Financial Advisors React to Incredible Money Clips

Introduction – What’s the Content Team Bringing Today? (0:00)

Brian: Haga haga. Here we go. Can’t wait to see what the content team has for today’s show.

Bo: Brian, I am so excited to see what they have lined up for us today. Let’s dive right in.

Dave Ramsey Impersonation (0:11)

Video Clip – Dave Ramsey Parody: We got Susan from Little Rock, Arkansas. How you doing, Susan?

Susan: Hi, Mr. Ramsey. I’m good. How are you?

Dave Ramsey Parody: Better than I deserve. What’s up?

Susan: So, we have $10,000 in student loan debt.

Dave Ramsey Parody: Good gosh. It’s not every day we talk to a neurosurgeon. I assume that’s what you have to be to have that kind of debt, Susan.

Susan: No, I am a teacher. Should we do a daycare that costs $15,000 a year or $18,000?

Dave Ramsey Parody: You are broke, Susan. You are poor. Poor. Everyone out of the studio. Poor, poor. Beans and rice. Susan—

Susan: Mr. Ramsey, can we still go on our anniversary trip? We paid for it in points.

Dave Ramsey Parody: Points? I got a few points for you, Susan. Point one: You’re stupid. Eat rice. Point 2: See point one. You can’t afford it, bro.

Brian: Is this a new category of content of just like reacting to people impersonating Dave?

Bo: At least I give them credit. They put a paper goatee here. Here’s the thing. Sometimes when it comes to making financial decisions, tough love is what’s required. A lot of people are somewhat naive to how negative or how bad their financial situation is. And so it’s about understanding where that line is. You know, I don’t think Dave’s quite that bad.

Brian: I thought they were vampire teeth. I mean, I know that’s a goatee because I watched the skit now, but they looked like vampire teeth.

Credit Card Debt Reveal: $85,000 (1:32)

Video Clip: Let’s break down my credit card debt together so that I can help you feel better about your finances. So, first off, I have my Citi credit card. This is the one that we’re currently working on paying off, and it is sitting at $2,874. After that is my Discover card and that is sitting at $4,844. Next after that is my Chase Disney card and this is sitting at $5,593. After that I have my star card which is sitting at $7,628. And after that is my husband’s star card because yes, we both have one. And his is sitting at $8,028. Then we have my Visa Platinum card sitting at $11,283. And then we have my cash rewards card which is sitting at $19,725.

Dave Ramsey Parody: $8,011, $19,000… You are broke, Susan.

Video Clip: And then we have my highest card. That’s my American Express and it’s sitting at $24,987. When you add all of these together, that’s a total of $84,962 in credit card debt alone. This does not include student loans. This does not include car loans.

Brian: How did she get here? Well, I mean, at some point, 3 months, 5 months, 6 months, a year into it, you’re like, maybe I should turn back and go the other way.

Bo: $85,000 of credit card debt is a huge hole to try to get out of and that’s going to likely take years upon years upon years of paying for past consumption. She and her husband have a long road ahead of them if they don’t want to continue spiraling into a very, very dark place.

Apartment Financing Parody (3:31)

Video Clip: Here’s how I only pay $400 a month for rent in Los Angeles. Klarna has just rolled out apartment financing. So instead of my rent being $1,600 a month for one year, it’s going to be $400 a month for 4 years. All with 0% APR. You might be thinking, Chase, this isn’t smart. It’s called investing in yourself because I know in 4 years time I will have a bigger portfolio with more money in my account. This system will allow me to enjoy my 20s more. Have fun now, worry later.

Bo: Well, obviously this is tongue in cheek, but so many people do this. I can afford anything in the world. If I just stretch out the payments long enough, I can get the monthly nut down as small as possible, then it automatically becomes affordable. Obviously, that’s not the way we should be navigating our financial decisions.

Brian: I love how you just said if you can stretch it out as he’s doing ab stretches with the thing. I commend you for the commitment to the game.

Tax System Absurdity (4:27)

Video Clip: I’m 18 years old. This is my first time paying taxes. I really don’t know what I’m doing. Can you tell me how much I owe and I’ll just pay it?

IRS: No, we can’t do that. You have to figure out that amount for yourself.

Person: Oh, okay. Well, if I’m just a little bit off in the amount I owe, it’ll be okay because it’s my first time, right?

IRS: Oh, no. We already know how much you owe. Exactly. I mean, down to the penny. But you still have to figure that out for yourself.

Person: Well, what if I get that amount wrong?

IRS: You go to federal prison.

Person: What?

Brian: They are waiting to see if you match it all up and it is kind of ridiculous when you see it in that context.

Bo: You know, we talk all the time about how we have a very complicated, very involved tax code and tax avoidance is highly encouraged, but tax evasion is highly illegal. And unfortunately, I feel like sometimes the deck is stacked against you. They know what’s supposed to show up on that tax return, and if you show them something that does not align, that does not match what they’re expecting, you get that dreaded letter in the mail.

Brian: Now, I would say probably the context from the IRS is that yes, we have a matching system. Yes, we have all the things that are required to be reported, but we don’t always have all the context because think about like Schedule C for business owners. They know the revenue you’ve received, but they don’t know all your expenses. There’s quite a few things like that. Investments, they typically don’t know the cost basis. They’re starting to get where actually a lot of that stuff is reported now. But I’ll give them the benefit of the doubt. But for skit purposes that was hilarious.

Puerto Rico Tax Strategy (5:56)

Video Clip: How much do you pay in taxes?

Person: Well, I live in Puerto Rico, so only 4% and then capital gains is zero.

Interviewer: So if you’re a US citizen living in another country, you only pay income tax?

Person: No, you pay income tax, capital gains tax. The US tax follows you anywhere that you go.

Interviewer: Well, how come you’re safe from that in Puerto Rico?

Person: Puerto Rico is the only exception.

Interviewer: Oh, really?

Person: It’s the only exception for Americans.

Interviewer: Yeah, it’s pretty crazy.

Bo: So there’s some truth in there. There are very unique rules if you happen to live and do business out of Puerto Rico. But that’s the case. You have to live and do business out of Puerto Rico. So often we see people coming up with these like, “Oh, what are some different ways that I can avoid taxes or take advantage of the 4% rate?” And you have to make the determination. Do I want to pretend like that’s my reality and pretend like that’s the truth or do I want to actually make it a reality? Actually move my family, my life situation, my business, and all those things to Puerto Rico and operate out of there so I’m doing it the legit way.

Brian: Raise your hand if you’ve ever looked at real estate in Puerto Rico. I’ve done it because especially it happens usually somewhere between March and April every year. When I look at how much I’m paying in taxes, I’ve actually looked at real estate in Puerto Rico, but it’s exactly what you just talked about. At the end of the day, I’m like, “Well, I guess I’m just going to write the check.”

Bo: I sure do like Nashville.

Stock Market Won’t Make You Rich (7:06)

Video Clip: The stock market will never make you rich. You don’t believe me? What I want you to do is go to a compound interest calculator and choose whatever interest rate you think the stock market’s going to return you. Let’s say 8%. And then I want you to figure out how long will it take you to even have a million dollars, which is not rich. What you talking about? Probably going to take you at least 20 to 30 years. That is not a fast enough investment vehicle to actually retire young and to enjoy your life. Instead, you need to do something like real estate or building your business or preferably both.

Brian: We love real estate ourselves, but the thing is is that if you’re broke as a joke, don’t get into real estate because you know the whole game with real estate, especially with levered debt, you have to convince people to pay you long enough so you can pay the debt. But what happens when the music stops and you don’t have a tenant for a few days. Big bank takes from little pockets. I mean, they get the house, they get all the money you put down, they take all the payments, and then they get depending upon if you did personal guarantees or whatever else you promised them, they get to take even more. What I hate about content like this is that somebody, especially a young person, will watch this and think that, hey, this guy knows what he’s talking about. He’s going to cut a corner off and save me some time. You’ll go down this rabbit hole, and not only will it break you, but you will lose 5 to seven years of your compounding growth years that you’ll never get back. While you’re a billionaire of time, do something with it. There’s nothing wrong with slow and steady. Yeah. So, it might take you 9 years to get to your first $100,000. Yes, it might take you 20 years to get close to the seven figures. That doesn’t mean that’s not the right path. I mean, it’s all these guys that are the snake oil salesmen who are trying to tell you they figured out how to cut a corner off. Well, if they really had, they wouldn’t be telling you about it. This stuff drives me crazy. I’m sure he has a system that he’s going to sell you.

The Car Dealership Horror Movie (8:52)

Video Clip: I would love a TRD, but I don’t know if that’s going to happen. I saw you had a 2017 black TRD, but it was expensive. And you still owe money on your vehicle, right?

Customer: Yeah, like $12,000.

Salesman: You have money to put down?

Customer: Not really. No, I don’t. I wasn’t sure if you would take my car on trade-in and I could use that as a down payment.

Salesman: Where’s your car?

Customer: Second row on this front row right here.

Narrator: A few moments later.

Salesman: What year did you say this was?

Customer: 2014.

Salesman: Oh, wow. Lots of room, dude. So, what would my payments be looking like?

Customer: What are you paying now?

Salesman: $300.

Customer: It’s going to probably be more than that.

Salesman: I could do $100 more. I could do $400 would be doable.

Customer: No, don’t base it on the payment.

Salesman: Kind of tough for me.

Customer: Well, I’ll find out as soon as we get back. Okay. He wants to be at $400. Said $450 would be a stretch, but I’ll take it out there. They will need $500 bucks down somehow. We’ll just give you a couple weeks to get it. Oh, really? No payment for 45 days. $483 a month.

Customer: It’s going to be pretty rough on me.

Salesman: They gave you a $3,000 discount. You say you can do $450?

Customer: I can.

Salesman: Let’s see. $450 a month. Give me an initial there.

Brian: This is like watching the sausage be made.

Bo: This isn’t like watching sausage being made. This is like watching a horror movie.

Broke Man: In a small town car dealership.

Broke Man Movie Trailer Voice: I would love a TRD, but I don’t know if that’s going to happen. One man only wanted a shiny new pickup truck. And you still owe money on your vehicle, right? Yeah, like $12,000. Oh my gosh. You have any money to put down? Not really. No, I don’t. Join us this summer. Oh, no. No, no. Based on the payment, $450 would be kind of tough for me. Critics have said, “Is this a skit?” Oh, wow. Watch out, man. Give me an initial there.

Bo: This is just a bad thing getting worse and worse and worse and worse. Had nothing for a down payment. Was trading in a car that he still owed $12,000 on. No idea if there was any equity in that car. And then he said, “Well, you know what? Okay, you tell me how much you can afford on a monthly basis and we’ll see if we can fit that in. And you know what? If you can give us $500 today, we’ll make it where you don’t have to make any payment for 45 days.” That is just enabling a bad decision to get worse and worse and worse and worse and worse. And unfortunately, I think that’s how a lot of automobile purchases go in this country.

Brian: But seriously, why was this published? Because if you work for the auto dealership, this doesn’t make you look good. No, you actually are just exposing how rampant and how bad the problem is out there in the industry is that we have the majority of people are rolling in negative equity on cars that rapidly depreciate. This is a disaster. Nobody cares what car you’re driving. So don’t, especially if it’s a well-tuned, well-running machine. I don’t know why I can’t talk today. I’m not smoothly operating today like that. But if you have a finely humming along car that’s not—that’s not good either. If your car is finely tuned, what am I trying to say?

Bo: You nailed it. It’s fine. It’s great.

Brian: If it’s purring, if your car is purring and it’s reliable, don’t go run up a monthly car payment. Let’s pay that car off and drive it for a few years paid off.

Bo: And if you do have to buy a new car, we think there’s a better way to do it. We want you to follow 20/3/8. 20% down. Don’t finance for any more than 3 years or 36 months. And your total car payment cannot exceed 8% of your monthly gross income.

Closing (12:01)

Bo: Brian, the internet again did not fail. It’s always wild to see all the different ways that people think you can go about building wealth when in reality the true way to build wealth is pretty simple, pretty straightforward.

Brian: Yeah, we actually tell you how we built money, how we’ve seen our clients build money. This is the real way. Go to moneyguy.com/resources. Download as much of the free stuff you want and I think you’ll quickly see it creates success and that’s what allows us to work with clients all across the country. I’m your host Brian joined by Bo, Money Guy Team out.