(upbeat music) - What to do if you have a hard time spending money to have fun? - Brian, I am so excited about this 'cause who doesn't love to talk about using our money to get to do fun stuff and to get to enjoy the fruits of our layering. You know, we love that we get to answer these kinds of questions for you guys 'cause we wanna speak to the things that you matter. So right, we wanna speak to the things that matter to you. So-- - You matter too, Brian. - That you do matter, you do matter. So right now we have the team out in the wings collecting your questions. If you have a question that you want us to weigh in on, make sure that you get it in the chat right now and with that, producer, creative, director, Revie. - Whoever I am. I've got the questions. - Over to you. - All right, Mr. Bobman 82 is gonna kick us off today. The question says, what are the goals after step nine of the financial order of operations? Also, what step can you consider fun money? And is it step nine? - So I love this. So what are the goals after step nine? Here's what I think is great. Money is not a goal. Money is a tool that allows us to achieve the goals that we have to do the things that we wanna do to experience life in the way that we wanna experience it. So for your question around, what are my goals after step nine? They're whatever you want them to be. That's what's so beautiful. We have some folks who they get past step nine and they wanna start thinking about legacy. They wanna think about how can I build up something for my children or I am charitably minded. I wanna figure out how I can use my resources to support organizations that I care about. Or people just say, hey, I wanna go experience the world around me. I wanna go travel and see all these different things and do the stuff that I've never been able to do before. What's beautiful is there's no right or wrong answer that. If you've done all the stuff that you're supposed to do with money, it should free you up that then you get to use your money to do the things that truly and ultimately matter to you. Now, what I think is great and I think this is really where Bob Mann's question is coming from, Brian. He said, well, at what step is fun money? Does that mean I don't get to enjoy stuff before step nine? Don't I get to have any fun before step nine? How should Bob Mann think about that? - Yeah, I heard there's two big things going on in this question. First of all, you should always be creating fun in your life. There's a reason I talk about bedazzled basic life and still creating blossoming memories even when you're in those aspirational or you can read through the lines, poor periods of your life. I want you to bank memories and I want you to actually use some of your resources to create those fun memories and those bedazzled basic things. But I think what any through a curveball in there, Bob Mann did by talking about post step nine. And a lot of people, especially if you've read Millionaire Mission, I think you know what the answer is on this is that if I took you through the journey of steps one through nine of the financial order of operations, but then the latter part, the last two chapters of the book really started focusing on who you are and what your money can and cannot do for you. And this is also ties into that show we do every year where we talk about about the five levels of wealth. And if you just to bring you up to speed, I'd encourage you go look into this show, but you have stability. That's where can you get to the, you know, where you can afford your life where you have $1,000 'cause that puts you better than 60% of Americans out there. And then you get into the strategy where you're actually letting your money do the work for you. Then you get to security. This is where now you're starting to get where you don't sweat the small stuff. You don't worry about going out to eat. Your money's actually working for you. And then you get to financial independence. This is where most people aspire to where they're just hoping to have enough resources that they now can buy their time and do what they want when they want and how they want. And then the last step is of course abundance. And this is that intersection point where you know, it's not about doing what you want, when you want, how you want, it's actually knowing what you value. You're comfortable in your own skin and you know who you are and you know what you're not. And then you also understand where that intersection of purpose works with your money. So you really are building that abundance level. That's where I would tell Bob is that use the steps one through nine of the financial order of operations to optimize what to do with your next dollar, but then spend some time on where you want to be. That back to that begin with the end of mine. And look at the five levels of wealth that kind of know what your next step is and what legacy and what the why is on every dollar that comes into your control. - And Brian, I'm curious, in your experience, if you found this to be true, that a lot of the things that are the most fun, some of the things that you enjoy the most don't tend to have to be the most expensive things. So like we think about, oh, I want to allocate some fun money into my budget so that I can travel or do this or do that. It's not uncommon that even like your baseline living expenses, the things, I'm gonna steal one from you 'cause I know this is something that you guys enjoy. You and your wife love cooking together. Like it's one of your favorite things to do. And so it's not like you had to figure out, well, how do I create a separate budget for us cooking together? No, you just recognize in our grocery budget a couple of nights a week, we're gonna stand in the kitchen together and listen to music and cook and dance. That's what I imagine y'all do. I don't know if that's the way it goes. - Well, I think you hit on something and I even said, when I was doing the, when we did the millionaire mission book tour, I told everybody one of the second key things was realizing that happiness doesn't have to be expensive. 'Cause I, and remember, I share even in the book that the poorest time of my childhood, that messy middle for my parents was actually the happiest part of my, you know, looking back on those years is because spending time with people you care about and love with is more important than spending money on stuff. So that's why, Bob, man, if you're trying to figure out if you're unhappy, but yet you're living, you're swimming in money because you're beyond step nine, you've got to bring it back to the basics and figure out what, did I spend enough time on the why of what actually makes me happy so you know who you are, take out money altogether. I know, look, money is necessary to be the kind of the lubricant of life of transactions and everything else, but you've got to spend some time knowing who you are, what you value and really what brings you purpose. And that's where the happiness is and it doesn't take money. That's what, you know, I like cooking with my wife. We like going on walks together. I love just, you know, having a meal with my family. All those things, they don't have to, I like grocery shopping. I know everybody is outsourcing the heck out of all these things with all these apps and stuff. - Hot, hot take. - You guys, we have the grocery shopping, but I'm happy for you. - Going to the grocery store with kids or even Jennifer and I. - That makes it worse. - I love it. I think it's so much fun. I don't know why, but it doesn't have to be expensive to still create great memories. - I want to put that to the test. This week, I'm sending my kids to the grocery store with Uncle Brian. You're going to take a grocery shopping, remember. Let my kids hang out with you and let's, it's going to be a fun time. - But you've heard me tell this story too, is I've never considered myself a kid's person. I'm not the one when a baby comes in the room. I have to go smell their head because some people just love being around babies. I love my children. - Oh, okay. - There is something about it and I told this to my daughter is to go, you know, because my oldest is like, I don't know if I want kids. I was like, look, everybody feels that way. But it was, or at least people wired like me feel that way. But I promise you, when you have your own children, there is something inside of you. You're hardwired that you just love those kids, no matter what. So you could bring your kids over, probably not going to be the same as how you feel towards your kids though. - Oh, that's awesome. - You guys are funny. Well, Mr. Bobman 82, great question to kick us off. Thank you for submitting it. If you would like a money guy, Tumbler, we'd love to send you one. Just as a thank you. - Tumbler made it in. I got a mouthful, quack quack quack quack. Couldn't even give him the sound. - It is a Tumbler day. Just email Katie, K-A-T-I-E at MoneyGuy.com to cash. And on that, since we answered your question today. All right, Nathan's question is up next. It says, "My wife and I are able to reach about a 30% savings rate, utilizing our various tax-favored accounts. I sometimes feel FOMO not investing in real estate out of our prime, outside of our primary home. My wife and I both have involved jobs and hobbies, a teacher and a coach and ER doctor, are the examples that he gave. And we don't want the hassle factor of real estate." So his question really is, should he be feeling FOMO at this stage? Is real estate, how important is real estate or how powerful is real estate in a portfolio? - I get this based upon social media. I mean, you see it and everybody tells you you should be doing real estate. What are your thoughts on that? - Yeah, I don't want us to come off as real estate haters, but cause we are not. However, folks that want to do real estate and get into real estate, it's not as easy as the brochure suggests. And Nathan, you just said-- - The brochure. - The brochure. - The way you said that. Maybe you tell, you know how you hear about Bitcoin bros and all the other, you could probably say the real estate bros, so you keep going. - So Nathan, you said that one of you's a teacher and a coach, which takes like a gazillion hours out of the day and you have like after school and extracurricular and practices. And the other is an ER doctor, which means you're likely on call often. So you naturally don't have a ton of like discretionary time. So the thought of getting into real estate, at least in this season, if it's something that you're passionate about and something that you're curious about and something that you're interested in, that's one thing. Then you kind of can like check those boxes. If the only reason you want to do it is, oh, I think maybe that's what I should be doing because I'll watch the TikTok of a guy who's doing this thing and it makes all this sense, I don't know that I would fall into the trap because what you have to answer is for you and your spouse, what is the most efficient and effective use of your dollars and most efficient and effective use of your time? And while real estate certainly can be a part of that once you get into step seven and step eight of the financial order of operations, I don't know that real estate is something you have to do or something you should be experiencing FOMO around because oftentimes I think anyone who's been in real estate for a long period of time will tell you, yes, some of it's great and some of it's awesome but it's not always that way and there is some headache and some trial that comes along with it. You agree, disagree, you want to fight about that. - I wrote, look, this is definitely a step eight of the financial order of operations. If you're saving 30%, you're probably at that step eight level and this is where you need to kind of know thyself in the fact that I love real estate but I love real estate for all that it offers you. - There are some unique financial mutant things that real estate with the leverage debt and the return that can come from that but that's also why you have to make this a step eight is because leverage debt can turn into a curse very quickly 'cause yeah, you love it when you're making rates of return on something you put down a small portion of or 25% on and then you've got the other 75% finance you feel great when that is appreciating off of the cash flow situation but when it turns ugly, meaning you require other people's money to pay your mortgage and you don't have the money, it can turn into a nightmare really quick. I also like that you get some depreciation and other things that come from some tax benefits. - Potentially. - But here's the reality of the situation, Nathan, is that it is not passive. Anybody who does this well and maximizes it is actually in the weeds on it. Despite what everybody says on social media to do real estate well, you're going to be involved in it and that's why if you find that you're in that messy middle, yes, you're reaching a lot of your financial goals but you feel like between the kids and all the life stuff and the relationship stuff, you just don't have a lot of extra hours in the day. Don't go put yourself into something if you're gonna do it in a half-baked way and then you might get on the other side of how bad, levered debt it can be because your spouse will be like, why are we in this? Just because you saw something on social media, the whys have to unite and connect with how you want to spend your time. And so that's why spend some extra effort figuring out, is this something I want to do? And then there's nothing wrong, it says if you feel like, hey, real estate something that you want to go into, you can do REITs, you can do real estate index funds, there's ways that you can do this without opening up six Airbnb's and you're in your neck of the woods. You can still get into the asset class of real estate, feel like you're getting that inflation protection and all the other things that good that come from it. You just don't get to make content on how you own all these houses off of Airbnb or something. Yep, agreed. Yeah, good stuff. Well, thank you, Nathan, for that question. And if you would like a money guy tumbler, we'd love to send you one since we answered your question on the show today. Just email kd, K-A-T-I-E at money guy.com and we'll work on getting that sent out to you. All right, Thai food season has a question. And yes, he capitalized food. You get it 'cause I get it, I get it. Just make sure you got it. He was like, okay, okay, okay. Okay, Thai food season's question says I'm 34 and I'm on step eight of the financial order of operations or the food. At least. So far I focused my savings rate and only invested in index target retirement funds. But how do I know when I need to change my allocation? So it sounds like Thai food has been listening to us for a while 'cause one of the things that we say is that when you're early on in your financial journey, your savings rate is exponentially more important than your rate of return. Meaning you don't wanna lose a lot of mental callers thinking about how you're spreading out your dollars early on. We think that a great solution for folks who are just starting to build are target retirement funds because all you have to do is answer two questions. How much money can I save? And then when do I think I might need that money? So if I'm someone who's young, I might do a target retirement fund out to 2060 or 2065. And that might be a great solution. All I've gotta do is start dumping money into that fund and it's gonna naturally allocate for me over time. It's gonna take a lot of the mental energy that it would require of me to allocate that portfolio. So that's great for folks who are starting out, but we are of the opinion that that's a great generalized solution. As your portfolio gets larger and as your unique financial situation gets more nuanced, it might make sense for you to move from more of a generalized solution to more of a specific unique solution to you. And I think that's the point where most people graduate past target retirement funds. - It's typically step seven in the hyper accumulation phase. I love that we get to go a little deeper on what step seven is because what I like is is that a lot of steps one through six is to cover the basics of your cash reserves, paying off the debt and then maximizing all the tax benefits that our government has incentivized for you to think for the future. But when you get to step seven, now you're saying, "Hey, how am I actually gonna use this money?" And you might find out if you're leaving the workforce early or you wanna have access and buy your time even sooner, that you're gonna need more money in after-tax accounts or maybe you realize, "Hey, when you're in step seven," you're like, "Wow, I really maximized steps five and six. So I have all these tax-free assets. I have all these tax-deferred assets, but I don't have any after-tax assets in a brokerage account. So maybe I need to re-proortize that." It's very common though when you start thinking about those three buckets, the after-tax, the tax-free and the tax-deferred, you're gonna start looking at these accounts and then you're gonna say, "Wait a minute, now I can see why tax location for my different account structures as well as what I hold in each of those account structures matters." Because in the beginning, it's exactly what Bo said. Your savings rate is so much more important than what you're even choosing to invest in. But you will get to this critical mass or this bowling point where the assets are now big enough that you're gonna say, "Well, I have close to seven figures in retirement accounts." 'Cause that is in your 40s, that is the account that typically crosses into seven figure status for most millionaires, is those 401ks, the 403Bs. And you're gonna say, "You know what I ought to do? Let's hold my conservative stuff in that because bonds already pay ordinary income taxes. Let's take advantage of that." But you know what, I know that I want my Roth assets. Let's stick it to the government legally by letting those be growth assets that I can grow and maximize all that, you know, compounding growth over decades. So let's put in something that's probably an equity index type fund or something like that. So you actually are getting the markets that are trying to beat the market. But then you're gonna think about your taxable capital. This is where I need my liquidity. So I have emergency reserves, but I also have opportunity capital here. But then you're gonna say, "But I know dividends are taxed in a favorable way. I know capital gains are taxed in a favorable way." So I'm gonna have a mix of several different types of investments and assets there. This is the way you will realize, hey, yeah, it's time to go beyond what I was doing with index target retirement funds. You've graduated beyond it. And this is also when I think, remember how I say that complexity finds you. Success creates complexity. - That's an example of that. - This is a perfect example of that. So see if you can self-assess and figure out what you need to do. But if you can't, there's nothing wrong once you graduate from the do-it-yourself side to actually bringing in professional help to help you maximize, because you've only had one retirement or planning for one retirement. Why not bring somebody who's done this hundreds of times so that you can kind of protect yourself from the blind spots and then optimize every situation that's provided to you. - And kudos to you, Taifun, 34 step eight. That's awesome. Certainly, without knowing the numbers, certainly doing the right things at the right time, your future self will likely thank you for that. - Absolutely. - Taifun season, thanks for being here. Thanks for being a fellow financial mutant. And if you would like a money guy tumbler, we'd love to send you one. Just email Katie, K-A-T-I-E at moneyguy.com. All right, Samuel's question is up next. It says, "Is there a quote unquote "too much to have "in an HSA?" - No, next question. - Really? - No, I'm just kidding. - I wanna know why. - Yeah, so a lot of people, so we think about this, right? And I think this is where people's minds go. They're like, "Oh man, I remember hearing about 529s, "and I know that 529 assets are really meant for college, "but if I save too much in a 529, "and I don't end up needing all of those expenses "to pay for college or K-12 private education, "I'm gonna have money left over, "and I'm gonna be over-funded, and there's mere penalty." And so they kinda take that framework, and they then apply that to help savings accounts. Okay, I know that these dollars are supposed to be used for medical expenses, but what if I don't have enough medical expenses? Here's what I get excited about with HSA's. There's sort of three things that get me really, really excited. One is that I can use it for current medical expenses. As I incur medical expenses this year, I can use those HSA dollars. So if I'm continuing to grow them, I have the opportunity to do that. If I've been saving my receipts in the past while I was covered under a high deductible plan, then I can then reimburse myself in the future for prior medical expenses. So even if I don't have a ton of expenses right now, but over the last decade I've accumulated some, I can then pull off those HSA dollars, or I imagine that as I age, I'm gonna have additional medical expenses in the future, and we all know that as we age, we have more medical needs. So there's a really good chance that I'm going to be able to use those HSA dollars in the future. So between the time I started saving it, until the time that I leave this earth, there's a good chance I'm gonna be able to use those dollars for medical expenses. But, there's one more little piece. There's one thing very special about HSA's, even if one of those three things doesn't happen. - Yeah, once you reach 65 and older, HSA's kind of, they can be their own version of a transformer, and the fact that... - They have something, I mean, it'd be something, (imitates howling) you know, just so you know how they change, but it does, it changes from, you still can get 100% tax-free growth if you use your HSA for qualified medical expenses. But if you're worried about overfunding this account, you actually can use it as a normal retirement account. It will be, once you get to 65 and beyond, it does not subject to any type of penalties. Now, it will be subject to income taxes, just like your ordinary IRA, or SEP IRA, or a tax deferred 401(k), it's gonna be just like that. But you're not going to overfund it, and not be able to get access to use that money for some other purpose. And let's not forget, you know, Fidelity every year gives this estimate of what healthcare will cost. And it's, I mean, it is like around $200,000. - I think the last number is like 250. - So I was scared to say quarter of a million dollars, but I knew it was over $200,000. So it was one of those things where healthcare is not going to be something that gets cheaper. I mean, unless somebody knows something I don't. So I think plan accordingly, but it is nice that this HSA account has the option to give you even more flexibility as you get older and will likely need that money. - That's great. - Awesome. Samuel, thank you for being here. Thank you for the question. Since we answered your question, we'd love to send you a Money Guy tumbler. If you'd like one, just email Katie, K-A-T-I-E at moneyguy.com to cash in on that. - Can I share a comment from a Brono? Hey, just finished money on our mission. I loved it. Gonna leave an Amazon review today. - Oh, I love it. - That makes me happy. Oh, I still am reading those things. - You read every single review. - Look, not that I'm trying to incur it, 'cause I mean, but it is my fun little activity. - You literally have read every single one, having you. - I have read every review. - No, I can't confirm. We'd be like out to dinner, like before the event. - I mean, I've gotten really good at it. - Would you wanna know how good, 'cause here's what's funny is. - I want you to get good at it. - I have a whole process. You go into amazon.com. You first, you see what the AI review has updated, because that thing changes, like, every day. - Oh, it's like sunrise, yeah. - In some little quirky way. And I wish I could just freeze it. Like, I'm like, I like that one the best. Let's just freeze that AI review. And I don't know how they're changing. Also, the top review, 'cause what's funny is when you put the reviews after you go through the AI and you hit the button to then pull up where you can sort the reviews, 'cause it's gonna say, I can't remember if it's most popular or most helpful. And then there's most recent. So before I look at the most recent, I always look to see what the top one is. And it changes, because like, what's funny is like, Mel, whose friend of the show, he was like, I can't, it keeps getting rejected. My comment does, and I was like, no, it isn't. It's the top one, I'm mine. And then, but then you go to most recent, and I can see all the ones that are there. - Next question is, "Is it possible to spend too much time on Amazon?" - And they know too many things about it. - I will tell you something that annoys me though, audible, I go into audible, 'cause those are separate reviews. And I go, and I haven't figured out how to sort that. I've become a master on Amazon reviews, but audible, and you know, these things are owned by the same company. So I don't understand why they give so much functionality on the Amazon portal, but the audible portable, a portal, I'm just like, I'm literally scrolling through, and I'm like, okay, if you're looking for something less than 24 hours, looking for something less than 24 hours. - My bad, this tangent eye on this one. - Plus it makes me see, it makes me seem like a weirdo a little bit. So maybe we shouldn't highlight it though. - Wow. - Yeah, I know. This is the part you're supposed to keep quiet, I think. It does it, but it is fun. - Honestly, all of that to say, it's because they, like I can tell they mean a lot to you. - Yeah, I do. - So thank you to everybody who is like. - I am, I'm still on cloud nine about this thing. I'm realizing that we're kind of on the other side of it now is because the book tours over, you know, I've gotten all these awards or, you know, I don't, is that award? - Sure, yeah. - Being title bestseller like USA Today and then, you know, whatever the-- - The New York Times. - The New York Times. - No, I didn't forget that one. There was another one that I'm forgetting though. It's the book scan number of publishers. The publisher thing, but all, and I'm like still so happy, but it's, we're on the other side of it and it feels a little surreal. So the reviews at least make it feel like it's still new. - Still going on there. - Because there's updated new stuff coming out because otherwise it's just, it's weird to have something you do for four years. And then, you know, and look, the engagement is on and off because you write the book, even though they tell you you're not supposed to tell everybody you wrote the book when you're pitching this thing to publishers. And then you have to go revise the bookings so you're hot and cold on doing it. And then once you get the date that you're actually publishing the book, there's a whole countdown and a process of Ruby knows 'cause she was like, whew, glad that's over. And but now it feels, it's kind of like, here's an analogy. - I remember in my 20s, early 20s, I had to get my CPA and I had to get the CFP. Those, you know, I had to go take tests for those credentials and you'd study like a dog. I mean, you just study, study, study. Your friends would be like, hey, you're going to Mardi Gras this year 'cause we have a place to stay. Now I got a study for the CPA exam. And you're skipping out on all this life and then you pass the exam. And then it's just like, oh my gosh, what'd I do now with my time? And that's kind of post book. It feels a little bit like that. I don't know. - I love it. - Okay, that was a weird tangent. Yo, you're in fact me up at all. - I just didn't mix that. - No, no, no, I love it, I get it. That makes sense. It totally does. - We better do another question. - The Money Guys Show is hosted by Brian Preston. A Bound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the Securities, Laws, and Regulations. A Bound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guys Show. The information provided is for informational purposes only and does not constitute financial, tax, investment, or legal advice.
