Are You Driving Your Wealth Into The Ground?
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Are you driving your wealth off a Cliff? Brand.

I am so excited to talk about this because I feel like so many americans fall into this trap where they are literally not recognizing the devastation they are doing to the overall financial life. And I love that we get to speak in to that. I love so much that we can answer questions that you care about.

And so right now in the live stream, we have our team in the wings collecting your question. So if you want to get our take on your financial matters, we would encourage you get IT in the chat right now. So with that creative director aby to throw every year .

yeah we've got a question on that very thing from joe IT says my friend is underwater on their bmw. They always seem to be servicing IT and can't afford to maintain anymore, but it's valued at forty three k and his alarm is fifty. What do you think about when deciding how to handle an underwater car alone?

Yeah, well, okay. So here's the first thing I want to say. I have I have a little bit of compassion here because I think a lot of things, if you, if you were not like raise in a household that talked about money, are you never learned like the right way to go about buying a otto mobile? I feel like so many people, especially early on in their financial journeys, find themselves in a place where they are underwater.

On a vehicle brand. I think i've told java got a dear friend. I didn't know he Better financed car for five years. Gotto car rec was not his fault.

T insurance company told the car when I got the interview IT was, there was less than what you are on the car. He was underwater on IT and had no idea. I said, I know this was a thing. How this happened? No, but I don't know that the I jose friend, I don't know, is in that situation, because he driving a luxury first.

Everyone should know when you step onto a deering lot. Anyone can buy a luxury car, but only people with actual resources can afford to service a luxury car is this. But this is a tale as old as I come when IT comes to these luxury cards.

I've already told you guys, when you buy luxury cards, not just the purchase Price, is the fact that the tires on the front are different than the tires on the back. They you don't get the rotto you burn through in a year. They're also probably super soft.

They go so they go burn down even faster. You're going to have to put a premium fuel in this. Yes, you only go about about parts from the premium mean the manufacturer of the luxury good itself. So all these things i've covered IT, because i've found in this trap myself, and that's why I tell you this is a tale that is so old. But it's a problem that somehow the average american still falls into is because one in five vehicle trainings have negative equity meeting two thousand roling in.

They are borrowing more than what .

they're the car example, B M W. And based upon that market value verses the value that's that's like probably like an next seven or or some other than you know big actually be the Price cost cost to one hundred thousand hours when they bought IT. And and you know IT also makes just chaps me that is become so popular, is close to twenty percent of loans out there on cars right now are being .

finance for eighty four months dars the deal ship.

There's gladly, with a smile on their face, give you the keys so you can drive your financial life over the Cliff. And that's why we want to tell you there's a Better way to do money and and that's why, look, I have a lot of great some heart because I know when I started out my financial journey, I couldn't afford to buy, uh, a new car.

I didn't have cash in the bank to even finance, but I needed a good, reliable piece of transportation to get me to my first wealth building tool, which was my job. Yes, so I remember I I had to go funny and have a no hiper quit. I'm like whatever worked for me in both, we need to be able to share.

So you guys know we walk this with you, eat your own cooking. And so that's why we came up with twenty three, eight. If you guys cannot afford to put down twenty percent on your vehicle, don't finance IT longer than three years.

Why is that three years so important? It's exactly a about talk to actually don't want to be underwater and also will keep your eyes in check with your your your wallet in your purse because when you find a hit up for three months of three years versus the eighty four months, three years versus the seven years, that seems like too many people are doing these days. You get a big wake up call that maybe you can afford that car anymore.

And then we want to keep IT, just in case those two first checks don't do IT for you. We also have the guard real of saying that can actually eight percent of your gross income. So if you will follow that, this will like to by reliable transportation and without IT out before all the haters jumping, we love paying cash for cars.

If if our own research shows most of our millionaire clients didn't have to finance their first car. But when you look at their current purchase, well over sixty percent of them are paying cash. We're paying cash for a car these days, but it's just one of those things that we want to give you a tool. So you don't fall the traps, but don't just because somebody on the deal ship tells you that sexy car that you think people are going to care about. They don't, by the way um just because I can say you can afford a dozens mean you really can.

So let's give joe some advice. I am unfortunately, difficult financial positions require difficult financial decisions. And your friend has gotten them in this place where they have an incredibly expensive car that's incredibly expensive to maintain. So if they try to just keep driving that car, keep Operate in that car, odds are they're going to keep spinning money on repair. And the mainland is going to be high and the oil changes are going to be high.

So one of the things I think that may be conceivable as, okay, is there some way that I can go get into a much more effort of a much more reliable car, a hand court toy camera, something like that elastic, that will work until I can write this ship. Now if you do that, odds are you're going to be rolling in negative equity because he doesn't like have capital to be able to buy that affordable car. But at least what you're gona do that is then you can get your maintenance costs down, get your ongoing where and tear down and you have to devote everything you can to getting this debt paid off so that you can start building future financial independence.

I don't have the numbers in from me was it's the o fifty eight and its .

worth forty actually .

but the water's taking on the boats, taking on water rapidly. You've got a fifteen thousand dollar mistake right now to clear the slate. You have fifteen thousand. I think if you keep driving IT, unfortunately the maintenance is going to eto alive because probably sets of tires are several thousand dollars a year um all the other maintenance and everything else. So I would I would try to unload this think think correa, not land cruiser, you know, on how you get yourself out.

And then you have to you have to make those hard decisions, both talking about you got to quit taking on water when IT comes to these bad financial decisions. So humble yourself, get into a car that you can actually afford. And then lets get that .

fifteen thousand dollars extinguishes. If you go buy a new one, don't don't miss here, or saying, don't go buy a new camera, the new correa get one that's a couple years, gently use that someone else with that appreciation. It's not about being in a nice car when you're in this kind of situation. It's about getting out of a very deep and very bad hole.

Yeah I think you can you can get reliable transportation for under seventeen thousand hours?

no. Well, well, IT was a good question. We understand that a lot of americans fAllen into that. So hopefully that means the more we talk about, the more people can get out of IT and then not get into that in the first place. So thanks for asking you if you would like a money guy tomer. Since we answering your question on the show, we'd love to send you one that is a time or day so you can email winner .

at money guy dot com if you want to cash on, know the best .

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bribed with the money guy show channel. So that way, you know, every time we put out new content, so makes you subscribe light and ring that notification bill.

hey, but we have some content coming up. You guys are listening. I mean, when I think about our financial mutants, you guys are following this. This is almost like, yeah, this is what the public is doing, but not our financial mute. So if your brand new to this, welcome, we love seeing the family grow and we love sharing is a Better way to do money.

Love IT. We're going to move on to j. Bees question. He says, are dumb doctor deals always dumb? The majority of my network is in the stock market. I'd like to get some debt exposure to real estate if i'm not sacrificing the financial order of Operations. Is IT foolish to try cyndi ation?

You know, this is actually a great question because we get a we a decent amount of hate on this because we do talk about dumb doctor deals and we do talk about really, uh, expensive, poorly thought out, poorly executed private equity deals. But that's not suggest that they're all bad. There are some a private equity type investments that .

have really big payoff.

the dictation or you know things like that, that have wonderful realize and create great experience. In my experience, those are the exceptions more than the rule, more often than not to see people, they are not at the place they're funny.

Cal journey should be get involved in deals that they don't really understand what they're doing because what you do start getting in up either private equity, real states indications or investments like that, there is a levels sophistication required you to understand what you're doing. It's not as simple as like opening up a broken account, just going and buying publicly stock. They Operate very, very different.

You have to have the make wealth behaviors first. And I think too many americans are they do what they think wealthy people do versus actually taking the steps. And that's why I think when you get into real estate investment in general, this is a step eight of the financial water Operation step.

Have your financial foundation or need you. And then boil means once you get to step IT if you want to get into real estate. And let's talk about syndication specifically.

The thing I ve seen there are there are people who've gotten become very successful half of doing real ates indications. But I want to give you some ground rules of things you want to ask. First of all, find out how much of the general partner's network or of their own investments are in the deals themself.

How many other family members are also involved in this, the same syndicate because I think that you want to make sure they have skin in the game. And this isn't just you know something that they do to generate revenue for themselves. Find out what there you know percentage of the Operating expenses are per annually because and then also you know just make sure you've seen the track record because there's a lot of people out there that have brochures or maybe don't know how much experience doing this.

And there out there the say, hey, I have do you go build apartment complex and will do this and this and this and this and you'll be rich and they don't get get into the location, the research, all the things that they do an occupant. Y no IT does matter who you're going into business with. So that's why I tell you this is definitely putting your 3d glasses。

Do your due diligence and research is not like you can just go to a google search and say, hey, give me the best real state syndicate and you're going to land on your feet because um there's some a lot of work that goes on behind the scenes to make sure you land well. And that's why back to the point, this is a step eight. If you're not even anywhere near step eight because we've seen that in some people who ve reached out to us recently. If you're not funding your rough because you want to get into a real state syndicate.

you might done this out of order. You do IT wrong there. The thing you want to make, we can always, especially when IT comes to real state, we always understand what the brochure tells us.

Ah, i'm going to do this and then I do and it's going be great. Well, often times IT doesn't work that way. I mean, even in this past years, we saw interest strates in a much higher level. They were traditionally a lot of rule type type investments have been hammer. And so you if you were an investor in those either needed to be able to sustain not getting capital distributions or even potentially be subject capital call.

So this is a step you want to make sure that you have deep enough pockets that you can weather when the investment and is not perfect for the particular deal or uh or structure that you go into because it's not always the same in all market environment. fantastic. J. B.

great question. Thank you for being here and asking IT. We'd love to send you a money guy tumbler as a thank you just email winner at money guy out com, and we send that out to you.

Someone just said, I love that. Start track mug.

That's prime with my bodies. They always, they always .

make that jack to me. Love IT. Okay, we have a question from Nicholas up next for you. IT says both when you say give save spin with your Young kids, where do you have them save saving towards retirement or just teaching them the concept of delayed gratification I thought that was a good question when you great.

So i've got three kids, nine, seven and then um eighty eight and nine months .

so in that ball that got me .

want you to say one.

want you to say almost .

most .

I got almost. So when I talk about give safe spin, special safe for I really am honing in on defer gratification. That's what I want them to understand. Now I could talk them about the concept of retirement, but man, i'm still working on talking them about the concept to work. Me about one, I think about starting work.

So it's more about this idea that, hey, if you save some, you're gonna have money available later when you want something else, if we want to, if we go on a trip and you want to have spending money, if we go to the mall and you want to do this, or if we go to the fair and you want to want to play the games, whatever that thing may be, that's what I try to focus on. So it's about defer to gratification. But for my kids what they are, its not long defer.

It's just differing to some point in the future. Now my oldest, he is kind of get in the point that here in the next couple of years, we probably will do the thing. We go to the bank and open up the same account so that I can start teaching her about interest, and that when he saves her money, SHE can actually have that money work for her and begin to make money on top of IT.

And she's my little math, ma girl. SHE is love the concept of that and i'm so excited, but I got get the basics down first. I got to get the behavior down before I can get the logistics down. So for me and my kids right now, that's how we're focusing on the safe.

I will tell you um my own experience care on this is that my Youngest SHE had got a point he had like two piggy banks because whenever you know he got birthday money from you know grandparents so whatever was just stuff the bills in the in the piggy bank and that I came up, we came up with this idea that hey, when we can, let's go count the money OK and do something with this so that was a great exercise. We had a fun time counting the money.

And I kid you not, he came to be six hundred and thirty six dollars. So then I convince ed, my Young gest. I was like, let's put this in your custodial account so you can actually earn some money.

All about IT very, very fun, you know, like, great. The money will get to work. And then, um there was a party time I had to exploit to her, you know because SHE my my bank so empty now, because now these pig banks were had nothing in the city more.

So we had to have some some additional discussions about now the money is actually how they're doing something, but SHE tangibly couldn't touch IT anymore. And there's probably something to be learned about that because kind of a thing in adult life too, is that I mean, I think like this firm, you come here and we're management, you know, over a billion dollars of assets. But if you came here, we have .

no money.

kind of my house. I I might have enough money to buy girl scout cookies, but I don't have. So there is probably a lesson with your children on that. You sometimes buying and saving is not about what you can touch, because there is a teacher concept there as well.

you know. So all about that. The last four times i've bought girl scout of cookies and i'm a big girl skirt cookie buyer.

I've had to win them every time because actually cases and when eb's daughter comes around and they get the money and i'm sure she's winning national prizes for all her sales techniques, you know IT is they go hand put the vin mo or you know on there. So that's that's a new thing. But I always still like to have a little cash. No.

just just in case. Hey, sis, I mean, I can do polls, right? I can ask, have a so back in the day with me, blind used to travel whether we were going domestic and international.

And I made you go the A, T, M. And I, I were traveling. We're in the state like we got a have cash on.

And I really so it's always been a thing where every time you try, even still, you always make sure that you go get a little bit cash. They work when you travel is just yes or no, max. When you travel, do you go get cash to travel or no? Yes, no.

Look, if you you guys and if you watch enough to stop TV shows and movies, that you know that that's just .

bad practice.

Now to walk around, nothing. okay? Maybe you're .

going .

somewhere where you want to be able to tip OK.

When you travel, I me think about you travel.

you're going to have to tip because you know luggage typically something touch that thing and expect some type of payment for IT. And then those also you're going to transportation. You're going to a city.

You don't have transportation outlook, I get IT. We all have mobile apps, we can uber, we can live to do whatever. But there's times where that's not practical and you need to have money to be able to pay if you need a cap.

I mean, I ran. And when I was in europe last um you couldn't some some of these countries don't do uber and left and things like that because it's just too hard to get around the city. So you do cabs and um in some of them take credit cards, but most of them and it's just you .

need to be prepared and always I believe in tennessee to head .

the florida. 没 必要 on .

the front porch。 Generation ally. I I, I got the era of light, didn't get a boy scout. I didn't get the eagle scout. But I mean, I was always prepared.

It's amazing. I don't .

it's not just you. So far.

people are still .

putting their votes in, but we are at seventy percent who say, of course, they Carry cash when they travel. so. Crazy idea.

good travel .

with.

I think that some of this is influenced whether if he was taking his own, his family out, i'm sure bois not going to be caught. The woman that get with no.

no cash. Yeah, yeah.

Surely I won't do that. never. All right. Well, we are at seventy one percent to say, of course they Carry cash.

I want to be I Carry cash. I not do a special trip of the I am not walking around and nothing in a while but you know I got a couple twenty and there i'm covered. I'm good.

So you will to tell me how much cash you having .

your pocket right now? No, but no. Actually I exactly how .

much I money.

what is IT? Because um my now I like from my wife to have cash on her because you never know.

Like I like for this .

put a lot qualities. So what happens is is every now cash begone.

but he wasn't make .

sure why not survival .

replenish .

exactly what happens. So anyway, I can check and and he gave me four one dollar bills for his mox. I get four one dollar bills.

And right now, so how is your wife for punishing herky? Ds, of all you have is four dollars based upon you the way you run your simple.

She's at a look right now, like, that's why not you never go to A T. M.

sorry, this was a very rich side bar that really came up with more questions for me than answers, but I hope everyone enjoys IT. Anyways, we do have some more questions so that I want to get to Tyler ages. Question is up next. He says, i've often heard four percent used for a fix income withdraw rate. Would I ever be appropriate to use a smaller rate, say two percent, to have increasing income each year in retirement?

Can you speak to this at all? I mean, I think when you say fixed income of dw really is a safe study, and everybody I like both kind of add where the rules vary. sure.

But the trend y study was assuming a Normal retirement age sixty five, you know in and that's where the four percent rule kind of came ba. Now look, things i've gotten a little different is because there's trends in personal finance where people are saying, hey, I don't want to work until i'm sixty five. But so how to solve that? I mean, what would you add to what tower saying and how does time impact? Yes.

the things we've done, a lot of episodes on the fire movement, or as we like to call the five movement for folks who want to exit the workforce earlier than traditional time. And what we said was four percent rule is a great like back of the APP and solution for folks are going to have a Normal retirement if you to retire at age sixty five and you're going to live until eighty five or ninety five, four percent liked works.

If you're someone is going to leave the workforce early, then you may want to think about using a lower draw, right? Because the port for is going to provide for you for a longer period of time. Now here's what happens.

So one, yes, could I use a lower draw rate and four percent to be able to account for fluctuation ation of spending? For sure. I think there is even some inflation assumptions inside the the original training study when they said the four percent.

But here's what we find in practice because we obviously do this as our day's b with a number of retired individuals. Most folks, when IT comes to their retirement living expenses, it's not a flat percent. It's not like OK january first.

What's my percentage? okay. How much can I pull out OK to do that? And I get december thirty first.

We try to build IT towards a base more on, okay, what's the lifestyle that you want to live in a time and the what are the other income sources? And you're GTA find that, that would draw IT very through time. Some years IT might be three percent.

Some years that might be five and a half percent. Some years that might be four. And the social security start in the year, draw rate drops down and half person. So there are a number of ways when you get to retirement or it's actually much more dynamic than I think we think IT is academically. But for planning purposes, when you're trying to figure out your number, you're trying to forecasts what should I be saving towards if you think you want to have a higher lifestyle, if you think that you want to have a longer retirement financial independence period? I don't know that they're wrong with using a lower than four percent withdraw.

right to do that. Well, here's the reality. I think when you're Younger, i'm talking my thirty year old, my forty. Something is nothing wrong with having what I called napkin financial planning rules, and that's what the the safety draw rate or the four percent rule is doing for you. Let you kind of see what the target is so you can start having some meat rics to measure yourself.

But when you get within five years, maybe even seven years of actually landing the plane, um it's just you need more because he gets into everything both said. This is the part where I remember I tell you guys, look, you don't have to go looking forward to go find you naturally. This is one those complexities where the personal and personal finance, because you don't want you don't even got one retirement, you don't want to try to figure this all out all by yourself.

Go talk to somebody who's done this hundreds, if not even thousands of times. So you can know where your blind spots are, know how to handle this. And that's one of the main things we're doing is we run in the money color simulations every year updating IT for what life goals are coming your way um because that sounds cool in practice to say, hey, i'll just make sure I have this and in most scenarios that works.

But every now then you need to have some of the customers is this for your life because um you know we all look like in humans from a far off, but then we get really close. sure. As we all have a lot differences, there's a lot of unique things about everyone of us that makes a so make sure you maximize and this time you get on this planet.

it's great. Well, IT Tyler, eight things for being here and thanks for asking the question we always appreciated. And we'd love to send you a money guy tumbler as a thank you just email winner at money guy dot com and we will work on getting that sent out to you.

The money guy show is hosted by brian present. Abound wealth management is a registered investment advisory firm regulated by the securities and exchange commission in accordance and complaints with the securities laws and regulations. Abound 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.