How to Do Financially in Crazy Times
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We have another question from kate m IT says, what are the benefits of rolling over a four one K I have retirement accounts from previous employers a four one k and a four or three b what are the pros cons to rolling over to the same institution where my current four one k lives?

Tell me the other um accounts that kate said had he .

has an old four one k and four three b and now he has a new four one k at his current employer so do you just leave in b do you roll them over?

But he but also throw another piece of thing. He said that he's going to considering R A roll over at the same institution where now is current for .

one k to hear here that but he wasn't .

the last part of the question.

Well, he said, what are the pros, cons of rolling these things over to the same institution?

Yes, I do. I think about a lot of people .

are faced .

with the decision. We change jobs. We end up moving into a new we are moving into A A, A new role, a new job. And we have this old four o one k left out behind there.

We can decide to what you want to do with one k we really four options, but it's not really four options because I will take away the forth. What are the options? We don't cash IT out because if you cash out your four one k, you're going end up paying ordinary income taxes and the ten percent penalty on that.

So then you ask the question, okay, what kind to do? Well, I really got three things I can do. I can leave IT where IT is at the current institution.

Under the current structure, I can roll IT into the new for one k new provider and invest in there. Or I can roll IT over into an I R A. I can just open up a roll over I R A and roll IT into there. So when I have those three options that I get to choose from, how do I decide which one I should do first?

You sure you have enough in the four old four k they don't automatic didius riba to you take a way, your choice. So do research on that. But always you have to do the research and do the homework on how good are the investment options, what are the administrative costs within the plans.

And if you figure out that your new plan is just as good, if not even Better, I will see any problem with you roll into the new for one k because that still allows you, especially of your higher income to continue to do back or rough contributions. Um but if you find that your old four one k is bad, your new four O N K is bad, probably set up by the golf buddy of your, the owner of the company and you just like I just do not love this is where this has got hold a majority, my retirement assets. That's when probably in our a roll ever does kind of stand out because you control who do we work with, what do we get to invest in, in.

But you got to do the work. You've got to figure out that's what we do. If you got a money, got a console resources, we actually have, uh, a really good resource to kind of help you go through a decision matrix on should you keep the money where it's at because maybe you work for a fortune five hundred.

You previously worked for a fortune hundred company, has a really low cost for one. K I don't want you rolling IT over just for the sake of consolidation to your new plan. If it's a bad plan, you've got to do the research steps to know if it's good.

And I don't want you mediately going to roll over your favorite institution. You might be cutting off corner on certain planning opportunities you have. So you've actually gotten don't skip like they do the homework and actually go through our worksheet that we've got a money get out come less resources.

I think one thing that I think it's overlooked, people think, hey, i've got this four one k plan is four or three b plan. I'm not paying any fees on that. No one imagine that that's not true at all.

Retirement plans do have some fees that they are subject to. So even when you're assessing don't just look at the investment options and I don't just look at the institution, look at the actual fees that you're paying. You go pull the four four a disclosure or often like a four eight b two disclosure.

You can ask for those from your H R. department. And then you actually walk you through one of the fees on paying on this retirement account that i'm participating in. And you want to compare the old into the noon because if you can also save money on fees some more, most going to stay in your back pockets. That's another thing to assess as you go through this investigation.

awesome. kate. M, thank you for being here. Thank you for asking the question.

And I hope that helps you think through this question. That's awesome. okay.

Liam asks, i'm a twenty seven year old P. H. D. Candidate on step five. I'm maxing out my rough, but have no four, one k or H, S, A options. Obviously, those are a big part of a step in the financial order Operations. Do I have any other options for investing other than a broken age? I make about forty, fifty k inside house right now.

What would you say to liam? Oh, liam, have a question. When you do the side holes, how are you getting paid like side houses, meaning like i'm working part time getting w 2 income because then there's not a whole lot you can do。 But if side houses are, you're getting ten ninety nine as an eliminate contractor. Well now we have a lot of really fun planning Operations because when you are a self employed .

individual, IT opens all kinds ful and fund that to twenty twenty five percent of your income um funded based group by the employer. But then along comes solar for one case, which now allow you to do you since you said you don't have a four one k at your work, that means you have your full wide open on four fifteen funding limits, meaning you can do sour to further up to the twenty three thousand dollars.

And then you could do a profit sharing portion on the other side of the twenty three thousand for the Price, twenty, twenty five percent of the profit of the the side gig that she've got going on. And it's an incredible saving opportunity. So you don't have to, if you, especially you have site come coming in, if you don't have A N K with your employer, go create your own opportunity. If you have saw hostile income, I have to make sure that this is money that's going to be subject to self employ taxes or payroll taxes for IT to be eligible for these retirement plans. But let's say .

that for some reason maybe you're doing part time work and this is A W 2。 You're not get get and all you can do is a broker to can. That's okay. You're A P, H, D candidates, which means likely when you finish your education, you're gonna move into a location where you're probably going to have access to things like a four one care for or three beer, maybe even a four fifty seven where you can double dip.

So just because you're not able to build those accounts right now in your financial journey does not mean that you won't be able to build them point in the future. What you really want to master right now is the behavior. If i'm making forty, fifty thousand dollars a year and I still gna make sure that i'm saving twenty five percent of my gross income for the future, because if I can do that when I making forty to fifty thousand dollars year, then i'm likely gonna able to care that same behavior.

4， i'm making one hundred and forty to one hundred and fifty thousand thousand year and I do have access to all these wonderful time of plan. So the fact that you're saving at twenty seven, if you have not done the wealth multiplier, got a money out that come lash resources, play with our tool out there. It'll blow your mind what everyone those dollars can turn into even if it's just following in a broker account, which is totally an OK thing at this stage on your financial journey.

Great point.

love. IT never. Good answer for liam. Thank you for being here. Thank you for .

asking the question. We always appreciate here, you and stuff in in the last next to me was the two questions later. He's out throwing out for away. I think .

I was like.

did okay maybe maybe the stash taken any .

on his food consumption .

because you know if some food getting caught up in there in the stash, but it's an overall brain. Horsepower is full.

Operating a glitch.

IT was a stake. Hey, is good. Alright, ready for the next personal finance question?

I now have a must station support of both. Hey, you, a muh right now can take on me. I take a picture of your stack, takes a media .

love, start to feel like we are. We going for a branding thing here, like K, F, C type branding opportunity.

Wasn't thinking about .

cornal centers. And maybe you, where is twisted in any thing here, wasn't in.

He does have some distinct facial hair. Yeah.

more to the l you can wear .

the monico.

Remember that part. The what is that?

The t that's right.

I mean, let's not go down that rabby hole, kay.

We've been very tire week to the .

I still say sim bad.

It's not being honest with no, he's lion. He's going lion. So I think we do have a .

couple more questions. Cute up or you're ready for kate has a question for you. He says we're planning in addition for one hundred twenty five k should we pay for a in cash or use a headlock? We have about one hundred four k in cash currently and our growth income is one hundred sixty five k where twenty seven years old save fifteen percent and rows are at six D K. We prefer to keep the cash so we can invest.

What do you think? Okay.

home renovation. But also here's all of this other.

yeah okay, the novation going to be a hundred and twenty five grants, not a small novation uh we have one hundred and four in cash. Currently our gross income is one sixty five or twenty seven and safe fifteen and we have rough money saved .

that we don't know what their spending radius.

So here's what I know. I know theyve one hundred and four thousand and cash. And like I don't do a lot of really good public math, but if I got a thing that cost a hundred twenty five and I know that i've got one hundred and four and I want to try to pay this thing in cash, how to use all my cash? What I S, I S, that's .

one hundred .

and four. That's or the option to pay cash right now because what you can do is whatever you're doing, a home innovation or you're buying a second property or you're closing on a whole, whatever the thing may be, you just can't spend your cash all the way down to zero. And we see people do this over and over and over again.

It's gona put you in a precarious situation that you do not want to be in. So I when he asked a question, should I pay cash or to a heat? C I don't really think he actually has that choice. I disagree. I think what's .

going on and I kind of can hear IT because it's almost like theme music. I hear Kenny loggins C E, playing the part of goose, and i've got on. My mother called on.

This sounds like the danger zone. I mean, that really does. I mean, I hear the music.

A compliment kicking in is both exactly right? You have, I think this is going to be. K, if I had to tell you, I think this could be a baLance above. You're going to to figure out what you your burn rate is on emergency reserves. You've got to have three to six months that stuff for the financial order Operations and then so that you're going to have extra and that money can go right into that home improvement project that you've been saving for.

But then you probably, if you can come up with the gap, maybe the home my on, but you got, I want to tell you before I give you permission to that, you gotta begin with the, indeed, man, is, how do you pay back the renovation? Obviously, if you ve got to one hundred and four thousand dollars of savings, you are able, you're in a discipline way, living on letting you make, but just make sure that you're building IT into your financial water Operations plans. So you're not giving up on raw funding, retirement matching and all the other great things that come from building your financial opportunities in the future. But also, you know, doing this home innovation is needed in .

the current moment. Now I know that i'm not only the nice one and brings the mean one, but I want to be the same one here for a second. Because he did say on the seven fifteen percent yeah, one of the things, just what I don't know, this home innovation, this one hundred twenty five thousand and improvement, was this in need? Or was this a lot? Now, if there was a need, hey, our families grow in.

We had to do an extra bedroom we had in, in order for us that would be able to live a life that we want to be able to live with a family or need to be able to live a family, we had to do IT. That's one thing. If the hundred twenty five thousand and innovation was a we're .

just not blowing .

out the bonus room. What you need to make sure that you're in the right part of your financial journey to be able to do that because I want to argue twenty seven years old, only seven like fifteen percent. Your goal should be to get the twenty five percent.

And so you got sixty thousand in your rose built up that awesome. But one hundred twenty five thousand is a big nut. If you go out to money, get outcome, splash resources in pg that hundred twenty five thousand dollars into the wall, multiple.

Er I want you to see how much novation is actually costing you future dollars that you're walking away from to make sure that you're making this decision at the right part of your financial journey and not accelerating IT prematurely. That's my opinion. That's my cold water.

Are you agree heavy someone's .

going to do that right? Um k and honestly, hopefully that gave you out to think about and helps you think through this decision. So things for being here and for your question.

i'm always looking for opportunities.

Alright.

i'm interested .

to here what you guys say about this next one .

it's from another .

brian one I two ends.

You sure that's Brown?

Ryan bryan.

I don't know. Second in made me put a question market .

and I D market.

Well, the question says, good morning. My wife and I are in the messy middle. These times are crazy. What advice do you have to organize life and get through this season?

What's that funny? Iconium people say, hodder, what is? How do I. Let me give you some solo, so you ask what advice we have to organize life and give you the season. Man, it's hard.

Because, like when you in a torna, what advice do you have? Man, you just gotta figure out, how do I sometimes IT little is, how do I survive this thing? But you're not alone.

And this is what i've found. And this is account to give there's a lot of folks that in the messy middle, and there's a lot of folks to go through the messy middle and is not easy. You have a thousand different things, pull you in a thousand different directions, and all the other, a thousand different unknown unknowns fall on your plate.

You don't have any money left over. You don't have any time left over your exhausted, and you have all these different stuff going on. So what you have to focus on is what's the very best next decision I can make in some of that decision might be, hey, i'm not gonna t off the raw funding.

Hey, i'm not gonna pull money out of the mercy fun to do this thing that I want to do. Or hey, i'm good, just gonna keep my head down. Hey, i'm gonna make sure I gotta pay raise and i'm going to save an additional two percent into my sometimes you just have to focus on making the very best next small martial decision until you can get through IT.

Because a lot of people, they get the mess. M, my financial life was an absolute disaster. How do I fix IT all? And unfortunately, it's going to be really hard, hard to fix IT all.

So you got got to try to fix one small thing at a time, one of the ways that we want to help you do that, ranking all the thing up. And we have the financial order of vaporous that even as you're going to the messy middle will help you stay true. Okay, I was doing great, and then something happened.

And then I was doing great and then something else happened. If you can use that as your um as your parameter, as your lime test, is that is that right? If you can use that as your brace to make sure that you are staying on the line that you should be.

If you can use IT as your copies.

let's do some more knowledge. Es, if you can use IT as a tool to make sure that you know you're not getting too far off course, there's a very high likelihood that your future self, when you come out of the back, back up. I'm so glad I did not deploy some permanent solutions to temporary problems like stopping my savings rate, racking up credit card debt, borrowing more money than I should have, making negative financial decisions I want to pay for for decades that maybe I could have avoided if I would have just like, stayed the course and catch my head down the best metal .

brand I would share, break the illusion. So many people out there currently, I think because of social media, they think everybody's doing great. And you're the only one in the world is struggling because you're looking at airbus highlight real. I mean, when you look at instagram, when you look at any type of social media, people aren't being real with you. They're telling you kind of their highlight real of how great their life is, that what we would need to show a ugobe had this survey that said how many people um that made a half a million versus how many people made a million in in .

the percentages .

of what the public thought were crazy dollars no, that's like a percent of person or sum. It's like nothing. There's not many people doing that I want you to know but everybody is struggling through what you're going through.

I want you to embrace this messy middle um where you short on time, you short on money um know that there are more people just like you that there are not despite what social media saying and IT was exactly right, you can each decade of your life is going to have its own special sweetness even if it's a struggle. And I would encourage you don't give up on still following the financial order of Operations, but also don't give up on but dazzling your basic life and still making memories. Nothing says you have to go book airfare for to go make memories.

You can do road trip. You can do all kind of crazy things. National parks, there's lots of ways to embrace the moment and still maximized both from the financial planning goals as well as from the memories and an I don't mind my experience share. And I put this in millionaire sion, and i've shared on the show bunch times, even in my trajectory through life, I didn't feel comfortable with money until I got to be forty two, forty three years of age. And that's with making lots of good decisions, but also going through the messy middle of moves, you know, starting a business, changing jobs.

There's all kind of things that put me your own messy middle embrace, that there's a whole community of us and probably more of your pair are struggling to this is just that we're not always honest with the people around us because in this new modern world, we all kind of fake IT until we make IT. And i'm saying row that out, break the illusion and just realized it's going to be hard. But even this you will look back on just like a good country music song and you can say you have missed these years or yeah, maybe you were short on time. Maybe you are short on money, but there's going to be its own special sweetness because I even share that in the book is that my happiest time in childhood was actually when my dad was unemployed and money was the hardest IT was for my parents. And that's probably there's something be learned for you on that to make sure you're not squandering the memory part of this even when moneys tight.

Love IT. All right, brian, thank you for being here, and thank you for the question. All right, we ve got one from torch seventy eight up. Next, he says, would IT be best to take the one time tax free roll over I R A conversion to a to c contribution next year, or wait until I reach fifty? We must .

take the one time tax free roll over I R A. Yeah, there's a, isn't there an age on that though? So what tour is asking is, hey, there's an opportunity where um I can actually choose to roll over, uh, I guess it's seven thousand dollars.

Uh, uh, I was a sixty five hundred seven. I came over the number IT was I can do a one time roll over from an I R. A, roll over into an H, S.

A to fund the H. S. A. Is that something that I should potentially take advantage of again in true financial advisor fashion? And the answer we're going to say is IT depends.

IT depends on what your financial situation is as well as what your financial resources are. Because when we think about funding health savings accounts and growing, that is such a valuable planning tool, that's all we put instead five of the order. Rop, so I wouldn't step five of the financial order of Operations because IT is a triple tax advantage savings vehicle.

Not only do you get a tax deduction when you put money into the H. I C, but you can then invest those dollars and they will grow tax to ford. And then when you go to pull those money is out for qualified a for qualified health care expenses, it's completely tax free.

So rather than taking some money out of your portfolio r there and rolling IT into the H S. A, I would love to see you put new money in there. You're not just shifting the part in.

You're actually adding additional dollars to the pot. So i've seen people that have done this one time roll over you to do IT in the year that they retire around about that age. But given all the options, I would probably choose new dollars falling in the H. S. A.

Over the roll over. Mean, you're basically going from a step, six step, unless your lifestyle requires because you've had something come your way at a hardship or something. I'm exactly with boys. I think I do like new money because of member triple taxes of anges.

You get tax eduction, you attacks the ford growth and then if you use IT for medical qualified medical expenses, its tax for e um that that contribution is really powerful on the front end. So um check into that. Make sure you understand those components to a um thanks for the question. awesome.

Well towards seven eight, like brian said, thanks for the question and we love hearing your questions so seriously. Thank you for being here every tuesday and central and thank you for subscribing to the channel that makes a huge difference if you haven't done that and like what you're we're talking about today makes sure you subscribe. And even after the cameras turn off today, money guy out com is always there for you. Money guide to come slash resources in particular has tons of free stuff. I know i'm always plug IT. That's because I just want to make sure you know it's available so that when you're having these conversations in your life, when you're thinking through these questions and is not tuesday at ten am central, go check out the resources because there's a lot of you know maybe a bit more in depth or the place where things are written downside that you can download or go and do a little more research and it's all for you. So make sure you check.

I like that we ve got a bunch of questions today though. You know we had about ownership decisions of differing comp. All these things really drive you to take an active role in your personal financial life. And while that's important is you have to own your financial future or will own you if you just kind of letting life happen. And that's something we try to make sure you know what to do with your next door army host Brown president mister bow hanson money got team out.

The money guy show is hosted by brian president. 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 abound, wealth management does not render or offer to render personalized investment or tax advice through the money I show. The information provided is for informational purposes only and does not constitute financial, tax, investment or legal advice.