Financial Advisors React to UNBELIEVABLE Money Clips

What Will Everything Cost in 2055? (0:00)

Brian: I’ve been told we have unbelievable clips to react to. I don’t know if this means mythical urban legend or just straight up false, but more to come.

Bo: Brian I am so excited because I don’t know if unbelievable means unbelievably good or unbelievably bad. Let’s dive right in.

Clip #1: What Will Everything Cost in 2055? (0:15)

[Clip] If the next 30 years look like the last, by 2055 you will see prices like this. How much do you think an average home will cost in 2055?

[Clip] I think we’re going to creep into the millions. Millions. Yeah, I’m going to say like $1.4 million. So the average price now is around $500,000?

[Clip] Yeah, because you’re talking all across the country. The price of an average home in 2055 would be $1.6 million. That was a phenomenal guess by me. How much is a new car going to be in 2055 if the next 30 years look like the past?

[Clip] I think the average one now is like $25,000 to $30,000. Let’s just triple it. Why not? Let’s go like $80,000.

[Clip] It would be $128,000.

[Clip] That’s more than a six-digit salary. How much would average rent be in 2055?

[Clip] Average rent now has got to be around $2,000 to $3,000. Let’s just throw out a guess. Like $6,500.

[Clip] Exactly. On the money. How much would gasoline be per gallon in 2055? Gas right now is already skyrocketing. What is it, like $4?

[Clip] I paid $4.50 today for gas. I think it’s going to be $9.

[Clip] It would be $16 per gallon.

[Clip] You can’t charge someone that. It’s got to slow down.

Bo: This is the math I would love to see because they took some specific industries and products and looked at the last 30 years. And it would be interesting to see what the rate of growth over those things was, because what they’re saying is accurate. Inflation is real. It is the thing that causes the price of goods to increase over time. So hearing that the average cost of a home would be about $420,000 to $450,000 now but $1.6 million in 2055 that’s not insane. That doesn’t blow my mind. I do think though that realistically there are some things that have grown at a pace over the last 30 years that will not continue to increase. One of the ones that comes to my mind immediately is the price of higher education. That is something I would argue has outpaced the rate of inflation and will likely have to revert to the mean. But some of these other things like homes and automobiles didn’t surprise me too much.

Brian: Look, this is more of a perception or brain exercise. Even in my lifetime I remember my grandmother bought an Oldsmobile and it was less than $3,000. Fast forward to the car that I got used many years after it was new a 1984 Chevy Cavalier. The sticker price on it was less than $10,000. So with cars now being $30,000 to $40,000, you can see the exact same thing is going to happen. My parents’ first house, when I was five years old and we moved in, was $60,000. What year was that? That was 1978. So here’s the secret to all this. Own stuff. That’s right. Go out there and use your time and your labor to create income, live on less than you make, create the margin, and actually put it to work by buying assets that appreciate. You’ll keep pace. You won’t have to worry. Don’t let this stuff scare you. Just act accordingly.

Clip #2: Should You Spend More Before You Die? (3:14)

[Clip] My dad died with about $800,000 or $900,000 to his name and he should have spent more of it. My dad was so terminally cheap that I don’t think he ever really had a chance to enjoy his money. Assume you’re going to get a 4% return on your money. Assume that at some stage that 4% is more than your burn. Could we spend a little bit more money on travel, on maybe fixing up our house, on maybe giving a little bit of money away to things we’re passionate about or people who could use some help? The whole point of being as responsible as you’ve been and working as hard as you’ve likely worked is that at some point money means nothing. From zero to 18 it kind of means way too much sometimes everything. From 18 to 70 or 80. And then as you get towards the end of your life it means nothing again. Money is meant to be at some point spent.

Bo: I think this is absolutely right. There’s no point in trying to be so frugal and so tight that when you leave this earth you leave behind a giant pile of money if that was not your goal. But on the flip side, the sad truth is most Americans are not in that position. If you look at the average retirement savings for the average American above the age of 65, it’s like $185,000 that they’ve saved up. So I do agree folks that have been good with money, folks that have built wealth, absolutely should spend and use that money to accomplish the goals they have in life. And if you’re one of those people, you should take that to heart. But if you’re one of those people that says, “See, they said I shouldn’t save, they said I should spend” if you have not done the hard work of actually building the wealth, you’re getting your steps out of order.

Brian: Don’t go with the die-with-zero mentality until you’re squarely ahead of the curve. This is something I love to give not Financial Mutants but financial misers. I think the majority of Americans are way behind. There’s a scale out there. There’s the super conservative hypersaver type of people. Then there’s the die-with-zero crowd who read that book too early. If you’re a miser mentality and you need a little nudge, that’s one thing. But if you’re looking for the better way to do money, I still think if you think about Millionaire Mission, we give you right dead in the middle let you maximize the memories but also build your army of dollar bills so you don’t have to work so hard in the future.

Clip #3: “We Bought a House We Can’t Afford” (5:24)

[Clip] We bought a house that we can’t afford and we have 44 days to make our first mortgage payment on August 1st. Let’s just let that sink in for a little bit because I’m stressing. Not only that, but we have to paint our house before we move in. There’s hardwood flooring all over the house which needs to be refinished, which we have also never done. There’s just a lot that’s going to be happening within the next couple of weeks that we have no idea how we’re going to make it through. We also have three girls that are four and under and I’m also pregnant with our fourth. This is literally our dream house and there is no way I’m letting this house go. We’ve got to make this my full-time job.

Bo: First, I feel for millennials and Gen Zers out there trying to get on the homeownership side of things because it’s hard. It is hard out there. But she said something really interesting. She said, “Hey, we’re buying this house and we have to paint before we come in.” Do you? We have to refinish the hardwoods. Well, if that’s a cost I had not planned on and I don’t know how I’m going to do that, perhaps that would have changed my decision to buy that particular home. Or if I can’t even make the mortgage payment, I’m probably not going to start immediately working on renovations. There’s a really good indication there that she’s bought more house than she can afford. If the mortgage payments give you anxiety before you even start the renovations necessary for your family of six, soon to be seven, to move in

Brian: Successful people sometimes have a habit of stacking too many things at once. You just heard her. They have how many kids under four with one on the way. Is that even mathematically possible? You hear about Irish twins or whatever. Maybe some regular twins. That could be the case. But it seems like a lot within a little bit of time. And then she did give a clue when she was talking about, “Hey, we have to make our first mortgage payment.” It makes me wonder, are they doing too much too fast? I remember my very first home that we purchased. We actually had empty rooms for literally years. We lived in that house for about seven years and it wasn’t until like year four that some of those rooms actually ended up getting the paint or the furniture that they needed. And I think that’s a healthy thing. You’re supposed to spread out the good decisions, let them absorb and process.

Brian: Even every time I’ve made huge financial decisions, whether it’s buying a new house, taking a mortgage, or even when we’ve done commercial real estate and other things, I have this weird icky feeling where the debt and the size of the transaction kind of works its way through me emotionally. So to do that plus have a new baby coming in the house, plus feel like you have to go do it all yourself I worry burnout is a real risk. And look, I’m just going to go ahead and say it. That many chemicals while you’re also in the pregnancy phase I don’t know that that’s what I would want to do. Let’s slow it down. You’re going to live a long fruitful life. Let’s spread those good things out so we can enjoy them over a period of time versus doing it all at once.

Clip #4: Her Dream House vs. Her Actual Budget (8:32)

[Clip] I’m looking for a simple traditional house. It’s always been my dream to have a two-story house with five bedrooms. I’d also love for it to have lots of windows, tons of natural light, and a nice yard. If it has a pool, even better. A lake view would be perfect. The only thing is I need 100% financing because I don’t have any money for a down payment. Right now I’m making about $2,000 a month depending on the month. I don’t want the house to be more than $150,000 either. So yeah, let me know what you can find for me.

Bo: It’s so true. I have this conversation all the time with people that have very unrealistic expectations around what money can and cannot do for you. Obviously, what she’s looking for and the price range and budget she should be looking at are misaligned. I think that’s called cognitive dissonance – when there are two things that exist that are opposite to one another but are both truths. I think she has to go back to the drawing board to figure out what actually makes sense in her situation.

Brian: Let’s hit the big three come up with the three big things. For a lot of people, especially if you have children, it’s going to be like the school system, the number of bedrooms, and things like that. And then you can always put the whipped cream and cherry on top later by repainting rooms, making them nicer. And then when it’s financially feasible, you can upgrade. That’s kind of the way things work. That’s why we give 3 to 5% grace on the first house purchase we’re trying to get you just on the homeownership train. But that was great in real time, showing how the type of house she’s looking for and then watching it come back down to where it essentially burned up on re-entry just based on some of the goals that she had.

Abound Wealth (10:28)

Brian: All right, Bo, before we move on, let’s do a shameless plug for Abound Wealth.

Bo: I have no shame because I’m mighty proud of the work that we get to do for our clients every single day. Here at Abound Wealth, we’re fee-only fiduciary advisors. That means we’re legally required to work in your best interest. And we love helping our clients optimize their army of dollar bills so they can live their best life. And before you leave a mean comment about us self-promoting, keep in mind Abound Wealth helps us keep this entire thing going, creating free content, growing the team, and changing the financial landscape. We’re honored you’re watching and listening.

Brian: And we hope you use this content to help you learn, apply, and grow your army of dollar bills. And when your financial life gets complicated – it’ll happen – we’d love for you to come back to where it all started. That’s the Money Guy Show and Abound Wealth. If you’re ready to take the relationship to the next level, check us out at aboundwealth.com or click the link below.

Clip #5: Retiring Right Before a Market Crash (11:28)

[Clip] This is how much money I retired on in 2021. That is the amount of money I had left a year and a half later. 2022 was rough. Dude, what are you doing? What are you spending your money on?

[Clip] It wasn’t me. It was a bad market, guys. A year and a half after that, that is what I had. It still wasn’t back to what I retired on. Another year after that it took me to get back to above where I was when I retired on – three and a half to four years. What is this called?

[Clip] Sequence of returns risk. What did I do to get back? Nothing. I left my investments how they were. Eventually it will come back. Guys, just do not panic in a bad market.

Bo: If you are a new retiree, this is why your withdrawal rate in the early years of retirement matters so much. You want to pick a lifestyle that is sustainable over the long term. It’s why the 4% or 4.7% withdrawal rate gets so much attention. Because even if you do a 4% or 4.7% withdrawal rate at the beginning of retirement and you see a bear market, you see the downturn, you see 2022, you see 2008 your portfolio can weather that. But if you go into retirement thinking you can pull out 8%, 9%, or 10%, and all of a sudden you have one of those bad sequences of returns or a bear market in the first couple of years, it becomes devastating. And instead of taking three or four years to get back to making money, it could take you six, seven, or eight years to get back to where you were.

Brian: What this gentleman didn’t tell us was how much he was pulling out. He says, “I’m retired.” But based upon those numbers he shared, I don’t think he was pulling money out. I think he had outside income sources or he was pulling out a sustainable, minuscule draw. I would have to do the math. We don’t do public math because we see this for the first time with you guys, but it looked like it was a very minimal pull-out ratio.

Clip #6: “Spend Your Money Recklessly” (13:19)

[Clip] Spend money recklessly because it’s easier to make more money than to penny pinch. If you only have $20,000, blow it on your dream car. Blow it on your dream vacation. Then you have a taste. Then you have a taste of what it’s like to spend money. It’s like a shark. Once you get a taste of that blood, you need more. You’re going to work 10 times harder to get those things. It’s the highest form of manifestation.

Brian: Manifestation. It is a small group of people who have life hacked that they are entertaining enough that they can go out there and act a fool in some aspects of their life and get rewarded for it, and then just assume everybody can do this. I wish I had a friend like this. But for the majority of people, act accordingly. This is not going to work. This is actually going to be a recipe for disaster. In our opinion, there is a better way to do money. I’m going to argue there’s an easier way to do money. Rather than having to hit home runs every single time you step up to the plate, if you can just hit a few singles and start putting those together, that batting average can get you into the Hall of Fame instead of putting you in the poor house.

Clip #7: Taking a Vacation With $23,000 in Debt (14:34)

[Clip] I’m doing Dave Ramsey’s worst nightmare. I am planning a vacation while I am $23,000 in debt. Because life is for living. I think life is a lot more fun when you have something to look forward to. And also, I’m not going to have PTO forever. I have literally over 100 hours of PTO that I have been banking and saving up. I deserve a vacation. And I want to use that vacation to go explore and make memories. So I’m currently planning a trip to the Pacific Northwest and I’m stoked about it. A lot of people might think that’s irresponsible, like, “Oh, you should really be putting that money towards debt.” And like, yeah, I could be putting that money towards debt. You’re right. I should maybe put that money towards debt. The reality is I haven’t taken a vacation in over a year, and my job ends in a year, and I think this will be the last vacation I take before my job ends.

Bo: What happens when your job ends? What happens when your job ends? Okay. We want you to go on vacations. We want you to make memories. We want you to have experiences. We want you to be able to enjoy life because you are right – life is worth living. But that does not mean that life is worth living with an expensive price tag. There are plenty of ways that you can still create memories and experiences and do things that do not cost money, where you could still be putting money towards that debt, getting out of that $23,000, and also preparing for the time when your job ends. If I was in $23,000 of debt and I knew my job was ending, I would be terrified not knowing what the next steps are. I desperately need to know that she has a plan in mind.

Brian: She needs a FOO sighting in her life and I’ve got it right here. Here’s the solution. Since she currently has a job, hopefully she’s got her highest deductible covered. Hopefully she’s getting the employer match. I have no idea what the interest rate is on that $23,000 in debt.

Bo: It ain’t low.

Brian: It ain’t going to be low. And then also to your point, you get to step four because steps one and four are your emergency reserves. This is also going to get you past what happens when you lose this job, since it sounds like she’s just a contractor and she knows she has a term certain on her career. You deserve vacation. Okay, I’m willing to go a little bit with you and say hard work you know what, taking a little time off can re-energize you. But you’ve got to bedazzle your basic life and do stuff that doesn’t cost a lot of money. This might be something where, hey, do we have a sleeping bag and a tent in the back? Or is this something where we’re going and staying with family and friends? If you’re running up more debt and you feel like you’re entitled to this, all you’re doing is creating a secret recipe that is just going to explode in your face. It’s kind of like when you see people put the Mentos in the Coke and then they’re shocked. She’s building up a Coke Mentos bomb and doesn’t even realize it because she’s thinking she can do this on her own time and it’s all going to be okay. Act accordingly. When you have desperate times with just a little bit of runway, you can save yourself from this bad moment in time.

Bo: This episode is not sponsored by Coke or Mentos. And by the way, don’t do that.

Clip #8: The Frugal Habits That Helped Bo Build Wealth (17:51)

[Clip] What were the frugal, unsexy habits that allowed you to have money to invest?

[Clip] Back then, Publix would sell cereal for $1. And so I would go to Publix and buy 14 boxes of cereal every Sunday. I’d eat that all week and that’s what I had. When I bought my house, we got the $8 paper blinds we put on the windows and that was there until I sold the house. My wife was not a huge fan, but man were we saving money.

[Clip] What was the cereal of choice?

[Clip] Well, if I was trying to eat healthy, it was Honey Nut Bunches of Oats because that’s healthy cereal, but if I wanted something fun, I’d go Lucky Charms and I’d bounce back and forth between those. And then Cinnamon Toast Crunch. That was like the weekend deal.

[Clip] Were you pouring whey milk in there to get those muscles? There’s no way just all carbs all the time is fueling that machine.

[Clip] It’s amazing what youth in your 20s can do, right? That’s better than any sort of supplement out there.

Brian: Obviously, look, that was me trying to be incredibly frugal early on. Create margin, begin to save. That’s not necessarily the advice that I would give you now. I don’t think that’s super healthy. But in my world, that was a way that we were able to create margin, begin saving, and then the way that we bedazzled our basic life is we would go Cinnamon Toast Crunch on the weekends.

Bo: How did you do a whole interview without breathing? I wasn’t breathing.

Brian: I mean, look at that. I mean, I’m surprised we’re not watching those pecs pop a little bit. I mean, we are in full on make sure we get all the right angles here. And by the way, JC’s in great shape too.

Bo: I don’t know what to tell you. Built by Cinnamon Toast Crunch.

Brian: I do love that all through JC’s comments, I was like, Bo’s a unit. And I’m like, I need to probably go look that up on Urban Dictionary. Is that mean like a soldier or somebody who’s like crushing it?

Bo: It means someone who’s just like a bigger guy, a built someone. I tell you the Lord is unfair in the fact that you know the salt shaker of talents Bo got the intelligence, the good looks. It’s pretty awesome.

The Simple Formula for Building Wealth (20:01)

Bo: There are outstanding things out there on the internet. Some of the advice is good, some of the advice is bad, and some of the advice has not aged well, like buying 14 boxes of cereal and living off of that early in your 20s. But if you can figure out ways in your own world to do money a little bit differently, to exercise the three ingredients of wealth creation have some discipline, create some margin, and then apply that over a long timeline – building wealth is not all that complicated.

Brian: It’s very simple, even though it’s not that easy. And I think you can tell we love helping all of you not only be entertained, but hopefully live your best life by learning how to maximize every dollar that comes into your army of dollar bills. I’m your host Brian, joined by Mr. Bo. Money Guy, out.