The True Cost of Retirement

How Much Will Retirement Cost You By Location? (0:00)

Brian: Hey, we got some interesting information to share. How about how much your retirement is going to cost you by where you live?

Bo: Brian, I am so excited to talk about this because it’s one of the questions that a lot of people have. Okay. What do I actually need to retire? What do I actually need to experience financial independence? And this won’t come as a surprise, but where you li ve will actually likely have a huge impact on what the answer to that question is.

Brian: And it’s not, you know, one of the biggest things when we do content shows, one of the hardest things for us is we have to use some number for people who are not retiring for 20, 30 years. Sometimes we use a percentage of income to assume expenses. But that gets to the point that what’s really the most important, it’s not really what you make, it’s what you actually going to spend in retirement.

Bo: So Visual Capitalist came out with this really interesting chart that shows the entire United States and it shows the annual retirement costs by state and this is again is across food, shelter, transportation, health care, utilities and then like a little bit extra to kind of show you okay well what would be the annual retirement spend, the annual living retirement need by states and unsurprisingly there are some that are relatively low and reasonable and there are some that are pretty high and a hard level to get to.

Brian: Well, let’s compare and contrast here. If you want to know on the low side, where would you have to live? It’s West Virginia with $58,000 in average annual retirement spending. And if you want to know the highest, we’ve got Hawaii coming in at $129,000 and the national average is $71,640. So then we said, hey, let’s in Money Guy fashion, let’s take this in a different way because I love what Visual Capitalist put together here with the Go Banking Rates data, but we’re like, okay, what would you actually have to have in assets to replace this level of expenses and we came up with using the 4% withdrawal rule a whole spread here for you.

Portfolio Needs by State (2:10)

Bo: Yeah, if we think about just the average, the national average we said was $71,640. That means that on average you would need almost a $1.8 million portfolio across the country. But if you want to get specific, we said, “Okay, if we take that same thought process and apply the 4% withdrawal rule to all of these states, what are the lowest 10 states in terms of the size of portfolio you would need and what are the highest 10?” And it was kind of remarkable that if you look at the bottom 10, this is West Virginia, Oklahoma, Alabama, Indiana, Iowa, Kentucky, the portfolio value falls somewhere between $1.4 to $1.6 million would be what would be necessary with a 4% draw rate to reach that average standard of living in that state.

Brian: Now, here’s the thing, because a lot of people are going to see this and be like, “Oh, no. I mean, I just don’t know that I’m on track to have a million and a half dollars, much less $3 million.” And that’s why I think it’s important, and this is why when we’ve done content in the past, we’ve tried to take a percentage of income or other things, because there’s always typically an offset. And let’s face it, when we think about offsets, a lot of you, especially if you’re retirement age, you might be old enough that you will qualify for a pension, you know, because the pensions, they were much more prominent in the past. And most people, especially those approaching retirement, qualify for social security. That is going to have a direct offset to your expenses or cash flow needs. And that could have a dramatic need. Think about for somebody in Hawaii, $3 million. That’s a lot of net worth that you would have to have, a lot big lift to save to build that type of net worth or basket of holdings. But if you had a pension that was going to provide or social security and those two in combination were $40,000 a year, all of a sudden instead of being around $3 million in need, you might need $2 million in need. You just trimmed a full million dollars off of that. So don’t let this panic you. You just need to, it shows how important is take inventory because once again, personal finance is very personal. What do you have coming in and what are you going to be able to use to build that awesome retirement?

Bo: And of course, the actual answer for how much you need to retire is dependent solely on you. Just because someone else might be able to live at a stated standard of living does not mean that’s a standard of living that you want to or need to live in retirement. So, as you get closer to retirement, we want you budgeting. We want you tracking. We want you having a really good understanding of what your retirement expenses will be. But Brian, we have a huge audience out there and they say, “Oh, I mean, okay, I’m in my 20s, 30s, 40s, and I want to know what my number is. How should I be trending? How should I be thinking about this?” And you already said this, one of the most difficult things that we do is try to project what living expenses will be 20, 30, 40 years into the future. And so when someone in their 20s or in their 30s asks us, “Hey guys, I’m trying to figure out my number. What should my number be?” We say your number should be 25%.

Savings Rate Over Cost Projections (5:18)

Brian: Well, yeah, you can quickly see this is the personal in personal finance is that if you go look at our, and I love the intersection point, How Much Should You Save in retirement? If you have not checked this out, go to moneyguy.com/resources. This is going to let you now look at, hey, okay, I’m in my 20s because I’m starting this much earlier than the average American who doesn’t start saving and investing for the future is usually in their early 30s, early to mid-30s at this point because it changes from year to year. If you’re in your 20s, you’re getting a huge head start and you’re giving your army of dollars that much more compounding interest opportunity. Your savings rate might be able to be well below 20%. So that’s why go check this out. Individualize your journey. But the big thing is don’t let studies like this on how much things are going to cost in retirement. Focus on what you can control and your savings rate is a big factor in that.

Bo: I love Brian that we get to share this kind of information. We get to help you dream and plan for what retirement and financial independence look like. But I also love that we can speak to things that are going on in your life right now today. It’s why we show up every Tuesday at 10:00 a.m. So, if you have a question you want us to answer right now, we have the team out in the wings collecting your questions. Make sure that you get them in the chat because we believe that there is a better way to do money and so we want to load you up. So, with that, creative director Rebie, I’m going to throw it to you.

Never Buying a Home (6:40)

Rebie: Yeah. Amber H has a question for you. She says, “What are your thoughts on never buying a home? What are some considerations on how this may impact your net worth and your retirement?” What do you think?

Bo: So, I think this is a take that a lot of people will find interesting. We subscribe to the idea that home ownership is not a requirement for financial independence. Home ownership is not a requirement for retirement. Home ownership is not a requirement for anything financially related unless owning a home is a goal that you have. Now, don’t mishear me when I say that. We love home ownership and there are certainly tons of value to owning a home and being able to have something that you’ve paid off and is yours, but it’s not an absolute necessity. And we have a number of clients who maybe at some point in their life prior were homeowners, but now at this stage of life or where they’re at, they’ve made the decision, hey, I don’t want to be tied down to one specific location. And they actually don’t own a home and they’re still financially independent. They still have flexibility. They still can live the life that they want to live on their terms. So, I do not think that home ownership is an absolute necessity for everyone.

Brian: But Amber, I’m going to be completely transparent and honest with you, is that if you look at the data from the FRED, that’s the Federal Reserve, they publish data on changes of net worth. Sadly, for the typical American, all of their net worth is tied up in their house. So, it’s almost like this big financial transaction that people do is what unfortunately is all that drives their long-term success and the growth of their net worth. And they chose it because this is I guess part of the American dream of the past. So, I will tell you with that type of knowledge and understanding is that doesn’t mean that has to be your story or your path. It just means more responsibility falls on your shoulder to actually not be that stat. Actually start saving and investing, live on less than you make. Actually start putting a little bit of your money to work so it can start growing on its own because it just depresses me that we create all this content, we try to motivate people and then you just don’t see the needle move with the typical American on building assets that can work harder than they can with their back, their brain or even their hands. It’s because people just let life happen to them. So Amber, I have no problem and we have a lot of very successful especially if you live, think about people who live in Silicon Valley or on the west coast, the east coast where it’s super high cost of living. We know some very multi-seven-figure families that we’ve helped out with that never own their homes until retirement. You can still, you know, do all the things of set roots, create community, but you still, it falls on your shoulder. Make sure that all of your net worth when you track it is actually growing in the background by saving and investing in the future by putting it to work into your army of dollar bills.

Bo: Now, if you are someone out there who is interested in home ownership and that is a goal that you have, we have tons of resources out there for you. If you go to moneyguy.com/resources, you can check out our home buying checklist. You can check out our home affordability calculator. You can check out all the housing shows we’ve done to help walk you through how to make sure that when you make this huge life decision, you make it well and you take into consideration the factors that should be affecting that decision. So, if it does make sense for your situation, we’ve got tons of resources out there for you.

Rebie: That’s great. Amber H, appreciate you being here and thanks for the question.

Roth IRA Before Maxing 401(k) (10:25)

Rebie: Danny Tsunami is up next. It says, “I’ve completed steps 1 through 4 of the FOO and I have enough funds to max my Roth IRA. No HSA available. Why is it recommended to match my Roth IRA before maxing out my employer 401(k) plan?”

Brian: Well, maximum flexibility. Plus, it doesn’t have to be an either/or. I think, look, we like the IRA first because guess what? You have complete control. That’s right. You have limited control with your employer. Yes, you get to determine how much you can save in your employer plan, but you don’t get to determine the investment options. What if it was the golf buddy of the owner of your company who set it up and it’s got all these sub-account fees. It’s got, you know, it’s not, index funds isn’t even an option. There’s lots of things that are outside of our control. Whereas that Roth IRA, you get to choose the custodian that you’re going to work with. You get to choose the investment you’re going to work with. And then guess what? Even if you change your job, you don’t have to go to HR to move those assets out. You actually still have control of every bit of that. That’s why we like the Roth IRA first. But ultimately, the goal is that you go do both.

Bo: That’s right. I’d love for you to load up step five, max out the Roth IRA, and then yes, move to step six with loading up those retirement assets and topping off with that 401(k). Yeah, we love Roth assets because Roth assets are a great tool where you can put money in today. You don’t get a current year tax benefit. Those dollars grow tax deferred and then when you go to distribute them in retirement, assuming that certain qualifications are met, you get to pull that money out completely tax-free. So that’s why it’s the tax-free growth, why it starts earlier in the financial order of operations because that can be wildly valuable for you. Even you may be someone who says, “Oh, but guys, I’ve listened to your stuff.” And it says, “Okay, if I’m in a higher tax rate, then I should do pre-tax and a lower tax, I should do Roth. So, should I just skip the Roth and then go to the 401(k)?” No, not at all. If you’re in that situation where you’re in a high tax bracket, we still would love for you to do backdoor Roth conversions even before you go back to your employer sponsored plan because we know that that tax-free growth is so so so valuable over the long term. But I love what you said, Brian. It’s not an either/or. Hopefully, as you’re working through the financial order of operations, Brian, can you hold the thing up for me? Hopefully, as you’re working through the financial order of operations, you’re not stopping at step five, you’re continuing on through step six, and you’re doing both of them.

Rebie: That’s fantastic. Well, Danny Tsunami, thank you for the question. I hope that helps you think through that. And I like that name, by the way. I know. Isn’t that a good one?

Brian: Tsunami solid feels like he ought to, you know, have maybe a DJ booth in front of him and, you know, design like a Dead Mouse type, you know, helmet to wear with it and he could mix it up.

Rebie: Okay. And Danny, if you need more career advice from Brian, just or design, fashion advice, costume advice.

Brian: All right. Well, I was thinking like a surfer. I wasn’t thinking a DJ. I was thinking like in my mind, Danny Tsunami kind of looked like Johnny Utah or something.

Rebie: Surfers don’t want to talk about tsunamis.

Brian: Well, no, no. I just thought like when I think of tsunami, I think of surfing. Yeah. Something oceanside.

Keeping First Home as Rental (13:50)

Rebie: If you like that username, you’re going to like this one. Trogdor the Burninator has a question for you. Is that a reference? I don’t get it. I don’t get it. And I’m a little bit nerdy, so I don’t know. You tell me. Let us know in the chat something. He says, “Hey, B&B. Thoughts on keeping a first home with great equity and a low interest rate when buying a second home? It should stay cash flow positive, but I’d likely put down less than 20% on the new one.” And in case anyone is new here or needs a refresher, you guys typically like putting 20% down on your second home. It’s part of our home buying guidelines. So, what would you say to Trogdor the Burninator?

Bo: A lot of people have found themselves in the situation. They bought a home a number of years ago, pre-2021, 2022, pre-runup, and they’ve seen their house go up a ton in value. Perhaps it was in a great location. There were a lot of reasons to hold on to it, and they have a super low mortgage on that. And they think to themselves, man, I’ve got this house that has all this equity in it. I got a great deal on it. I bought it at a great time. I’ve got this low interest rate. I’ve got a good mortgage on it. Man, I hate to see that go when the rental market in my area substantiates that I can actually put someone in this home and their rental payment could even cover the mortgage. So, I can get even more price appreciation over the long term while having someone else pay the mortgage. And frankly, we love that idea. We think that’s great. And we’ve seen tons of clients that have done that. We actually have a Making a Millionaire episode coming out, has not come out yet, but it’s coming out in the next few weeks or months of someone who that’s actually the very way that they built their wealth. That’s one of the ways they built their wealth was by buying a house and then moving out and renting it and moving out and renting and kind of rinse and repeat that process. So, I was all with Trogdor. Did I say that right? Trogdor. I was all there until the part where you said, “Oh, but you know, I’m going to have to run afoul of one of the rules when I go to buy my second house. I’m not going to be able to put 20% down.” In my mind, I had some just yellow flags go up on that because there are some things I’d like to see differently if I had my preference.

Brian: Let’s go through the mind map on this because I think there’s some really cool things that is unique to this moment in time is that without a doubt now when you sell a house or you’re considering moving or looking at should I sell or turn it into a rental, the interest rate you have on that current mortgage is valuable because if you have a 7% bond and now the bonds are all at 4% then you have a premium in the value of that bond. Well, it’s the same thing with your mortgage. If the market is 6.5% to 7% and you have a 3.5% mortgage, there is some built-in value or a premium that you have with that lower interest rate and that actually moves the needle over to in some cases to you keeping that and turning it into rental property. But you have to offset it. I’m just going through kind of the decision matrix here that the government gives you a very unique opportunity when you live in a primary residence for two of the last 5 years. If you’re single, it’s $250,000. If you’re married, it’s $500,000 of tax-free gain. There’s not many things in life that the government says, you know what, we’re going to let you make hundreds of thousands of dollars and take it out completely tax-free. I mean, that’s a unique thing. So, you can see how these two things now are in complete conflict with each other. So that’s why I’m going to tell you I have no problem with you because there is a premium now on where the interest is if you look at that and go man I couldn’t replace this and then but also the offset of that is the tax-free growth opportunity. So it’s going to come down to what you desire and want to become. If you want to become a real estate maven then maybe that pushes it more towards the interest rate. But if you’re one that says, “No, I like the hands-off. Let my money maximize and grow and I’ll just take these proceeds or I’ll put them into the new house and then I’m going to load up the index funds. I’d love to have that $500,000 of growth opportunity.” Then that’s going to push it the other way. But Bo is exactly right. And I will say like this Making a Millionaire, they did foolish in some ways, but they had a reason. So I’m not going to, I mean, look, you can break rules and sometimes you’ll still get rich because the tide didn’t come back in and catch you skinny dipping. You know, you weren’t caught swimming naked. But we’re trying to give you rules to protect you from taking on too much risk to where you get caught and it becomes catastrophic. And that’s what happens. And Bo is spot on. I like on that second home, you putting down 20%. Because let’s just play this out the other way. Now, this like this person we had on Making a Millionaire, they had a little thing that is not reproducible for everybody. They were in the military and the military was subsidizing each move that they did. So, it was creating an automatic transaction every 3 to 4 years that allowed them to buy a new house, get some subsidy in it, and then they kept doing this and it stacked. Just like all good things with compounding behaviors that are good for wealth building, they work together. You’re not going to be able to do that. But what happens if you keep the existing house? Now look, the carry cost is going to be much lower because probably you’re in a super low interest rate, but you go buy this next home. You only, you know, you’re paying 6.5% mortgage. What if the tenants don’t show up? And the tenants, but that’s exactly right. What happens? All of a sudden, the tenants leave. And it’s just like even this couple that we’re going to have on Making a Millionaire, their very first rental property, he says, “Look, I didn’t do very good in the screening process.” So I don’t want to tell them what they were dealing with, but it’s not their story is not unique. I have seen people get into rental property, not know the ins and outs because all good things sometimes a little bit of experience is required for you to become an expert and you find out not only do people quit paying rent but they might also destroy the property on the way out the door. You’ve got to cover that plus the mortgage payments plus your mortgage on the new property. Just make sure you don’t get caught swimming naked.

Rebie: I love that. If you want to see that episode of Making a Millionaire, where Brian and Bo sit down with a real life person and talk finance, we just recorded it and it’s not out yet. So, that’s why you need to subscribe to this YouTube channel right now so that you will get updated every time we release a new episode.

Brian: See, this is why we need real time, like throw the screen up because Trogdor is an old internet meme from 2003.

Rebie: I was about to say I was googling it like that.

Brian: We are not worthy because they brought it up in real time. If you want to know if this is a live show.

Bo: Is that just for us or did you bring it up? There you go. Is it a snake? Is it a snake with a big arm?

Rebie: A dragon. He’s a dragon.

Brian: Okay. I got to be honest. I love that he lives. That’s all I could see. I was like, “All right, Troy.” A lot of arm curls in that in that meme.

Bo: So, it was just it was a meme. It wasn’t like a cartoon or anything. It’s like an internet cartoon skit. Internet cartoon skit part of a popular website series. Now the more you know. Now you know. Wonderful.

Rebie: Well, Trogdor the Burninator. Thank you for the question and thank you for being here on the live stream and for the amusement. Did y’all know that or did y’all like go Google?

Bo: Oh, you knew it.

Rebie: I had to Google it. Although once I Googled it, I did recognize some of the channel like the Homestar Runner channel. So, I was like, “Oh, I have seen this around.”

Brian: You would not be surprised. Never seen that in my life. I’m fully insulated.

Roth 401(k) vs Roth IRA Priority (21:45)

Rebie: Now you have. All right. Next question is from MI Football. You were hard messy middle in 2003.

Brian: Yeah. Like hard messy middle in 2003. The only thing nerdy about 2003 for me was while I was, you know, helping my wife waking up in the middle of night. A lot of Stargate Atlantis.

Bo: Oh, okay. Jason Momoa, if he will always be Stargate Atlantis. That’s where he was from. He was from Stargate.

Brian: Well, he was also Baywatch like Hawaii years. I mean, it’s funny. I don’t know why we’re talking about Jason Momoa, but there you go.

Bo: Now I know. I don’t either, but that was great.

Rebie: Okay, let’s go back to the question. So, MI Football, Michigan football feels respected. “How does the FOO change if you have a Roth 401(k) and an HSA? Does the IRA become less important further down the list? I save about 24% and do not max out my 401(k) yet.”

Bo: So the real question here I think and tell me if I understand this right is hey what’s the difference in Roth 401(k) and Roth IRA? Why would I prioritize the Roth IRA over the Roth 401(k)? And there are a few reasons why you might want to do that. Now don’t mishear us. We love both of them, right? But when it comes to a Roth IRA, you can choose where you open that account at. Do I want a Fidelity Roth IRA or a Vanguard or a Charles Schwab or fill in the blank? With your 401(k), you are held captive to wherever your employer has that plan. So, it might be at an expensive insurance company or there might not be very good investment options or there might be limited investment options in there. So, when you choose your own Roth IRA, you get to pick where it’s held. You also get a wide array of investment universe you get to choose from. So maybe your 401(k) doesn’t have target date index funds, but inside your Roth IRA, you really want to go buy target date index funds. So I don’t think it’s an either/or, like I have to choose one or the other. But there are a few small reasons why Roth IRA in our mind comes up a little bit before the Roth 401(k).

Brian: Yeah. And by the way, if you think about step two is employer match, get that free money, you can do Roth 401(k) contributions into that, fill up the free money bucket. But then, yeah, get to step five, love the HSA, and then I love the thought of you thinking about this, not an if, an either/or, it is really an and because you’re going to do the Roth IRA next. And then after you fill that bucket up, yeah, jump over to step six and you’re loading up that Roth 401(k) as part of step six as well. So, don’t think about it as either/or. It’s more of an order of operations, hence financial order of operations, so that you can take advantage of all of these great tax favored, heavily incentivized options to build your great big beautiful tomorrow.

Rebie: Love it. I hope that helps clarify some things. MI Football, thanks for asking the question.

Banking with Credit Union for Future Mortgage (24:45)

Rebie: All right, Austheboss1216 has a question for you. “Hello, Money Guy. I plan on being a homeowner in the future, five plus years. Is it a good idea to bank with a credit union now so I could get a mortgage there and have the best chance to do a rate modification? Thanks.”

Bo: Oh wow, man. Thinking ahead. Holy cow. Yeah, really thinking ahead. Let me start with what is a rate modification and why does it matter? So, for those of you that aren’t familiar, a lot of people think about, okay, if I go buy a home now and I’ve got this interest rate, the only way that I can improve my interest rate at some point in the future is if I refinance my mortgage, which means I have to go through another new closing with a new mortgage company and new terms and all that stuff. But what you may not recognize is that a lot of times when it comes to a loan, if the prevailing interest rates have dropped, you can reach out to your current mortgage lender and you can say, “Hey, rather than me refinancing this whole loan, rather than me changing providers, would it be possible for me to do a rate modification where all the terms of my loan stay the same except for my interest rate? And I want to modify my rate from where it was when I originally closed to where rates are now.” And usually there’s just a few pieces of paperwork and a couple hundred bucks to knock that out. So it’s a lot more cost effective than doing a true refinance. Well, what Austin is referring to is that oftentimes credit unions if they’re holding your mortgage might be because it’s more of a relational interaction might be more susceptible and more agreeable to doing a rate modification. So with that context, should he go ahead and begin establishing a relationship with the credit union now?

Brian: I think it may even be interesting to talk about like the difference in like credit unions and big banks. I don’t know a lot of people know. No, I think this is probably from an educational standpoint of what’s happened in the wonderful world of finance. Post great recession a lot of your banks have now become they’re not relationship focused. I mean, I think that the great recession really broke the banking situation because you had a lot of consolidation where a lot of local banks got completely busted up, meaning they just went bankrupt or, you know, they couldn’t make it. So, the banks had a lot of, the federal government came in, did a lot of shotgun marriages, created a lot of consolidation to where you have a lot of big banks now. And unfortunately with big banks and we’ve seen, I’m not going to say the names but you’ve all seen the scandals where artificial accounts, not focusing on your relationship, just being straight up and I’ve even experienced that with you have a great local bank and then they get gobbled up by a big national bank and then all of a sudden you see they cut staff, a lot of the service goes away and just that special connection is lost. So, here’s way I would tell you, and I love where your thought process is as you’re thinking ahead at least three steps here. I love credit unions. I will say that. I mean, one of our dear dear friends, I even gave him a complete shout out in Millionaire Mission because of what he’s done in my life, and I’ve told this story before is that I mean, one of my early clients back in the early 2000s when I went on my own was a school bus driver who had come into a large sum of money, seven figures plus. And I thought it was, I’ll never forget, I got a phone call one day when this person had just signed the contract. And then I get the phone call and it’s the president of a credit union in Georgia saying, “Hey, I’ve got a member who’s coming to a large sum of money. I know this member and I’m just a little nervous. I want to find out who’s going to be helping her out with her decisions because I want to make sure you’re not a scam artist.” And if you’re worried he was trying to keep the money, he was not because he was like, “Look, we can’t even keep this money because it messes up some variables.” And he gave the whole reason. He just wanted to make sure that I wasn’t going to take advantage of his member. And he was very sincere. So this phone call I was so impressed with it. We ended up, it turned into like a 45 minute to an hour phone call, created a friendship which is kind of crazy if you think about it from a serendipity providence type standpoint and then we ended up started doing work and other things with that credit union. But I think it just shows the heart and so I think if you go now look there might be credit unions because look their game is very much like the bank game is the bigger bigger bigger sometimes they might lose focus of the mission as well but I think you can go quickly interview, see how serious or how good they treat you and there is nothing wrong with you going ahead and setting up a relationship if you get those warm fuzzies when you meet this credit union or even I was going to say look we’ve, because Bo and I we own businesses. And so banking relationships mean a lot. They matter. So we’ve always focused on going and interviewing the banks, seeing if they’re going to be in our corner. And I even have like in the last two weeks, we have a bank that we’re changing some things around account-wise and structure-wise. And there was an oopsie, meaning that I had a draft system that was changed and the vendor didn’t update things even though they had sent me a confirmation email saying, “No, we’ve got this updated to the new account.” Well, there was like a $10,000, $11,000, $12,000 draft that hit. Well, there wasn’t enough money in the account because of the structure. They covered it and said, “Hey, bro, I know that you and Bo don’t want this thing to bounce.” So, we went ahead and covered it. You need to, you know, can we make sure that there’s, and I was like, yeah, immediately and I transferred that, but it was the relationship. I mean, they very quickly could have easily just let that bounce. It would have been embarrassing even though it was just an error and that stuff happens to everybody. So, you have to go figure out what you want from the relationship, interview and then just see, are you just a number or are you going to actually be able to build a relationship here that has value and can they be on this journey with you?

Brian’s First Car Loan Negotiation Story (30:41)

Bo: Can I go just a little bit longer on this one for a moment? I think it’s interesting. Most people don’t realize because I want you to tell one more story if you’re up for Brian story time. Most things in this world are negotiable. A lot of people don’t realize, but like if you actually have a relationship and can talk to another human being, you can negotiate. I’m thinking about your very first car loan. Do you remember this? Do you remember this story?

Brian: Yeah. Tell about that and tell because that was because of a relationship or you were setting the foundation. So now look, this bank is now gone because they’ve been gobbled up as part of this great recession. They’ve been gobbled up and now I know which bank they’re a part of. I’m not going to say the name of them because they have, I have a storied history with them, too. But I went in after I got my first job. I had not even started this job, but I had the offer letter and I was trying to, you guys I’ve told the story. I drove around, it’s a raggedy car all through high school and college. I got my first offer and I knew I immediately needed to get a car. So, I had this used car that I was going to be buying for $10,100. It was a Mazda 626, 1994, oscillating fans. I love those oscillating fans. I still had a five-speed. It was a really slick car. And I went to this bank and they immediately said, “Hey, I had my offer letter and they were like, this is, you know, you don’t have enough credit. We’re going to need you to have a co-signer.” And I came back. I actually went home and then I thought about it and I went back and I was like, “Man, this stinks. I don’t want, I’m trying to open my wings, leave the nest, and then here they are telling me I have to go ask my parents to help me out.” So, I went back to the branch manager and I said, “Look, here’s the thing.” I said, and this is why it is negotiable. I said, “I’m brand new to my career and I’m going to be a CPA. I’ve got all these things going on here. You guys are making me bring my parents in. They don’t have a lot of money and you’re going to make them now be, sign off on my name. I don’t like that. If you take, you need to take a chance on me because look, if you make me happy, I’m going to eventually buy a house. I’m going to need to buy more cars and I’m going to need a place to deposit my savings accounts. Why don’t you see if you can make this work because you’re betting on me and the future relationship we’re going to have.” And he says, “Man, I appreciate that.” And he actually called me back. He goes, “You know what? We’re going to do it. We’re going to give you the loan. We’re not going to do the co-signing.” Awesome. And what’s funny, I did give them close to 20 years banking relationship. And you know, before all this gobbling up and horrible service kicked in and all the scandals that happened with this big consolidated bank afterwards, but at the time I stayed true to that. I ended up opening up many accounts, business accounts and other things with this same bank. So yeah, if somebody, if you don’t like, if it leaves a bad taste in your mouth, don’t feel like you can’t advocate for yourself because I do think that a lot of these things are negotiable and they would have been crazy not to give me that loan. I mean, it was just it was insane. But so I’m glad I stood up and didn’t just take the first thing that they threw at me.

Rebie: Love it. Yeah, that was a great experience share and I hope that all of that helped you. Austheboss1216. Thank you for the question and thank you for being here.

Brian: I think, don’t you because like we had that Making a Millionaire couple that was on. I can’t wait. But Bo put it in my head that they’re, you know, they came from nothing or they came from modest beginnings and then they’ve built this big portfolio. And I remember telling them at the end of the interview, I was like, I wish I could have met the 22-year-old version of yourself. And I kind of wish I could go back and meet the 22-year-old version of myself to see that idealistic kid that basically was like, “Hey, you sure you don’t want to give me this loan?” I mean, I just I wish I could have been a fly on the wall to experience that. If you’re having your Ebenezer Scrooge type, you know, go back in time or Back to the Future. That would have been a cool thing to witness.

Bo: As someone who’s been hanging out for 20 years, I feel like you haven’t aged a whole lot over the last 20. I imagine 22-year-old Brian’s pretty much just like the guy sitting right here today, right? Not a whole lot.

Brian: I think I was probably funnier back then. You think so? Oh, man. If you could have seen me before the CPA, the CPA lifestyle turned me into this. That was a good time back in those days.

Rebie: That’s hilarious. That makes me happy imagining he didn’t choose a CPA life. The CPA life chose him.

Brian: I’m telling you, look it’s made me smarter and better with money but I’m probably a little less fun than I was back in college.

Bo: Brian was a good time. Well, you’re still really fun. So props to you. It all worked out. Maybe I needed to moderate it then.

Inheritance Investment Options (35:20)

Rebie: All right. Here’s another question from Febreze Me Up. Oh, some good usernames today. It says, “I just received an inheritance of $10K from bonds. I want to take that and reinvest. What are some good options? Love the show.” And I mean, I think this is an interesting question. Whenever you have a lump sum of money, yeah, you know, what do you do with it? What’s next?

Bo: So, here’s the very first thing I would do. The very first thing I would do for Febreze is I’d go to moneyguy.com/resources and I would download my free copy of the financial order of operations. Brian, will you hold that up for me? Because one of the things you need to answer is where am I in my financial journey? You know, am I still trying to get my highest deductible covered? Do I have high interest debt that I need to be paying off? Am I putting money in my 401(k)? Where am I in this journey? And then I would say, okay, I’ve got this windfall. I’ve got this $10,000 that has now come my way. What is going to be the best use of that? If I have some debt that is high interest, maybe I don’t need to invest this $10,000, maybe I need to go satisfy some of that debt and wipe that off of my balance sheet. But let’s assume for a moment that you’ve gone through the financial order of operations and you know exactly where to put that $10,000. You know, I’m either going to put it in my Roth IRA or I’m going to use it to put more money in my 401(k) or maybe I’m in step seven, I’m going to put it in an after tax brokerage account. Well, once you’ve made that assessment, what you invest in and how you choose to invest will also depend on where you are in your financial journey.

Brian: Yeah. I think where you are in your journey, but then also I want to talk about the logistics of how you actually do it. Here’s something you might not realize. Now, first you have to go see if you wanted to, because you talked about reinvesting. I’m basically thinking you’re thinking about liquidating it and then putting those assets elsewhere. What are the transaction costs on that? You need to go figure out because bonds sometimes you need to just figure out what is it worth, you know, what’s the spread, is there any inefficiencies with that. But after that there is a nice little thing about inherited assets they get what’s called a step up in basis meaning that I don’t know if there’s any built-in gains to this bond from whoever you inherited it from but the good news is is that whatever the value was on the date of death there will be a step up to that value so you could potentially be able to convert this to cash tax-free. Yep. Doesn’t mean cost free because there might be some transaction costs. You need to know what those friction costs are. But then you can kind of get a start at square zero and figure out where in the nine steps of the financial order of operations that this is going to really help you out because that is and then I think that also honors, I always like to tell people when you inherit assets I also take a moment to just think about what would whoever you know blessed you with this would kind of put a smile on their face too because I do think that there’s some weight to when you get a blessing like this, what the intent and how can you make this actually have some legs that you can remember this and it actually has some long-term value to you and gives you a leg up because I hate it when people come into money and they go buy a new car or they go put it in lifestyle and then you think about this blessing just got squandered in a lot of ways. So I always tell people when you get any type of blessing or somebody gives you an inheritance try to honor it and make sure it actually sticks around and gives you some legacy.

Bo: So when they think about like what to invest in, they’ve gone through all that. Should they go buy some individual stocks, maybe some Bitcoin, maybe they should go back to your point. I mean, if this is I mean because I can, when it comes to investing, what are the actual things that they should be buying?

Brian: Yeah. I mean, we like index funds, you know, index, you know, that’s what Roth IRAs, you know, those type of things. And that’s why I even think about, y’all know I’ve lost my, I lost my father in my mid-20s. My mom gave me and my brother $10,000 from a life insurance policy. And I can never forget I paid off a little bit of, you know, it helped me catch up on, you know, I didn’t have credit card debt, but it definitely there was some expenses that I needed to get caught up on. I might have paid off. I think that maybe that car loan that I might have paid that off, but then I definitely funded a Roth IRA with that money. And that it makes me still happy that I think about, you know, came into this money for something, I’m not, you love to give the money back and have my father, but still I feel like it has legacy now because that’s part of this Roth IRA that I have.

Bo: Yeah. So, if you’re early on in your journey, a great solution might be target retirement index funds. It’s a type of investment where there’s only really two answers you have to come up with. How much can I save? In this case, $10,000. And when do I think I might need this money? If I think I might need it 30, 40 years in the future, I can look at a target date index fund some point in the future. Or maybe you’re further along in your journey. You’ve reached the boiling point and you’re at $500,000, $600,000 of assets. Well, then I would look at my overall allocation and say, “Okay, where am I underweight? What are the undervalued asset classes that I might want to get exposure to?” And then I think about really good low-cost index funds inside of those asset classes to make sure that I have a very robust and well-diversified portfolio.

Rebie: Great. Febreze Me Up. I hope that helps. Thanks for being here and asking the question.

Febreze and the Mandela Effect (40:35)

Brian: Look at the content team. We realize Febreze is a cleaning product first released in 1998.

Bo: What? They think we don’t know what Febreze is. That’s so messed up. We know what Febreze is.

Brian: Isn’t Febreze one of those things that’s part of the Mandela effect? Mandela effect where the logo changed or something? I don’t think that was Febreze, was it? I don’t remember that being, I thought it might have been one of those. Bo is looking up. Yeah, Rebie, you tell them a joke while I’m looking this up real quick because now you have me curious. I might be wrong. I know Fruit of the Loom was one of those things. The Monopoly is one of those things.

Bo: Oh. Oh, I’m sorry. Yeah. So it is part of, look at you still trapped. One of the people remember Febreze being Febreeze with two E’s instead of the correct spelling with just one correct spelling.

Rebie: I don’t know that’s not a real word.

Brian: Well, but the correct spelling of the brand. Some people say that they, conspiracy. Which one is it? We don’t know. Mandela.

Bo: Man, that one still kind of messes me up. Don’t know, don’t get me started about Sinbad.

Rebie: Yeah, we’re not going to, we’re not getting started on this. Don’t do it. He just is embarrassed. That was in the movie. That was real.

Brian: Okay. I watched. We have a question from, but can I say one more thing? Okay. Berenstain Bears or…

Bo: Oh my god. No, this one you debunked.

Brian: I will say unless the Large Hadron Collider really did create and change things, I went home. We have all of my childhood books or my wife’s childhood books from like the ’60s and ’70s. We got them all. It was spelled, you know, it was spelled the way that we didn’t think it was spelled.

Rebie: If you don’t know what they’re talking about, go Google the Mandela effect, the Berenstain Bears, Sinbad, and you too can have the hilarious day that we did when Brian discovered the Mandela effect.

Bo: So, Fruit of the Loom changed, too. I’m going to stick by Fruit of the Loom changed apparently. Sinbad was in that movie. It was just, it’s true.

529 Plans Investment Options (42:45)

Rebie: All right. Are you ready for TWWC’s question? Absolutely. Because I’ve got it queued up here. He asks, “Investment options in 529 plans are too conservative for funds that won’t have to be liquidated for 18 to 22 years. Could a Roth be used as an alternative approach for paying for grandkid college expenses?”

Bo: Okay. Let me double back before I don’t even want to really talk about the Roth part because you said, “Hey, 529 plans are too conservative for funds that are going to be 18 years in the future.” Most 529 plans now, and you can go look because every single state now sponsors their own 529. Most 529 plans will give you a number of different options you can choose from on how to invest those. So, one of the options might be an age-based allocation, which I agree with you tends to be pretty conservative inside of 529s, but then oftentimes there’s also an aggressive age base, which is a little bit more equity heavy than the regular age base. And it’s less conservative and maybe a little more fitting. But then even most plans now will allow you to do your own customized portfolio across the low-cost indices that they have. So if you are someone who wants a specific level of risk exposure inside the 529, it’s not uncommon for 529 plans to have a small cap index, a large cap index, a total market index, an international index where you can build an allocation to match the level of aggressiveness that you want to have inside of that plan. So I’m not going to concede that all 529s are too conservative.

Brian: No, that’s too strong of a statement because you think about you even get to choose. You don’t have to work in your own state unless there’s a huge tax benefit in your state because you can go look at like and I’m just doing this off memory but Utah is Vanguard. Yep. I mean you get to go choose whatever index fund that you want to maximize a 529. Here’s the crux of what I think he’s getting at is he’s looking for instead of doing the 529, he wants to use the Roth IRA. And I would tell you it’s back to this isn’t an either/or, it’s really an and. Because I don’t, when you get money into a Roth IRA because you’re limited on how much you can put in a Roth IRA. They cap you out at around $7,000 a year. You’re going to not want to use those assets. Whereas college is going to happen, you’re going to want to use it. And I will tell you, having a child that’s a senior in college right now, and I’m happy to report we just, she’s we just paid, basically we’ve paid for three and a half years because we just paid her last semester of her first semester of her senior year. So we’re three and a half out of four years paid for and the 529 covered three years. And I’m very pleased because you don’t, I didn’t want to be left holding the bag on it. Now here’s the good news. 529s have gotten a lot of escape hatches built into them now. You can fund Roth IRAs with them. You can pay off student loans with them, you know, up to $10,000. You can do K through 12. You can pass them down to relatives. Lots of escape hatches if you overfund it. But I like that it’s built into the system that you’re going to use this and if you use them for qualified expenses, it’s completely tax-free growth. Whereas the Roth IRA, I just that money is so valuable that I want you as soon as your kids, and this is a conversation I had with a client over the weekend, their kids are starting to work. They’re teenagers, they’re lifeguarding, they’re doing other things. And I’m like, go start doing dollar-for-dollar match on those custodial Roth IRAs so you can prime the pump. Get that money in those Roth IRAs so that you can turn them into savers and investors at an early age. So that way it’s not an either/or, it’s an and. And so that you not only have the 529s, but you also can prime the pump once they start working and open up those custodial Roth IRAs. Man oh man, are you creating a legacy for the next generation if you can combine those things.

Rebie: Love it. Great. TWWC, thanks for being here and thanks for the question.

Medical Debt and Braces Payment (46:49)

Rebie: Matt C has a question next. He says, “Is medical debt good debt?” Quote unquote. “My youngest needs braces quoted $6K before insurance if I paid in full or $150 per month with $2K down at 0% interest. Should I use my emergency fund?”

Brian: Well, what is it after insurance or is there not insurance? It’s a great question.

Rebie: That is a great question. I kind of took those two options, but there may be another option.

Bo: There’s literally someone out there who is pinning their kid’s smile on us like that. You know what I mean? They’re going to be like interesting question.

Rebie: Types of debt because you do talk about good debt and bad debt and emergency funds and choices you have to make.

Brian: This is more, this isn’t a good debt, bad debt. This is more of what’s the need for my child. And that’s the thing is that now look this is why these industries they really get you because you’re like oh my gosh I got to do, but you have to kind of you know your situation and have to do what’s the best for your child. And this isn’t really debt. It’s really of do you have the money? You don’t have the money because they’re doing a 0%.

Bo: Well that’s what I’m, what’s unclear that and maybe I missed this is were you getting a discount for paying the $6,000 upfront or could you just pay that $150 a month at 0% interest indefinitely? Because if there’s no discount for paying upfront, the 0% is certainly something that you could take advantage of here without getting yourself into precarious spot. But I’d want to do the math on that. Generally speaking, when you pay upfront, you pay upfront because you’re going to have some sort of cost savings there. But even if you were to take advantage of 0% on this type of thing, that debt’s not supposed to stick around forever. So, I’d want to have like a very finite plan about how, okay, I’m going to knock this out over the next 12 months or over the next 18 months so that you get it off the balance sheet and move on.

Brian: I would rather be if you assuming you have a well-funded emergency fund, I’d rather just knock it out because I worry about the unintended consequence of because look, there is a bank being brought in here and yes, it’s 0% but they’re waiting for you to step out of line and then slap you with interest and penalties. A lot of times when you see 0% they’re very effective if you use them perfectly but there’s a lot of language in there that if you fall off the straight and narrow that you get slapped with fees and you know even they sometimes they even bring in the interest that you got to defer. But there’s a relativity question here too. I mean, I just, I’m not disagreeing with you that they could use the emergency fund, but if your emergency fund is $8,000 and you take $6,000 to go, that makes me more triage your situation and go, man, because yeah, if you get where it’s taking you down to where you’re hitting bone. Yeah. Well, take advantage of this, but then you’ve got to, you know, put yourself under the pressure of that. You’ve got to follow the straight and narrow and then get yourself back as fast as possible because look, your health is, I’m never, you can’t write us a question saying, “Should I buy my kid’s prescription or fund my Roth IRA?” Come on, guys. I mean, seriously, we’re going to tell you that money is only a tool. It’s not, you know, it’s not the only thing in your life. You know, there’s a lot of things outside of the money that we get. And that’s why we try to give you the flexibility. And it also ties back to this is why a lot of people think the financial order of operations is a walk up the mountain hitting each step. And if the content team wants to pull up, it’s actually not. There’s a lot of things that are going to happen in your life that pull you forward, pull you backwards. You just need to be prepared. And maybe this medical expense is one of those things that sets you back a little bit.

Bo: Did you find, have your kids Rebie had dental stuff yet? Any dental stuff? Okay. Did you find that like after because we did, we’ve already done the one bout of braces and I’ve had to do a bunch of cavities at this point after the first time that happens like the very first cavity or after they had braces you got militant about their teeth? Oh yeah. No, it sounds terrifying. Every single night I was like girl did you floss? You better floss. You flossing right now. Are you wearing your retainer? Because I felt like I had to protect that investment. Right. Because it’s not inexpensive, right? Like but yeah it does get expensive. Do you find that you got that way or?

Brian: No. No. I mean, realize I’m a person that, y’all don’t, I’m giving you way too much information. Oh. My wife has she’s blessed with great teeth, so she doesn’t get cavities and all this stuff. I’m one of these people that I think if I just look at a piece of candy, a cavity starts forming because I’ve just, I have deep wells in your teeth or something like that. So, I’ve always been very meticulous with brushing my teeth and stuff because, as I was a kid, I had cavities and had a lot of fillings. So I’m kind of always been on the kids about brushing their teeth because just because I know the struggles I had as a kid. Now my wife and I think fortunately, knock on wood, my girls, they got their mom’s teeth so they could really, there are some of you out there who don’t have to be militant about your dental care and somehow you come out the other side perfectly fine. And then there’s others, this all goes back to if I was born in the wrong century, I would have probably died after childhood because I mean I don’t see well, I have horrible teeth. I mean this is why it’s a blessing to be born in the century that I’m born in that somehow there’s value in what I do versus what would have probably been valuable back in that century.

Rebie: Wow. So much was there. So much ground covered. I’m also blown away by the science and technology of like teeth stuff like when they do like the palatal expanders and they put the braces, like I don’t really understand how it works, how you can make all your teeth get fixed but it was wild to watch like they you know they weren’t straight and they were, it’s mind-blowing to me.

Brian: No, I mean look I’ve got one that’s getting wisdom teeth cut out in the next two weeks and I got another one that had surgery to get chains inserted because the tooth wasn’t coming down. I mean there’s crazy things. So, you’re talking about the technology. I don’t even know. I mean, once again, it’s good to be in this as old, you know, to live in the time we live that they can do these things.

Rebie: Wild. Well, Matt C, I think we’re saying that the investment in your child’s braces is worth it. It’s worth it. I just feel like I need to bring it back home. There’s nothing wrong with you asking if there any discounts or right, you know, cost reductions or any, you know, go ahead and ask, you know, I know it sounds crazy, but it’s worth at least, I do that on about everything. I probably drive people crazy.

Bo: Medical you do actively. I’ve watched it in real time, but yeah, like that kind of stuff. Medical bills. Hey, I’ve got this bill coming in. I’d love to go ahead and pay this in advance. Can we work something out or if I pay you today, it’ll be this amount. And the second worst answer you can get is no. So, you might as well ask.

Brian: Might as well ask. And look, in the comment section, there might be somebody who works in that industry and tell you, “Yeah, we’re just waiting for you to ask for a discount or no, your insurance is the only discount.” Worth looking into.

VA Healthcare and HSA Eligibility (54:05)

Rebie: All right, I’ve got another question from Anthony F. It says, “I’m a disabled veteran and utilize VA healthcare. I currently do not use health insurance offered by my employer. Should I enroll in a high deductible plan in order to open an HSA?” And I think he’s bringing up a great question because you love HSAs, but does everybody need an HSA? How do you think about this?

Brian: So, Bo, you probably know this. So, is he probably on Tricare? That’s what I’m guessing is most likely what’s going on. And that’s going to be completely covered or heavily subsidized by the military and the government. So, I mean that’s, I’ll let you give the answer because we don’t want you to make a bad financial decision just because we love HSAs.

Bo: That’s right. As much as we love HSAs and being able to take advantage of one thing we all have to do, whether you’re someone who has, you know, VA healthcare or Tricare or whatever, you have to assess, man, is the insurance that I currently have access to, maybe I work for an employer who has a very solid Cadillac highly subsidized plan and I see the high deductible option that would give me the HSA availability, but then I’ve got this other Cadillac option that’s really, really good that has low out of pockets, has co-pays and all these things, and it might make sense based on the type of medical consumer I am. I ought to take the better insurance and not be able to do the HSA. That’s an okay assessment to make. It’s an assessment that you ought to work through at least every year as you’re working through open enrollment to make sure you understand, okay, based on the next year that I’m going through, what is the best plan for me? What is the, if I add up here’s what I think my out of pocket is going to be? Here’s what the premiums are going to be. Here’s what the prescription is going to be. Here’s what the tax benefit from the HSA would be. And I compare two columns. I want to select the one that’s most optimal. And sometimes it’ll be the high deductible HSA plan, but sometimes it’ll be the other plan. And in this case, it sounds like there’s a chance, Anthony, that the current insurance that you’re on might be better than going to a high deductible plan. So, you need to make that assessment based on your specific medical usage.

Brian: Well, I love and I think what Anthony’s done is he’s probably gone to moneyguy.com/resources, downloaded his own personal copy of FOO, the financial order of operations, and he’s thinking, hey, I see step five has Roth and HSA, so it must be so good I ought to do it. Well, it’s no different than it’s been treated as a checklist. When you’re looking at the financial order of operations, you get to step two, employer match. If your employer doesn’t offer a match in the 401(k), you just kind of check it off and say, “Well, that’s a great opportunity for most, but my plan doesn’t really allow that.” So, I’m going to move on to high interest debt. Same thing. You get to step five and you say, “Yeah, I realize the HSA with that triple tax advantage is an incredible opportunity for many, but I get free or I get subsidized health insurance because of my disability. I would be crazy not to take advantage of what is free or provided or prepaid for my benefit because of my service.” So, you’re just going to check the box and go, it just doesn’t work for me. And that’s really what we’re trying to get you to do with the financial order of operations is that we just want you to make sure you put the personal in personal finance, but we’re trying to, money is a tool and we’ve tried to create the better way for money, but it is very personal and you have to kind of go through and then you have to now triage what’s the best things for my situation to maximize this.

Rebie: Love it. Yeah. No, that’s really great. Anthony F, thank you so much for the question and thank you for being here.

Staying on Track During Family Planning (57:35)

Rebie: You want me to do one more? Sure. Sure. Let’s do it. Milkman Please says, “Good morning, Money Guy team. My wife and I feel like we’re on track for retirement, but are incredibly stressed as we enter family planning. Any advice to help us stay on track during this transition?”

Brian: Oh, Bo, I’ll let you because you know me, I get all sentimental as a guy who’s, you know, got older children now. I’m always like, “Just go have babies.”

Bo: I think a lot of… There you go. Can we make that a t-shirt? Just go have babies, Brian Preston. I think a lot of financial mutants are in this place where they say, “Hey man, I’m doing all this stuff and I’m saving 25% and I’m on track and I’m tracking my net worth and I’m doing it every year and everything is looking great, but man, there’s this big unknown unknown associated with starting a family. And there’s going to be another human being that is going to be dependent upon me and I’m going to have, it’s going to affect the way that I might be able to work and it might affect career trajectory. It might affect income. It might affect savings. It might affect spending and all these unknowns. And so they begin to get really really stressed about that. It’s one of the reasons why when you listen to any of our content, especially for young folks in their 20s, 30s, and 40s, we say that when it comes to what you ought to be doing financially, your goal should be to save 25% of your gross income. And if you can save 25% of your gross income, you can remove that stress because odds are if you’re able to do that and you do that for your entire career, you’re going to be able to write the ticket on the kind of future life that you want. And so the question that I would ask you, Milkman, is are you at the place where, okay, I’ve been doing this stuff that I’m supposed to be doing. I’m a financial mutant. I’m moving in the right trajectory. I’m going to have this family. I’m going to start a family. And even though there’s some unknown unknowns, I feel pretty confident that I’m going to get back to once things normalize, once things settle out, I’m going to start making financial decisions the way that I have traditionally always done that. I’m going to be a saver. I’m going to live on less than I make. I’m going to exercise discipline. So long as those things are true, you’re likely going to be fine. It’s not like what happens is all of a sudden these two financial mutants decide to start a family and then they have a baby and immediately they’re getting all kinds of credit card debt and they start buying time shares. They start making these horrible financial decisions. Who you are pre-family at least from a financial standpoint is likely going to be similar to who you are after. So long as you make sure you put controls in place to keep yourself in check. So, I do not think that starting a family is a financial decision. It’s a life decision, but it’s a life decision you can go into confidently, understanding that if you start out as a financial mutant, odds are you’re going to get back and stay a financial mutant even through the messy middle. Agree, disagree?

Brian: I’m glad we let you go first because I’m going to blow this whole thing up.

Bo: He said, “I have a different take.”

Brian: Well, no, it’s just that this question immediately made me think of a pop culture reference and I’m going to probably screw this up. Content team will correct me. Is it Mike Judge and Idiocracy? Is that the guy?

Bo: Yeah, that sounds right.

Brian: If you go watch the first 10, I’m not saying you have to go watch the whole movie, but you can probably find this on YouTube. If you watch the first 10 minutes, the whole plot of this movie is that really smart people overthink having children and they keep putting it off, putting it off so they have success and other things. Meanwhile, people who aren’t so smart just have babies and babies. I mean, it makes this whole, and society just shifts because the people they just quit having babies on this side and then the other side and we end up with Idiocracy and all these other things. You really just got to go watch the first 10 minutes and you’ll see what I’m talking about. And I think that sometimes I think about that pop culture reference to sometimes us financial mutants, you’re so determined to build your financial success and I’m all for and I think it’s great that you’re disciplined, but also don’t overlook that money’s just a tool. And your family, as take it from a guy who’s in his 50s, children are, get much older, super sentimental. Life is so cruel because when you are more sentimental, your kids will become more independent and it creates these all strange dynamics. And you know, because it is special. I know there’s a lot of people out there that even in our comment section telling you marriage is not good, kids aren’t good, and all this. And I’m telling you, it’s the opposite. I think that it’s pretty awesome. And I even got a unique situation because you know I have a child on the spectrum. They’ll probably never live on their own. So even with those curve balls, I think there’s a lot of good that comes from it. Maybe I shouldn’t be so opinionated about it, but I’m just telling you from a 50-some year old sentimental guy. Don’t overthink it too much. I want you to do your homework. Measure twice, cut once, but it’s okay to have kids.

Bo: I love it. And you ask, what can I do to prepare? I think one of the things just like anything else, are you following the financial order of operations? Do you have a fully funded emergency fund? If you don’t, maybe as you enter into the season where there’s going to be additional medical costs and there’s going to be additional stuff, maybe you need to bolster and beef up your cash position a little bit as you move through this transition so that when the stress comes, because having babies is a stressful thing, you can rest assured, okay, I’ve got cash in the bank. I’ve got my emergency fund there. There’s just one less thing I got to think about. All I got to think about right now is how warm is that milk supposed to be or how do I change the diaper? What are the things that you want to be able to focus on, not the financial stuff.

Rebie: Yeah, you still get to follow the FOO even when you’re in the messy middle. That’s the point, right? Keep track.

Brian: Did I get the movie right, by the way?

Rebie: I think you did. I was googling it. Yes. Content team was telling us yes.

Brian: Now the content team is like, “Don’t say that.” That’s, you know, because it’s not exactly the cleanest movie.

Rebie: Good to know. I have not seen it. So anyway, I’m not saying you have to go watch the whole movie, but it is very interesting to watch the whole setup.

Brian: I’ve never seen that movie before. We all learned something. Maybe I know what we’re going to watch in the content, the edited version. We need to find the superstation version of it because Bo and I have, let’s say this just because I know we’re coming to a close. Bo and I have a very similar background and the fact that we grew up in South Atlanta and anybody who’s from Atlanta knows superstation TBS, Ted Turner’s thing before you know AOL Time Warner bought them out, notorious for putting movies on there and they were censored movies though so we have a lot of common you know talk about great but you go watch these movies now through the streaming platforms you realize they’re a lot dirtier. I remember that part. You got to go find the TBS version of these movies when we mention them to you.

Rebie: Oh, love it. All right. Well, Milkman Please thank you for being here. Thank you for the question. And if anybody watching or listening wants to continue this conversation, make sure you go to moneyguy.com/resources because we have tons of free downloads, free calculators for you to use to keep thinking about your personal financial situation and hopefully help you build confidence in what you’re doing so that you can actually just focus on what really matters. That’s the whole point. So, thanks for joining us. Thanks for being here. We’ll be back at 10 a.m. Central live streaming next week. There’s a better way to do money.

Closing Thoughts (1:04:45)

Brian: And look, a lot of you guys take advantage of all that free stuff that Rebie was talking about, but also know a lot of you are super successful. And if you’ve gotten to that point that you need somebody to help you co-pilot the seven, maybe even multi-seven-figure success story you’ve created, we’ll leave the porch light on for you. Consider fulfilling the abundance cycle. I’m your host Brian Preston, Mr. Bo Hanson, Rebie and the rest of the content team in the wings. Money Guy out.