Should You Die With Zero?

The Book Die With Zero Keeps Coming Up — Watch This First (0:06)

Brian: The book Die with Zero keeps coming up. Watch this first.

Bo: Brian, I am so excited to talk about this, even though this book has been out for a while. I still feel like it’s very much out there in the zeitgeist. Like it’s out there, people are talking about it, and people are thinking, okay, should I take what’s in this book? Should I be using the things that are in this book, and should I allow it to inform and change the way I think about my personal finances?

Brian: Yeah, it has come up multiple times on our Making a Millionaire show. And I want everybody to stay until we give the final word on this. Because I think I have the perfect ending that’s going to bring this all together. I like the book. I like the premise of the book. I just have a few asterisks of concern. And once I share what this book is great at and what the issues with this book are, you’re going to start to see the full picture. Because it’s one of those things, we live in the same neck of the woods as Dave Ramsey. Dave wrote a great book in the 90s called The Total Money Makeover, but it has issues. And if you stick with me as we go on this journey, I’m going to put this all together and wrap it up with a nice bow where you can kind of see how you need to apply all of these great books to your financial life.

Bo: So for those of you who are unfamiliar, maybe this is the first time that you’ve heard of this. There’s a book called Die with Zero written by Bill Perkins, and it was actually released a number of years back in 2020. And it kind of set the financial world on fire. Not that there were any really new crazy concepts, but the way that he distilled the concepts and laid them out, I think, caught a lot of people’s attention. It resonated with a lot of people. And so we thought perhaps it’d be helpful to go through some of the key principles that he lays out in the book.

Brian: Well, think about it. Every financial book is telling you lean in on discipline, live on less than you make. We fall into that camp of things. And then you have this book come out with big bright letters saying “Die with Zero.” You’re like, wait a minute, that means I’m going to spend more. That is appealing because instead of being the brake pedal, it’s definitely the gas pedal or accelerator, and that gets people excited.

The Key Principles of Die with Zero (2:28)

Bo: So here are some of the key principles. The number one in there is this idea around memory dividends. It’s the fact that experiences that you have in life, or even in the time of life that you’re having them, can keep paying emotional returns, emotional dividends for years and years and years to come.

Brian: Yeah. When we talk about, I mean even in my book, I’ve shared about blossoming memories because what I love about memories is that they are so much better than stuff. Even stuff that are bad memories or difficulties can blossom into key things that are actually good in the long term of the way you remember them. And that’s why we love creating memories with your family and friends. They definitely pay dividends.

Bo: Another principle that Bill talks about is this idea around time buckets: that there are certain experiences that are best done in certain seasons of life, and not all seasons of life are equal. So the experiences that you ought to have at each of those seasons isn’t exactly the same. When you think about time, health, and money as all your resources, it is kind of unfair in life in that when you’re the most vibrant, when you’re healthy, you’re broke as a joke. And then when you’re loaded, you’re probably not healthy enough and you don’t have the time to do everything you want to. So I actually love how Bill was able to really draw attention to the fact that there is definitely a moment in time to maximize this resource of money. And then he walks through that even as we age and as life transitions take place, retirement spending changes. Oftentimes there’s a go-go period, a slower go period, and then a no-go period. As our health and energy change, the way that we spend money changes. And so that ought to impact and affect the way that we make our consumption decisions.

Brian: And that leads to this next one, and I like this one, because now that I have adult children, and my second one is still in the household, there is something about giving while you’re living. A lot of people, now look, I think because my daughter is still in her 20s, I don’t want to give her too much too early. But I do think there is something about, if you have children who show good responsibility and good management, and you are very fortunate and you’ve done well in your life to create success, there is something about seeing the fruits of what you’ve created while you’re still alive, versus waiting until you’re dead and somebody inherits it or passes it on to charities and so forth.

Bo: Now, what’s interesting is, Brian, the last time we talked about this book, we got a lot of negative feedback, as though we didn’t like the book or we disagreed with all the premises, and that’s just not accurate. There are a lot of things that we really like about the book. And one of those is that all throughout he talks about focusing on maximizing happiness. And it’s not just about like deferred gratification, maximizing happiness in the future. He’s talking about what we like to call maximizing lifetime happiness. How can I be happy both in the present today as well as happy in the future? We love that idea.

Brian: Well, because it hits on this next point: money is nothing more than a tool. So if you can’t figure out how hoarding it and becoming a miser is obviously not healthy. There’s got to be a balance between how do you use this tool of money to not only be disciplined with it, but also to live your best life so you don’t have regret when you’re getting to be in your 50s, 60s, and 70s and look back at your 20s and 30s. With money being a tool, what that means is there’s likely not a ton of utility for leaving this earth and leaving behind as large of a pile of money as possible. We know the statistics would suggest that the second generation is going to burn through a big chunk of that wealth, and the third generation will finish off what’s left. There’s no point not enjoying your resources while you have it and leaving this giant legacy behind that your children and grandchildren will have no trouble spending. And this is an echo of something we just said: instead of leaving the legacy behind, emphasize actually making an impact while you’re alive so you can enjoy that legacy and actually see the fruits and the dividends of what you’ve created now.

Where Die with Zero Falls Short (6:55)

Bo: So okay, so we like a lot of these ideas. And even in there Bill had this quote, it says, “Hey, if you die with $1 million left, that’s $1 million of experiences you didn’t have.” That’s where my spidey senses go off just a little bit. Because while that can be true, if you die with a big pile of money, yes, certainly you could have used that. But there’s other utility that having that excess, that having those resources there could provide for. I don’t know that I agree that it’s as binary as that statement would suggest.

Brian: Well, what I have found through the wisdom of actually going through this journey, starting from humble beginnings and then figuring out how the tool of money works, is that once I’ve reached this level of success, I’ve recognized that a lot of my success comes from a bunch of small, really good decisions. It’s hard for me to say that being super disciplined in my 20s hasn’t paid off tremendously. And that’s why what I’m telling you is it’s squishy to try to figure out which decision is what led to your success. So yes, we often share we’re not going to leave this earth with our families broke. But I don’t necessarily think that means I shouldn’t have started saving in my early 20s, that maybe I should have lived my best 20s and gone hog wild, and then really got disciplined in my 30s. I don’t think that’s the right answer either.

Bo: And that’s why in a minute I’m going to kind of bring this all together and show that there are some issues if you go heavy into this philosophy when you’re especially a young person. Yeah. I think one of the questions that we would pose to someone who’s really subscribing hardcore to the Die with Zero ideas: would you rather die with $1 million left behind? Or would you rather, in your retirement, in your financial independence planning, come up $1 million short because of unforeseen circumstances? Because there are tons of things to think about when you’re doing longevity planning, especially when you’re counting on your resources to provide for the remainder of your life. And the number one variable that none of us know is how long we live.

Brian: People say, “I want to die with zero. I want to die with zero.” Great. If you can just tell me exactly when you’re going to check out, exactly when you leave this planet, I can put together a plan for you to die with zero. Absent that variable, it’s going to be very very hard to do because of the unknown. You also don’t know how long you can work or how long you’ll make great money. When I have some people in their 20s and 30s who are just crushing it, in the top 10% income, top 1% income, is that something you’ll be able to repeat forever? You don’t know. And the other reality is that we all go into financial independence, go into retirement with these best-laid plans of what we want our life to look like, but in reality, we don’t know what’s going to happen with our health care. We don’t know what’s going to happen with our long-term care. We don’t know what’s going to happen with either physical or cognitive decline. And not knowing those, it’s really difficult to project how much do I need to leave and reserve to be able to account for those things. Markets are unpredictable. And also, a lot of people, we’ve found this as financial advisors, they underestimate how much they’re going to spend because those go-go years are legitimate. When you get out, you might find that once you actually retire those first few years, you’re going to spend a lot more than you counted on. Because traveling is expensive, hobbies can be expensive. I find that people underestimate how much they need versus overestimating in a lot of planning situations.

Bo: Okay, so what are our thoughts when we step back? Because again, it’s a fantastic book and we love the ideas that are in there. But what are the thoughts that we have on the surface? I think the first thought that immediately comes to mind is that a warning against over-saving is not the message that most people need. If you look at the average American in this country, the average American is not over-saving. The average American is not on a path or trajectory to leave behind a huge pot of money. So I don’t think that this is something that the average American should grab on to. The average American actually needs some motivation to probably start saving more and start building more for the unknown.

Brian: Yeah, and we know that the typical American doesn’t start saving and investing until their 30s. But if you go play around with our Wealth Multiplier tools, you’ll see there is something magical. That’s why we are constantly talking about the 88 times over, that every dollar for a 20-year-old can be 88 times, but a dollar for a 30-year-old can only grow to really 23 times. And you’re like, how did all this drop so fast? That’s why you don’t sleep on the power of compounding growth, especially while you’re young.

Bo: Yeah, I think about the decisions that I did not make in my 20s that I could have made. I could have gotten the nicer car, could have gone on the nicer vacation, could have bought the nicer clothes, could have bought the expensive watch. But in reality, if I go look at the cost of those things, the marginal cost from the vacation I did do versus the vacation I could have done, that marginal cost when applied to the Wealth Multiplier becomes huge. Whereas now, at this stage of life for Brian, even at your age, the marginal difference with the Wealth Multiplier is just not as significant. I think a lot of young people miss that idea. “Oh well, I’m going to go blow it out in my 20s,” not recognizing how costly that can be to their future self.

Bo: Yeah, and I do like the exercise of figuring out what brings you happiness. I think a lot of times you’ll find out it’s the non-financial stuff. It’s spending time with family, friends, spiritual stuff. That’s really where happiness and fulfillment live. But I want to kind of bring this all together if you give me the chance.

The Goldilocks Solution: Where Dave Ramsey, Bill Perkins, and the FOO Fit (12:52)

Brian: Do it. Everybody’s got a system, and I kind of alluded to this in the beginning. You have to be careful what system you’re going to use for your financial decision making. Let me give you two extreme examples. Let’s take Dave Ramsey and Total Money Makeover. Dave has created a system where if you think about the origin story, young Dave in his early 20s found out about leveraged debt, went just hog wild with it, and then got burned. He was so burned by debt that he went teetotal. “Debt is so bad that I’m going to avoid it at all costs.” It created an extreme that’s kind of pushed him onto this level of being super uber conservative. You don’t do any credit cards. If you need to drive around in a clunky car that may or may not crank, there are just things. And look, we love Dave’s system to a degree, because when I have a friend or relative who gets into credit card debt and I say, “Look, you have to live on less than you make or you’ll never build wealth,” that goes in one ear and out the other. But I can give them Total Money Makeover and Dave, because he shares and he has a way of motivating people on the extreme of not having any discipline, he can straighten them out. Now take Bill Perkins and Die with Zero. This is a person who, yes, comes from humble beginnings. But he reached millionaire status before age 30 because he figured out how to do high-risk trading and got good at it. It wasn’t necessarily his labor or his discipline that created his wealth. It was his ability to take huge risk and then get rewarded for it at a super early age. And now he has a distorted vision, just like Dave has the distorted vision of getting so burned with debt that he teetotals and avoids debt. Bill had such a huge experience using the tool of money for taking risk that he created money so easily that I think he underestimates how hard it is for people in their 20s on normal career trajectories to come up with six figures to $200,000 or $300,000, because money was easy once he figured out how to use risk.

Brian: So where Bill is really good is if you’re hanging out with a bunch of rich people and you look at a rich person who’s kind of being miserly with the way they’re using the resource of money. I think that Die with Zero is a great tool there. But to give a 20-something Die with Zero and say, “Hey, you don’t need to worry, go live your best life now. There’ll be time to make great money in the future and save for it,” I think that’s an extreme that’s too aggressive because you’re going to lose out on the Wealth Multiplier. You’re going to lose out on compounding growth. And that’s why I tell you I like both of these books, but there is a Goldilocks solution. And that’s Millionaire Mission and our Financial Order of Operations. And let me tell you why I say this is better. What I have tried to pour into our content is that it’s always the chicken or the egg. What created success out of a system? Was it the system that created the success, or was it the sales of the system? And that’s the thing. My financial life, I never made great income. Now look, I’m in a blessed situation now, but I had to be disciplined and made reasonable incomes all the way up until my early 40s. So I can honestly look you in the eye and say the system created the success. Meaning that if you follow the Financial Order of Operations and go through our nine steps, even if you don’t make world-class income, you’ll be okay. I never had to fall into the debt trap that Dave did. I was always disciplined. I didn’t have to realize, “Hey, I’ve got to go make $300,000 or $400,000 a year to have the success that Die with Zero is talking about.” I’m here to tell you there’s a better way to do money. And we are the Goldilocks system to help you navigate this. We don’t have to do that by trashing the other systems. We’re just exposing to you where they fall on the risk spectrum. Now, if you’re in credit card debt, go follow Dave. If you’ve got a parent that’s kind of being miserly, maybe Die with Zero. If you have a friend who won’t go on vacations or do spring training to make memories with your buddies because they’re just so tight, give them Die with Zero. But if you’re trying to navigate how to do this in a reasonable fashion, the best of both worlds to live your best life but also know how to be disciplined, it’s Millionaire Mission.

Bo: So if you have it, great. If you want a free copy of the Financial Order of Operations, go to moneyguy.com/resources. It is a nine-step process to help you know exactly what you should do with your next dollar, because we do believe that there is a better way to do money. We believe it so much that every single Tuesday at 10 a.m., we sit right here and answer your questions. So if you have a question, make sure you get it in the chat right now. With that, creative director Rebie, I’m going to throw it over to you.

Rebie: Yes, I am excited to dive in. Are you ready for the first question?

Bo: Yes, ma’am. We are indeed ready. By the way, I missed being here last week. I just want to say that I’m happy to have the gang back together. I heard you did wonderful, though.

Brian: Oh, thank you. I saw some comments. I know. Did you answer some questions? Like, were you weighing in and answering some? I mean, on some I feel like I do that. And by the way, nobody needs to adjust their color. It’s true. Bo showed up super tan. I showed up super tan. We’ve both had some time at the beach. I did not show up super tan, ever.

Bo: Well, so it’s not a color distortion. It’s just me and Brian have gotten way too much sun in the last few days. What’s funny is this is super tan for us and people are like, okay, really? No, I think you look pretty tan. I feel like my face is definitely redder than it should be right now.

Q&A: When Should Taxable Investing Become the Priority? (20:05)

Rebie: All right. With that, we’re going to move to the question from our friend PJ Dad Life. He says, “Money Guy team. Monday’s couple on Making a Millionaire wanted early flexibility but saved heavily in retirement accounts. When should taxable investing become the priority?”

Bo: Oh man, this is a great question and it’s one that we get a lot. And if you don’t already, make sure you subscribe to the channel right now because every other Monday we have a brand new Making a Millionaire come out. We sit across from an individual or a couple and do a deep dive into their financial life so you can get a peek behind the curtain of what it actually looks like to apply all of this stuff that you’ve learned on the Money Guy Show. And we were sitting down with the couple that released this past week, and it was exactly that. They had a lot of retirement assets, a lot of wealth that they had built up there, but they were trying to figure out, well, what if we do want to early retire? How do we get access to capital?

Brian: We get that question all the time. And that’s why, you know, when we were designing the Financial Order of Operations, the first few steps are to keep you out of the financial ditch so you don’t make desperate decisions. There’s of course free money, there’s high interest debt, a lot of these things are common sense. But when you get to steps five and six, we love the tax incentives that the government has set up for you to start saving and investing. So we want you to take advantage of those systems: funding out your Roth IRA, doing health savings accounts, and even maxing out your employer plan. But for somebody who thinks they’re going to leave the workplace early, this is step seven. Once you get beyond saving and investing 20 to 25% of your income, you have to start thinking about how am I actually going to use this money in the future? And if you think you’re going to leave the workforce early, before 55 especially, you better have access to some capital. Because those are retirement accounts. You might be retirement rich, meaning you have a ton of IRA and 401k assets, but you’re still financing cars, you don’t have any money to do all the things you want to do. That’s where step seven helps you out because you actually start thinking about how you’re going to use this money and live your best life. And you go, wait a minute. If I’m going to get access to this money at 52 or 53, that’s not going to be an IRA. That’s not going to be a 401k. I probably need to start doing a portion of this into after-tax brokerage accounts. Still investing the money, but now you can get creative and say, okay, what’s the balance between how much goes into a Roth IRA, how much goes into my employer plan? We definitely want to get the match. But now maybe we want to start loading up that after-tax account just so we build that bridge account for early access to the money when you need it.

Bo: We actually did a show, you’re going to have to help me with the name of this one, but it was something like “Four Ways to Retire Early That You May Not Know About.” And in that show we walked through the rule of 55, we walked through 72T, we walked through Roth conversion ladders, and we walked through building up a taxable account. So PJ, there are things you can do and strategies that you can implement. But I will tell you this: the earlier you figure it out and the earlier you start thinking about it, likely the better of a plan you’re going to be able to build, the more flexibility you’re going to give yourself. So if you’ve not gone to listen to that show, we’ll put a link in the comments below. And by the way, I just named three there, so we need to update that show to “Three Ways to Retire Early That You May Not Know About.”

Rebie: Okay, that was an abrupt ending, but PJ Dad Life, thank you for your question.

Brian: By the way, my watch is blowing up over here because we have a guest in the studio who’s a neighbor of mine. My wife is texting me to make sure everybody says hello. So I just want you to know you’re causing trouble for being here today, Lucas. Just so you know. Because my wife is like, be nice.

Rebie: Shout out to the mysterious guest Lucas.

Q&A: Transmission Going Out — Do I Pause Step Four to Save for 20/3/8? (24:20)

Rebie: All right, next question is from Ben B. “Good morning. I am fairly new to your content.” Welcome! “I’m currently in step four of the FOO. The transmission began going out in my vehicle last week. Do I pause step four to save for 20/3/8?”

Bo: Well, what’s really really interesting is if you’re in step four, I would not say that you’re pausing step four to save up the 20% for the 20/3/8 rule. For those of you who aren’t familiar, when it’s time to buy a new car, we want you to pay cash if you can. But if you can’t and you have to finance: 20% down, don’t finance for any more than three years or 36 months, and your payment cannot exceed 8% of your monthly gross income. So you’ve got to come up with that 20% down payment. I would argue if you’re in step four already, you just want to keep doing that. You want to keep piling money away in that emergency fund, recognizing that even part of your emergency fund is likely going to be a sinking fund to cover that 20%. Now, it’s going to mean that you’re probably going to be in step four for a little bit longer than you would have been otherwise. But that’s okay. That’s what it’s there for. That’s what you want to be able to use your emergency fund for. So I don’t think it’s a pause. It’s a use.

Brian: You are saving into step four, so then you can use those cash reserves to put that 20% down. So it’s not a pause. It’s a use of your cash reserves because your car is about to leave you stranded and you need the car to get you to your job, which is the primary engine that’s going to help you build wealth in the beginning of your humble start to the journey. That’s why you’re not separated from the Financial Order of Operations. It’s just part of it. That’s why I love how these things interconnect. You have the nine steps, but then you also have some of these guidelines like 20/3/8 and house purchasing guidelines. These things all intersect with each other. You just need to know how to use the money and know where the limits are so you don’t get yourself in a bad situation. Now, when you use your emergency reserves to put this down payment on the car, you should feel a little scared that you don’t have as much cash reserves as you should to keep you financially safe. Use that fear to keep you motivated and stay disciplined. You know the two levers: you can make more money or you can spend less money. But let’s get the cash reserves boosted up because that is your protection from the desperate decisions. Let’s get that built back up as fast as possible.

Rebie: I love that people sometimes don’t think this is live. And Ben was like, “Oh my gosh, they’re really answering!” Yeah, he said he was new to our stuff. So maybe he thinks this is all in there and fake land. We really are taking questions live. We’re picking them from the chat as we speak. Thank you for the question, Ben. And good luck on step four and all the potential car buying.

Rebie: Okay, next question. And before I get to the next question, we’re going to be doing rapid fire in just a little bit. So be sure to get your rapid fire questions into the chat. Just put RF at the beginning of the question if you want to be a part of that.

Brian: Did y’all do rapid fire last week?

Rebie: No, we did “Waiting in the Wings.”

Bo: I will tell you both, because I like everybody to know how smart Bo is. It was just me and Rebie doing the show. And if you go read the comments, we had a great show. Rebie not crushed it. But there was one question that I just completely left on the table on Roth IRA. I saw that. So I was thinking, this is why Bo and I are such a great team. I probably in reality whiff on a lot of them, but Bo just comes, he’s like the janitor who comes up behind me, cleans it up, makes sure everything is good.

Brian: So it’s nice to have you back in to sweep up behind me so that nothing falls through the cracks. I heard Brian just dubbed me the janitor of the Money Guy Show.

Bo: Man, you’re the cleanup hitter. There you go. I’ve been doing it for 20 years. It’s nice to have you back. It’s always an honor to sit at the big desk. But I prefer when we’re all here doing our thing all together.

Q&A: Bought Annuities — How Do We Track Net Worth Now? (28:29)

Rebie: All right, get those rapid fire questions in, and we’re going to move on to Thomas’s question. He says, “We recently purchased annuities that will provide a healthy paycheck in retirement. With that large sum spent, how should we think about our net worth now for continuity of tracking?”

Bo: Oh man, this is a hard question to answer, Thomas, because annuities are fairly complicated. We don’t know what kind of annuity you bought. Did you buy some sort of deferred fixed annuity, meaning like, okay, I paid $100,000 into this annuity, and at some point in the future, it’s going to pay me a fixed return to create that paycheck? Or is this like a variable annuity where we put it into an annuity product and it’s still investing, and so the future payouts are going to be dependent upon how the underlying assets perform? It’s really really difficult to give you guidance on exactly how to account for that in your net worth, because some annuities can be kind of like pensions, with a guaranteed future income stream, while others can be like present-day assets that fluctuate with the market, going up and down. So you need to really understand what is the product that you bought and how would you mark it to market based on the value.

Brian: But I don’t mind speaking to this if it’s a fixed, like an immediate annuity that’s going to provide like a pension to you. So you could take the risk off of you and put it on the insurance company doing the annuity. I will tell you that’s a very small subsection of the marketplace. And in my opinion, probably the most appropriate way to use annuities is because if you want to take some of the risk off of you for providing in the future, because then that frees you up to think about legacy, you can think about other things on how you’re using the money. Because you’ve essentially purchased your way out. Now you no longer own those assets. Now you’ve created a promise from the insurance company to provide this income stream. So from a net worth standpoint, that money is off your net worth statement. It’s more of a footnote. It’s a promise that you’re going to be receiving this type of income flow for many years to come, no different than when your employer has a pension. If there’s not like a rollover opportunity, it’s only a promise of future payments, just like Social Security and other things. Those are things that essentially help you offset your cash flow in retirement. But now it’s off of your net worth statement.

Bo: Now if these are, and it says immediate payment for both of your entire lives, so that’s probably the best use of it. If you want to take that risk away, that’s a great thing. It is one of those things where now you can start thinking about how you want to use the other resources, both from an investment standpoint and from a legacy standpoint. It really opens up your thinking. But realize the catch: when Thomas made that decision, the legacy of the portion that goes into the annuity is gone because you wanted to take the risk off of you. The problem is if you die quickly, that money doesn’t get passed on to your relatives and others. But for a lot of people, that’s okay. You see this with a lot of assisted living communities, where you can buy into essentially the house but you don’t get to keep it. But now they promise to do your health care and all these things as you work through later life decisions. You can buy yourself out of some of that risk if you structure it appropriately.

Brian: Great question, Thomas. Thank you for being here. And this coffee before I knock it over.

Bo: Good save. People are commenting saying that we have an obscene amount of drinks on the table.

Brian: It’s always the same number of drinks we always have. I have coffee and water. I don’t know what Bo’s doing over here. He’s got coffee, water, and what else?

Bo: I have coffee, I have sparkling water, and I have still water. So when you go to a restaurant and they go, “Sir, would you like flat or sparkling water?” You go, “Both.”

Brian: I say tap. Because do you know why? If you want to know the financial secret, when they ask you, “Sir, would you like sparkling or still?” Don’t answer that question. It’s a trick question. What they’re really asking is, “Sir, do you want tap water?” And the answer is yes. I would like tap water. It drives me nuts. You want to know what cooks my goose? That right there. When I get charged for water and I don’t expect to get charged for water, it gets me. You know, a much younger version of myself, the first time I ever went to LA, I got in a fight with a waiter in the parking lot over this exact equation.

Bo: Are you serious? He followed you to the parking lot?

Brian: I’m not going to tell the rest of the story, but it was an intense situation because I had written a note on the receipt because I felt like he ripped me off with all the bottles of water he charged us. And you know, you can’t even tell if they’re serving you tap water versus bottles because they all use these fancy little glasses. Now look, we go to Disney all the time and Florida has horrendous sulfur water. But somewhere in the last two or three years, they filter everything now because you can drink Disney water in the restaurants and it doesn’t taste like eggs anymore.

Bo: Really? So most restaurants I think are filtering their water now. It’s okay to do tap water. But Florida was the exception for me. I used to buy bottles of water at restaurants because of the sulfur taste.

Brian: That was a great exploration of the types of water. I got charged for the ice cube. I got a $3 ice charge.

Bo: Oh yeah. I’ve been to that restaurant. You can order a mixed drink and they won’t charge you a premium for the big ice cube. But if you do like a bourbon, they hit you not only with the charge for the expensive bourbon, they hit you for the ice cube too. It’s stick it to you moments. That’s truly crazy. Oh, it is ridiculous.

Brian: But it is hilarious to hear you talk like, I don’t like when they come out: “Hey, would you like bread for the table?” Because my answer is always yes, I’d like some, but like, I don’t always want to pay for bread, you know? Like, is this a Longhorn situation, or is this a fancy place? Can I tell you there’s a great book you might want to read?

Rebie: Die with Zero.

Bo: We might be at that point. You’re fitting into miser territory versus mutant territory. Fine line between miser and mutant. So maybe you need to consider. All right. I mean, I start hearing rich guys talking about how they don’t want to do something and they might need a book. Look, I don’t want the memories made with the time spending money. I just like to know that I’m spending it. You know what I mean? Like, we were just down at the beach and it was awesome. My kids, we got all the good stuff, and it was fine. But I knew what I was doing. When it’s done to me instead of me doing it, I like that. And that’s why we partner with Monarch on this. I have like a Sankey diagram and I can see all the ice cubes on there. There’s a specific category just for ice cubes.

Q&A: Planning Financially for Starting a Family (37:00)

Rebie: All right. Next question before rapid fire is from Casey. She says, “Hey Money Guys. My husband and I are planning to start a family in the near future.” Congratulations, parents yourselves. “How can we anticipate and plan for this to affect our budget?”

Brian: You know, look, I’ll say this part because I’m like the grandpa here. I’m out of the child-rearing ages. So now I’m in that sentimental phase. I just want you to know. We also had a lunch yesterday and one of our key key team members, any day now, his wife is having a baby. And we were talking about how that first week when you come home from the hospital is just something. And if I can bring it back to the financial side: kids do have a cost. Don’t mishear that. Kids do have a cost, especially when you talk about daycare.

Bo: I want you to know that the biggest thing is start thinking about how you’re going to handle it if you’re both going back to work or if somebody’s staying at home. That’s the biggest part. But all the other components of it, with the diapers, the food, and that type of stuff, it’s not as big as everybody would have you think. So figure out the childcare side of it if you’re going back to work. But once you get that part figured out, I want you to be fruitful. Because as a guy who’s in his 50s, I wish we’d had more kids. Nobody tells you that. Part of it is you’re going to get to an age and say, man, it’s kind of sad once you’re off of that child-rearing phase. It’s hard in the beginning, but there is something about the love that you have for your children that’s just hard to explain. I’ll tell you what I did that I think is helpful for young folks. If you can structure your life in such a way that you have a pretty decent savings rate early on, meaning you’ve caught the bug of being a financial mutant and you’re saving 15, 20, 25% of your gross income before you have kids, what you’ve already naturally done is built in some really good margin. And so the way that I would mentally prepare for the financial impact of kids is that outside of losing an income if one of you stays home, or having to pay for daycare, realistically, the costs are not unbelievably burdensome. But what you might have to do, and I see a lot of parents do this, and I think my wife and I may have even done this with our first kid, you may have to back down your savings rate a little bit. You may have been so good at saving 25%, or you were at 23.2%, almost at 25. But that kid comes along and now all of a sudden, oh man, I need to go buy life insurance, disability insurance, all these things. The diapers and bottles and all these things. Maybe your savings rate drops down to where you’re saving 17%, 18%. That’s okay. That’s going to be something that you will get back on the path. It’s okay if you take a step back. It doesn’t have to be just a solid straight walk up the mountain one step at a time.

Brian: I think a lot of parents are so hard on themselves because they say, “Oh, I can’t back down my savings. I can’t live life. I can’t actually enjoy the moment that I’m in.” And I just don’t think that’s the case. And I think a lot of people say, “You know what, well, I can’t do that yet. So I’m going to wait to have kids.” And you have to make that decision for yourself. I do not think that having kids and starting a family is a financial decision. I think that obviously the finances play into it, but it should be a life decision that you make and you figure out how to make the finances work around that.

Rebie: We just heard from the wings that Casey has shared that she’ll be staying at home with the kids.

Brian: Embrace it. I will tell you some of my favorite memories, this is part of the blossoming of memories, as struggles, and if you embrace it as part of the adventure of this, it can be fruitful in the future. Just kind of go into it and know that, hey, yeah, we’re going to have to maybe not do everything that we did, but in the long term, this is going to be better. And by the way, whenever you make huge life decisions, put on your 3D glasses. Go ahead and model out what the next three years of your life is going to look like, and put it in three different scenarios. You’ve got the dream scenario, the down-to-earth plan, and don’t leave out the doodoo plan. With newborns, you’re going to know all about the doodoo plan for sure. You need to take that into account from the financial standpoint so that you have all scenarios covered.

It Does Not Depend Rapid Fire Segment (41:31)

Rebie: Love that. All right. It is time for our “It Does Not Depend” rapid fire segment where Brian and Bo have a combined 30 seconds to answer your questions, and they cannot say the word or words or phrase “it depends.” Now, at the end of the rapid fire segment, if there are some things that need to be said, we will revisit those at the end in our “Maybe It Does Depend” segment. With that, let’s get 30 seconds on the clock and let’s dive into question number one. Bo, you go first since you’re fresh from vacation.

Rebie: Is it okay to put all or part of your emergency fund in a CD ladder?

Bo: You can put your emergency fund in a CD ladder, but you need to have access to capital like today. Like if an emergency happens today, you don’t have to wait for that ladder four months, five months, six months to mature. So give yourself a portion of it in CDs, but you need readily available cash.

Brian: Today I’d want to know more information on how much you’re putting in CDs, because there’s a good chance your high yield savings accounts and other things are going to be very competitive. Unless you locked in some CDs years ago, there’s just a better way to do it. I hold zero CDs right now. I don’t mind disclosing.

Bo: I don’t have any CDs either.

Rebie: That was over 30 seconds but I’ll allow it. Next question. Big ticket one-time gift giving. When it comes to gift giving, do you get an item, a gift card, or cash?

Brian: The ideal is the item first. I like cash over gift cards second. But I’m all about can you have a thoughtful idea? But I will tell you, probably more often than not I give cash.

Bo: Cash would be what I’d like to receive the most. Oftentimes I find myself giving gift cards, which is so dumb. Why would I do something that I don’t want to get back? But a gift is probably the best thing. Man, it’s really hard to do that, especially around the holidays.

Rebie: Question number three. Are there reasons to see a financial advisor if you’ve accumulated a million but have several years left in the accumulation phase?

Bo: We say that there are generally three times when it makes sense to reach out to an advisor. One: the gravity of your decisions is bigger than you feel comfortable navigating alone. Two: the complexity of life has gotten to the point where you don’t know what you don’t know. Or three: you recognize that stuff in your financial life is falling on the back burner and you don’t have enough time to put the effort in that you need to.

Brian: More than likely, this is the first time you’ve ever had $1 million, and you just don’t know what you don’t know. Having somebody who’s done this thousands of times is probably going to be a more efficient and better use. Go to moneyguy.com/become-a-client. Check it out. We’d love to talk with you.

Brian:I thought we were about to go micro machines there with the way you were speeding up.

Bo: You know how unique it is in this world to have $1 million? It’s a big accomplishment. People are like, poo-poo, $1 million isn’t that big, but $1 million is still a lot of money. If you hit the two-comma club, that is worth celebrating. If you’re not out there in our Discord celebrating milestones when you hit that stuff, you should be, because it’s awesome.

Rebie: Back to rapid fire. Does the Money Guy 3 to 5% down rule for first-time homebuyers apply to someone who’s 50?

Brian: I mean, this is easy. We give you this rule for your first home. Now, if this is an upgrade, I want you to do the traditional thing because hopefully you’ll have the equity from your first transaction.

Bo: I think you can still use 25/3/5. However, if you’re 50, one of the things I want you to think about as you’re aging is you ought to be thinking about de-levering. So if I’m 50, buying my first house, and that sounds like a 30-year mortgage, I might want to figure out, okay, is there a way to be in a 15-year mortgage or something else to get that timeline down?

Rebie: That was close. Maybe we’ll come back to it. Next question. Do you have many expat clients for Abound Wealth?

Bo: We have some. Many is a word. But yeah, I mean we have expats. We have clients who choose in their financial independence post-work life to go live in another country, live somewhere else. We also have clients who are still in the active growing phase that go live in Europe and other places for a period of time. We have to help them with the tax side of that as well. Yes, we can help with that.

Rebie: Next question. “Hey guys, I have a friend. It’s me. I’m the friend who has a bit of a spending problem. That really is a discipline problem. What tips do you typically give your clients who have the same struggle?”

Bo: I do think that using some sort of budgeting or tracking app can help, because then you can’t ignore it. If you make yourself every single morning pull up the app, look at the transactions, make sure they’re coded, you will start to see, before you go swipe, “Man, I’m going to have to look at this tomorrow morning.” It will likely change your behavior. Automate as much of your life as possible, meaning that you actually make the good habits that much easier by doing your 401k, your Roth IRA, and then every time you get a pay raise, have 60% of that go towards your savings and only 40% towards lifestyle.

Brian: Love it. And if you want that tracking app, use code “moneyguy” on Monarch because you can get a big 50% off discount if you want. There it is. Look at that. I wasn’t even going to say it. We should not be scared to actually use and share the tool that we actually use personally. No, I’m just saying if you want to take our advice, you can get it way cheaper if you use the code. My wife loves being able to see it now. She’s never had like a mechanism where she could see and she kind of just trusted things. It’s helpful for her to have that good information tool.

Rebie: All right. Last but not least: throw pillows or curtains. Which one do you buy first?

Brian: The easy answer is throw pillows because I know how much drapes cost.

Bo: I’m ashamed at how late in my life it took me to buy blackout curtains in my bedroom. Do that tomorrow. Just kidding, it’s not step one of the FOO. But blackout curtains so you can sleep better? Game changer for me and for all my kids. I don’t know why we didn’t do it for our younger kids. For my baby boy, blackout curtains were a game changer.

Bo: I like waking up when the sun comes up.

Brian: I don’t want my son waking up when the sun comes up. That sucker needs to sleep. As soon as the light came in, my kids at the beach, 6 a.m. waker-uppers, right? Because there was no blackout curtains. Not at home though.

Rebie: I heard it here first. That concludes our rapid fire segment.

Brian: What time were you going to bed on this beach vacation if the kids were waking up at 6 every morning?

Brian: We were probably going to bed around 9:30 or 9:39. And with the animals, this is the first time we’ve ever done this. I’m not even ashamed to admit it. I’m at this age now. We just kind of all went to bed at the same time. As soon as we put the kids down, we kind of just went to bed. That’s the way it went, and it worked out great.

Rebie: Practically speaking, if you have to choose one, do you have to buy curtains?

Bo: Throw pillows are useless. There’s no utility in them at all. I don’t know why you would spend your money on something with no utility. Other than, like, looking at them. And I’m not even talking about sleeping pillows. I’m talking about the pillows that just sit on the bed. The shams. You know, the pillows you’re not supposed to sleep on. How many pillows do you have on your master bed if you don’t count the shams? Okay, not counting those. Three.

Brian: My wife and I have eight pillows total. Not counting the one two on the bench at the end of the bed, so actually ten. I’ve got seven total. We have three pillows that are one color, then two smaller pillows in front of those three, then two more, then one. It’s like a pyramid of pillows. It looks beautiful. And then we have a bench at the end of the bed with one on each side, and I didn’t even count those.

Bo: We did this back porch thing. My wife bought these pillows and they look like Tootsie Rolls. Not like regular Tootsie Rolls, but like these little rolled pillows that just sit in the chair. And when you need to sit down, you’ve got to move the pillow. And I’m like, what? All these pillows do is get in the way. They’re not serving any purpose other than taking up room in the seat. We’ve got one on every single one of our chairs outside.

Brian: Tootsie Roll pillows. I knew exactly what you’re talking about. And they serve zero purpose. How did they convince anyone to buy those? That must be a heck of a marketing campaign. My wife bought them from this designer she buys all her stuff from. If you had a Netflix special, I should not be buying your throw pillows. But that’s who she bought them from. So they’re pretty. They’re pretty, but they don’t serve a purpose. All I do is want to sit in that chair, but there’s a pillow there.

Bo: And if you throw it down, do you know which direction to put it back? I don’t. What am I supposed to put it in my lap? Now this pillow is causing me problems.

Brian: I think you’re just not supposed to sit on any chairs outside. That might be it. My house philosophy is if something’s going to go outside, I’m assuming it’s getting dirty. This is just a little item, right? This is just what this is all going to be. It’s fine.

Maybe It Does Depend: First-Time Homebuyer at 50 (51:50)

Rebie: Okay. Did you have anything else to say about that first-time homebuyer question?

Bo: I would really want them to think about maybe a 15-year mortgage, or maybe figure out how to do some sort of extra principle payment. I just, the idea of having a mortgage from age 50 to age 80, especially if you’re going to leave the workforce around 60 or 65, I’d want to know: is there a way to potentially de-risk that a little bit?

Brian: But you have to be careful. That’s such a hard spot. That’s actually where it’s hard to give rule-of-thumb math, because you actually need to get into the numbers. I have had clients come in because, and I don’t know if I would tell you in certain high cost of living areas, if you have a 401k or savings of $1 million, going and paying for all of that house might not be the best use of those dollars. Because once you’re debt-free, as you know, it’s a scary thing. That’s why you really have to do the math on it to assess the risk and figure out how to navigate this. And what’s the interest rate? It is true that once you get to retirement, it just gets to be a two-variable thing you have to consider. Yeah. Because you’re not truly financially independent until you have zero obligations behind you. And so for some people, the reality is that you will have a mortgage in retirement. But I would want to really measure twice, cut once before I’m willing to say, “Yeah, this is the best course of action for you.”

Q&A: Paying Off a 5.625% Mortgage by Age 35 (53:26)

Rebie: All right. Let’s do one more question before we close it out. This one’s from Kyle. He says, “Thoughts on paying off a 5.625% mortgage by 35. Assuming all retirement accounts are fully funded and hitting milestones, I want to hit coast FIRE or financial independence to have more time with family. We are 30 and 28.”

Bo: This one pains me a little bit, right? So what are our thoughts? Our thoughts are if you’re saving 25% of your gross income for the future, if you were doing that, you get to choose what you do with the money above and beyond that. So if you’re saving 25%, you’re funding all your retirement accounts and doing that sort of stuff, and you decide that one of your financial goals, because money is nothing more than a tool that allows us to accomplish our goals, is to be debt free by 35, then it’s your prerogative. You can do that. Now, what I’d want to do is walk through some mathematics with you and say, man, Kyle, not having a mortgage at 35 is super cool. You know, it’s only slightly cooler having the ability to just write a check to pay off that mortgage. Because at your age, at 30 and 28, 5.625% on a primary residence home loan, it’s just not that crazy. And I’m going to argue that your dollars could work a lot harder for you elsewhere, and could even potentially have you be debt free sooner if you were to implement a different strategy. But once you save 25%, you get to pick and choose.

Brian: Kyle. When you can make this decision, you are at step eight because you’ve done it all. You’ve loaded up the retirement accounts. Your question kind of set up, I’m assuming if you’ve thought about how you’re actually going to use this money when you retire, you’re talking about Coast FIRE. That probably requires a savings rate that’s higher than 25%. But I’m going to give you credit if you’ve done the math and you know that yeah, what we’ve saved up and what our current savings rate is, we’re going to be a-okay. And you still have extra resources and you want to be debt-free. Then that’s step eight. And you can, and I give you permission, as long as you’ve done the math on that and your Coast FIRE situation really is that strong that you can go ahead and prepay a mortgage at 30 years of age, then I think it’s okay. You’ve earned that right.

Brian: Once you get to step eight, just make sure you’ve measured twice, cut once on those big decisions, because that’s what step seven is: when you think about how you’re actually going to use this money. Now, Bo is the extreme because he forever didn’t want me paying off my mortgage. Well, just because I’m good at math. Because yeah, because my interest rate was so low. Oh no, it wasn’t 5.625%, which is probably about where mortgage rates are right now. I had a 2.5% mortgage rate, and I had gotten down to where it was like $60,000. I mean, we were talking about a few hundred bucks a year in interest. It just didn’t make sense anymore to keep it. But it’s one of those things where I understand the desire to be debt free. Just make sure you’ve done the math on the front end that the opportunity cost is worth it, because it feels good emotionally, but it might hurt you from a financial standpoint.

Closing (57:07)

Rebie: Love it. Never forget, we’ve talked about a lot of things on the show, whether it was our rules for buying a house, guidance on buying a car, how to become a client, when to become a client. All of that lives on moneyguy.com anytime you need it. Even though we turn the cameras off, you can go to moneyguy.com/resources to take advantage of all of our free calculators and downloads and learn more about all of the things that we talked about on the show. So be sure to check out moneyguy.com. And thanks for joining us today.

Brian: I’m just glad like having the team back together. It was really fun. I mean it’s one of those, whenever I hope when I go on vacation because I go on vacation more than anybody, I reserve that right as the older guy. I hope that when I’m not here, you’re like, man, it was a shame that Brian wasn’t here today. It definitely felt like it when you guys weren’t all together. And I like us all being together because the lift is easier. It’s more fun. We just have a blast doing this. And I hope that comes through, that we really do love creating content for you guys so you can live your best life financially. And also your feedback, you guys let us know when content hits and when it changes your life. And that is the fuel. We did a collab with Erin Talks Money and it was on ABLE accounts. And Erin was able to reach out to us in the last few days and share with us some feedback she’s gotten from some specific audience members. Guys, that stuff means the world to us. So we appreciate y’all going on this journey with us. We really do believe there’s a better way to do money. And that’s why I love that we got to share the good of Total Money Makeover by Dave Ramsey. We also get to share the good of Die with Zero by Bill Perkins. But man oh man, do we think that we’ve created something that can help you in your financial journey with both the Financial Order of Operations and Millionaire Mission. I’m your host Brian, joined by Mr. Bo, Rebie, and the rest of the content team. Money Guy out.