out there to win. Not rapid fire quickly, but quickly. Maybe a three-minute answer would be really good.

Q&A: Balancing Early Retirement Goals and Saving for Kids (41:16)

Rebie: All right. Next question is from godsgirl951. It says, “Hi, how do you balance between saving for your kids’ future and hitting early retirement goals? We are on track to retire at 55, but should we be putting more in a brokerage now or 529 for our kids’ future?”

Bo: This is a goal priority question. The fact that you have a financial independence, retire early FIRE goal means you have to figure out: what is more important for us, being able to retire early, exit the workforce, have a different timeline, or being able to pay for our kids’ college? And the answer to that will dictate where your dollars go. For most folks, it makes sense to prioritize financial independence over college because there’s going to be a plethora of options for your children to pay for college that will not be available to you when it’s time to pay for financial independence.

Brian: God’s girl, it’s built into the plan already. Financial Order of Operations step seven, hyperaccumulation. This is actually where you’re going to get into this. All the other steps were to protect you or to give you some type of tax benefit. When you get to step seven, this is the first step that’s going to say, “Hey, how do you need to change how you structure your accounts? Are you going to need access to your accounts early because you’re retiring early?” You’ll very quickly realize, okay, we’re going to need to have a higher savings rate. We’re going to need to structure these accounts accordingly. And that’s what you’ll decide. Then once you figure that part out, you’ll move to step eight, which, ding ding ding, you can fund kids’ 529s at that point. So you see how you have to protect yourself first, do the planning, and then once you’ve measured twice and got all that stuff figured out, go load up the 529s. They’re great savings tools for education. Trade schools, future Roth IRAs, lots of opportunities now with 529s. They’re not to be slept on as long as you’ve funded your own retirement first.

Bo: Two minutes. Beautiful. God’s Girl, how old is she?

Rebie: I think we do have that. 28.

Brian: 28.

Bo: What’s the multiplier for a 28-year-old?

Brian: 29.7. Wow. For God’s Girl. Well done.

Rebie: All right, god’sgirl951, stick around because we will be doing our drawing at the end of the show.

Brian: Do you have to be present to win?

Rebie: Ideally yes, because then you won’t know to cash in your prize or how to do it.

Q&A: Can You Retire Early Without Three Buckets? (43:47)

Rebie: All right. Music and Coffee 1923 is up next. “Is it possible to retire early without three buckets? I am maxing out my Roth, HSA, and on my way to maxing out my 401k. I’m 31, $240k household income, but haven’t begun contributing to my taxable brokerage. What do you think?”

Bo: So for most people when they retire, you have to wait until 59 and a half to be able to access your retirement accounts. Unless you are still employed in the year that you turn 55, then you can access the dollars inside of your 401k in the year that you turn 55 without having to pay a 10% penalty. But you say, “Hey, I don’t have three buckets. I really only have two. I’ve got my tax-free bucket, my Roth, and I’ve got a pre-tax bucket. Is it possible to retire early?” And the answer is yes, it is possible to retire early, but you have to plan for it and you have to kind of think through how am I going to access these dollars. We did a great show titled something like “Three Ways to Retire Early” or “Five Ways to Retire Early That You May Not Know About,” and we walk through some of those strategies that might be available to you, like Roth conversion ladders, like 72T distributions, or like building up and creating a taxable account to pay for that. So you have to figure out for your unique and specific plan what that’s going to look like and how you should build your three buckets and whether it’s necessary based on your timeline to get there.

Brian: Well, the truth is Bo just covered it. You don’t need the three buckets. But let me just go ahead and tell you how life plays out. You hit your peak earning years in those 40s and 50s and you’re going to find, because if you’re planning on leaving in your early 50s you’re going to hit some of those peak earning years, you’ll get to step seven of the Financial Order of Operations and then you’re going to say, “You know what, this must be what the guys are talking about. I’ll start stacking some money in this taxable brokerage account to be the bridge.” Because all these people, it cracks me up when people talk about using their Roth money as their bridge money. This thing is your Gollum home where you’re like, “It’s my precious.” Nobody wants to get rid of their Roth dollars. I mean, tax-free growth. Are you kidding me? I still, in Millionaire Mission, I missed out on $10,000 from my Roth IRA because when I started the company early on I just didn’t get all those contributions in. And I still regret that $10,000. I’ve just found in my practice most people tend to find that they have money in other places that they can cover the bridge with. So, you know, there’s one thing I think people like to get creative about, especially when you’re 31 years of age right now. You’re looking at your buckets going, I could use this. Yes, you could. But when you get to be in your 50s, you’re going to be like, man, I really like that Roth bucket. It’s nice that my income was high enough that I was able to set up a taxable brokerage account that can be my bridge account. By the way, 31 years of age, 20.39 is the Wealth Multiplier. Crazy for Music and Coffee. That’s right. I love both. Go in for the drawing!

Q&A: Is a Home Renovation Worth It? (47:07)

Rebie: NoahTurvolon1946 is up next. It says, “How do you decide if a house renovation like redoing your kitchen is worth it, especially for younger people since we have a higher wealth multiplier? I’m 24.”

Brian: Oh man, I was about to say, what does your wife say? Because as y’all know, I’ve made horrible decisions because it made my wife happy. But Noah, you’re 24. Holy cow. If you’re already making these decisions, you own a house at 24, you’ve got me in a pickle now. Because that wealth multiplier for a 24-year-old, by the way, not to ruin it, is 50.42. It’s a lot. Can we just paint those cabinets?

Bo: And that’s kind of in a roundabout way where I was going with that. How do we decide if it’s worth it? Well, you have to define the value. What are you quantifying? Are you saying if we renovate our kitchen, is the value of our home going to increase more than what we pay? So there’s going to be an ROI on those dollars. That’s one way to measure value. Another way is, man, we really love having people in our home. We want to be able to host people, cook dinners, have our kids here, do all of these things. And that may be of highest importance, of most value to you. Every time you make a financial decision, you’re making an opportunity cost decision. If I do this thing, then it’s going to cost me this thing. If I don’t do this thing, I’m going to be able to fund this thing. A home renovation is the same. So you have to figure out, okay, why do we want to do this? What’s the purpose behind it? And where does it fall in priority amongst our other goals? If we’re 24 years old and financial independence is very very important for us and we want to retire early, and instead of saving and building we walk away from the wealth multiplier to do this kitchen renovation, will we be okay with working longer because of it? Maybe that means we can’t go on trips like we wanted to. You have to define what it is that you value. And only once you’ve done that can you determine if the cost is actually worth it.

Brian: Also, I want to give the experience share. When I got my first house at 24, we had an issue with the kitchen and my wife and I went and rented a wet saw from Home Depot and we did our own backsplash. I did my kitchen backsplash. It turned out so good. Because it’s all geometric, it’s so much easier than I thought it was going to be.

Bo: My wife would like some in the pantry. Would you want to come do our backsplash?

Brian: I mean, I’m aged out of this now. But then I ended up doing it at my parents’ house. I did it at my in-laws’ house. I mean, renting a wet saw was just not that expensive. And when you see how affordable tile is. By the way, for the years that we lived in that house, I felt so much pride that I had done that project myself. So I tell you this, Noah, not because I’m trying to be the Scrooge that says hoard this money. I’m just telling you, at 24 years of age, I’ll repeat it again: your Wealth Multiplier. Every dollar you spend is worth $50. So there’s a lot of power in that time and the compounding growth. I’m just asking you at this early stage, where you also have the biggest threshold for what you can put up with and be happy with, maybe you can look at your kitchen and first ask yourself, is this something I can improve by painting the cabinets, putting up a new backsplash, changing the countertops in some way? Is there some way you can spruce this thing up and not get yourself out of whack from building your army of dollars for the future? Look, I share that experience of when I did things on the ultra cheap. And then last year we updated our Tennessee home and it was nice that we didn’t have to think about it. I just let my wife go hog wild with what she wanted to do, and it was fine. But the time was right. The wealth multiplier wasn’t getting damaged as a percentage of my total net worth. It wasn’t even moving the needle. Whereas in my 20s, it would have moved the needle. You go spend $50,000 or even $25,000 on a kitchen renovation, that has a huge impact when you multiply by 50. Maybe we ought to think about this. I don’t like being the cold water, but I’m just telling you, when I look back on my life, decisions like that are what move the needle towards success.

Rebie: Love it. All right, fantastic. If your question was featured on this live stream, stay tuned till the end. We’ll announce our $3,000 giveaway winners after our From the Wings segment. Do the From the Wings folks qualify too?

Brian: Oh no. From the Wings is from you guys. You all don’t qualify because you’re employees. So never mind, keep going. Sorry, Reeves.

From the Wings: Headlines That Are News or Noise (52:33)

Rebie: All right. This is our segment where the content team pulls some headlines that they want your reaction to. You have your thumbs up and thumbs down paddles. I’m going to read the headline and you’re going to tell me thumbs up, yes this is news we should pay attention to, or thumbs down, this is noise, this is not going to really impact us. And then you can explain why. So the first headline is: “74 to 75% of US homes are now unaffordable as Dave Ramsey calls this the most unrealistic real estate market in 100 years,” from Yahoo Finance. We have two thumbs up. This is news. Why do you think this is news?

Brian: Well, I mean, we had a show and we really tried to give you the honest truth. We didn’t try to be talking heads that make you feel bad about where you are and how the system is cracked against you. We just tried to share the numbers and be like, yeah, housing is one of those places where the past had it easier. You have a very solid point. So, you need to act accordingly. And I hate it, but in a lot of markets that’s probably why you rent until you get to a little more success in your future. And it’s coming. You’ll be able to do it. Also, there will be adjustments. There are times in my life where I see things and I’m like, man, I would love to do that, but it’s just not affordable. And then it’s amazing that we go through a recession or something and all of a sudden the affordability of that item becomes much more attainable. Or maybe my success rises to the point that I can afford it. Don’t force it. Realize that the people you’re renting homes from probably bought those houses significantly cheaper with much lower interest rates. So they can build that into the rent versus you going and buying it, carrying all the cost of it.

Bo: The reason I think it’s newsworthy is that we love home ownership. We love people being able to cross over that spectrum. But it is worth noting that it’s super unique right now. Prices of homes are high. Interest rates are somewhat unfavorable. Affordability relative to median income is not in a great spot. So if you’re going to make the decision for home ownership, you need to make sure that you understand you’re making it in a very unique market that is very different than it was 20, 30, 50, or even seven years ago. Not that that means you shouldn’t make the decision. It just means that you ought to recognize it’s unique and there are some trade-offs associated with that. It’s worth paying attention to. If you want to know more about how to buy a home, we have a great resource. Go to moneyguy.com/resources. We have a home buying checklist and a home buying calculator, tons of tools so that if you’re going to make this decision, you make it the best way possible.

Rebie: Love that. Next headline from CNBC: “Gold, silver, and Bitcoin fall as traders up Fed rate hike bets.” We have two thumbs down. Why is this noise?

Bo: Well, I mean, I don’t mind if you do any of these. You could do gold, silver, Bitcoin, but you’re probably going to keep them at a portion of your total net worth of less than 5%. So at most, this is a hobbyist type thing that you’re going to do. I wouldn’t want people to get emotional or stressed out by it. There’s nothing wrong with dealing with these asset classes, but it just shouldn’t move the needle for your long-term success. Two of these are for sure commodities. The third, there’s an argument about what category or classification it actually falls into. But most often when we see spikes or movement in these, they tend to be emotionally charged, whether that emotion be excitement because of something going on or fear because of something else going on. And I try really hard not to let emotions drive my investment philosophy and the way I’m making investment decisions. So when I see a headline that’s really trying to trigger an emotional response in my mind, that’s noise. Think twice.

Brian: Yep. I like it. What I find interesting is that every one of those asset classes, if you watch the daily volatility, they’re big. So I do think it is some headline harvesting from the journalists sometimes when I see them grab that, because you could go any day on the cryptos or even the gold and silver, the bullion, you can see lots of volatility.

Rebie: Next headline from Forbes: “SpaceX shares soar again in pre-market, nears $2.75 trillion market cap.”

Brian: I mean, it’s one of those things where I can’t help just because it’s part of the zeitgeist. I’ll say the word. We covered it, and now every day I’m like, can you believe it? Just today it overtook Microsoft on its market cap. That’s just wild to me. So I think it’s just, it doesn’t mean that you take action off of it, but I think it’s interesting to just see the headline and know what’s going on.

Bo: News to me suggests that a piece of information is actionable and informs the way I make my decisions. You’re not going to do anything. Cat videos: wildly entertaining, not news, you know what I mean? And so even what’s going on with SpaceX right now, especially in the short term, what it’s doing today, tomorrow, this week, next month, the next six months, I don’t think from a stock price trading standpoint is newsworthy.

Brian: Now, the company, you can make arguments about that sort of thing. But short-term stock movements are more noise. And again, it elicits an emotional response. Either, “Oh my gosh, I’ll never buy it, it’s so overvalued.” Or, “Oh my gosh, why didn’t I get in on that earlier? It’s going to the moon.” We all have our own things that shape us. I drove down to Georgia this weekend and my mother-in-law, 86 years old, asked me if I got her into some SpaceX.

Bo: Well, did you?

Brian: No! I mean, she’s 86 years old. But then, okay, my mom, she did get in on the SpaceX. And we met at the restaurant and I just told my mother-in-law, and then the first thing my mom says is, “Wow, that SpaceX is doing pretty good.” And I’m like, I did not ask her to do that. She said, “I’m not allowed,” you know, owning a financial firm, we felt like out of an abundance of caution, I was not involved in any of that. But my mom, that’s why I know it was part of the zeitgeist, is that she got in. So maybe it is me reflecting. I have to keep up with this stuff because I’m going to get asked by friends and relatives what’s going on with SpaceX. Doesn’t mean you should be taking action.

Bo: That’s right.

Rebie: All right, last but not least, with great anticipation, the headline says, “Oh no, albino buffalo named Trump goes wildly viral for its fetching blonde comb over.” And in case you need a visual…

Brian: I need a picture. Yeah, please.

Bo: Oh, wow. Whoa. Okay, look. I’m going to give that a thumbs up just because that is something. Can you imagine taking that to work? There are 10 to 15 minutes of productivity just completely zapped out of the day. That’s exactly what the content team did last week.

Brian: That’s AI, isn’t it? Somebody styled it at the minimum. Honestly, it’s got definitely styled hair. I think somebody went in there with some hair product. President Trump would be jealous of that hair. That’s something. Look, it kind of resembles me a little bit. Just the wrong color. I don’t orange my hair up. And I kind of respect that. There’s definitely some product in that. That’s wild. So we gave it a thumbs up just because of the entertainment.

Rebie: It was very entertaining. We hope that you were entertained by it. And that has been our From the Wings segment.

$1,000 Giveaway Winners Announced (1:01:03)

Rebie: It is now time for the greatly anticipated winner drawing. If we featured your question on the show, by the way, is it 50% odds that you’re going to win money if you had a question answered?

Brian: Because we had six. I think we had seven.

Rebie: We have seven. Okay, I just didn’t write somebody down. So no, 50% is not right.

Brian: I only wrote down six. I got Jordan. I do want to mention if you are one of the seven who were featured on the show, you are welcome to cash in on your Money Guy tumbler. Just email winner at moneyguy.com. But only these next three usernames I’m about to read will be our $1,000 winners. Are you ready?

Bo: Can you tell us their ages when you read them also?

Rebie: No, I don’t have that written down next to that. I’m like, well, where do I have to go find that? Maybe the team can get me that. But more on that after we read the names. The names of the winners are Music and Coffee 1923, 41-year-old Noah Turvolon 1946, and God’s Girl 951. Congratulations to you three. Thank you to everyone who asked a question and showed up and just had fun with us. It seemed like you guys really liked this live stream and we enjoyed it too. Congrats to our winners. Just email winner at moneyguy.com for instructions on how to claim your prize. Be sure to include who you are. We’re very excited.

Brian: Not to nerd out. How old was Noah? Noah was 24. That was the 24-year-old. Yeah. So 50.42. God’s Girl didn’t have an age.

Bo: I’ve got that 28. So that’s 29.7.

Brian: I can’t even read my own handwriting. How bad am I?

Rebie: The team did this math. We were about to tell it to you.

Brian: Oh okay. Never mind. I’m doing public math over here for no reason. I was like, what are we doing? And, oh, I’m going to tell it. Great. $100,000. $100,000. That’s how much can we give away in one live stream? We’re giving away the potential to become $100,000. That’s a great headline. That is the potential to become. That’s really really exciting.

Closing (1:03:21)

Brian: Guys, thank you so much. We believe there’s a better way to do money and we really appreciate you guys for all the support. We love that we can pay it forward. I’m your host Brian, joined by Mr. Bo. Money Guy team out.