11 Things You Should NEVER Buy for Cheap!

11 things you should never buy cheap it's brian preston the money guy brian i'm really excited about you know what i'm not going to say that because i say that every time and i get caught out guess what guys he's excited uh this is gonna be a fun show because uh well because of where it originated from right so a lot of the show ideas some come from our audience some come from clients this one hit us out of left field we're not expecting it and it kind of just hit us right in the face when it fell in our lap so we were in a content meeting and full-time equivalent daniel was just sharing by the way we'll change names and other things to protect those that are guilty or innocent uh but deku was sharing with us friend family that was explaining that when they got their tattoo somehow we were talking about tattoos that they actually walked into the tattoo parlor asked the artist wear their list or their their art that was on the cheapest tier so they could get the best cheapest tattoos so they walked in they said hey uh sir i'd like her ma'am i'd like for you to put something permanent on my body it'll be there forever never going to go away but i'd like to spend the lowest amount possible to make that happen that was how they went about making this decision probably not the way you want to go about making that decision that kind of leads to the theme of this today's show is that we wanted to to kind of talk about tattoos now now but we we before i do this setup because there were some things we were going to show on the tattoos why is it that you don't want to be so cheap with tattoos yeah because if you are someone out there and you decide to go bargain hunting for tattoos perhaps you might end up uh with pika ooh which is over here on that arm or or you might end up with a fantastic quote like believe in yourself and never lose hoop so this is but this is the point is that yes something's cheap because i get a lot of you guys your financial mutants you want to be and maybe you're aspiring to become a financial mutant but we want to share you have to pay attention to value what do you get out of the transaction not just how much you save out of it because there might be some contrarian other ways to look at it i mean look i've read the millionaire next door i've read stop acting rich and some of the data that comes out is contrary into what you think sure and now a lot of people think okay you get on this this these structures i'm going to save every dollar i'm going to squeeze every bit so my army of dollar bills can do it and that's very noble that's good the problem is is where you're cutting corners in areas that actually it would be behoove you or or benefit you to actually spend the extra money like shoes yep think about that shoes one of the things when you you read books like stop acting rich or millionaire next door they do share that a lot of successful people will actually wear nice shoes more on shoes and the reason is is because you know and the quote dr stanley even has a quote cheap shoes where you you don't wear them since you're walking on your feet or you're you're standing for hours you actually if you wear cheap shoes it causes back problems your your ankles your your flat if you're flat footed you need help with that i mean shoes are actually something you shouldn't neglect so cutting a corner on costs with your shoes probably isn't the best way to save bucks and i would even say that it's not the best thing i mean frugality is a great quality however for something like shoes buying the cheap shoes may in the long term actually cost you more money and that's going to be kind of one of the things we walk through is just because i cheap out today on this thing doesn't mean that i'm saving money over the long term shoes are a great example yeah i might spend a little bit more but if they last me longer and i don't have medical problems probably going to be better off financially in the long term so let's jump into things you should never buy for cheap and the first thing we kind of group these we put this in a section where we put something that we just to kind of make you think go hmm and then you know but then we went a little deeper and the first category though is long lasting effects yeah i felt like you know letting tattoos be the segway in here was a pretty good one because obviously a tattoo is a long lasting thing it's probably going to be there for a while uh so let's talk about some other long lasting decisions where perhaps you shouldn't make the cheapest choice so just like shoes obviously have an impact on your the way your back feels what your ankles and so forth mattresses are the same way and here's here's something i think is interesting we i did a little google research some of the studies out there show that we spend 25 years of our life actually sleeping you know that makes sense if you think about if you're supposed to sleep eight hours a day that's what a third of the day so if you live for 75 years then 25 of those years were lived on a mattress so that leads to because i had daniel i said fte go find me some article so find something because i've always see ads or you'll be riding down the street and there'll be a sign on the front lawn they'll say mattresses from 29 or something like that you're like wow that's a cheap mattress so daniel found some some ads here's one that i couldn't believe i don't know if this is genius or the worst fundraising idea i've ever heard is there's actually a band and i don't know where this is but you can see on the right we found this on the internet they actually their big annual fundraiser is actually to sell mattresses yeah you know when when i was in school and i was never in the band but i remember they used to sell like the world's best chocolate bars at my school they weren't selling uh you know 199 dollar mattresses so i'm just telling you do a little research you know there's a lot so you can go to consumer reports there's lots of stuff out there on youtube do your research because you're going to spend a lot of time on a mattress probably not the best place to cut a corner but let's talk about something that actually has a little bigger impact than even the mattress you sleep on let's talk about medical procedures yeah once again this is one that can have long lasting effects so what i think is so interesting about medical procedures is you can break them down into like necessary medical procedures things you have to have done to increase the utility of your day-to-day life or there are even cosmetic medical procedures and even when you're talking about those you probably don't want to go with the cheapest solution well and i think this leads into because a lot of you guys we've already talked about this is a a mindset that you want to be good with your money but you're trying to make sure that you don't do this in a poor way so how can you tell am i making a good decision or a bad decision well i have an opportunity cost analysis when we talked about this this is something that i think will serve you very well if you get nothing else out of today's show pay attention to this opportunity cost analysis because this will give you the clarity for decision making on things you need to cut the corner on versus things you ought to invest for the long term and the first thing i'll talk about is like lasik surgery oh that's a great one so i've had lasik i had a lasik done in the mid-2000s you said it was life-changing right it was a life-changing unbelievable thing truly incredible and i went to the same doctor that did a lot of the the atlanta braves because i lived in atlanta at the time you know so a lot of you guys who have heard the story of greg maddox and you know his thing with with lasik i went to the exact same um surgeon that did greg maddox's and a lot of you guys are like wow so that obviously means you're willing to pay more than what i see advertising the paper for 500 and i want to get one free so here's the opportunity cost that i did with my own eyes is that i looked at the good if i go to this 500 nile lasik center what am i saving and it was the good was is i was saving between 500 to two thousand dollars for going to this cheap advertised lasik center and look we all know because we subscribed to 88 times over here if you were to save that five hundred to a thousand two thousand dollars and you were to invest that and let it compound into retirement that could be big bucks so that could be a very very good thing the bad was i'm blind so when you compare 500 of savings to blind you quickly see the clarity that hey this is probably not the greatest place to trim a few bucks it's the same thing with cosmetic procedures it's the same thing with orthopedics like if you're getting joint replacement do your research because this has a long lasting impact and just a note you know not all medical providers are created equal so if you are going to do something i'm thinking about a dear friend of mine if you're going to do something like a knee replacement or like a hip replacement it is worth doing your research it's worth getting someone who you know you're not the very first person they've done this procedure on and they have a track record of doing it well because a lot of that stuff you can't get the water back up the hill that's exactly right so that leads to i want to talk about now look this is a little self-deprecating but i think that's good there's always a good educational component when you can make fun of yourself so we titled this growing up preston now i just want now this is one of those if you're out there in itunes stitcher i heart radio spotify one of those places you ought to go just you know pull up youtube real quick go to this point in the show because right now it is brian preston circa 1977. well one's my kindergarten photo and the other ones they're the greatest 1979. so this is definitely in the 70s and here's what's interesting we just had a youtube comment call us trust fund babies no and i like when it cracks me up when people just assume they see a level of success and they assume well these guys were just born if you go look at our yearbook photos and our kindergarten photos you can see you know getting dressed getting to school that was just it was happening but you know humble beginnings but it is interesting when you when you think about i think about all the things in the lesson lessons i learned growing up and one of the big ones was on things you don't want to be cheap about and i learned these through life and experience like and i'm going to pick up my mom a little bit and everybody knows i love my mother but um she cuts she she's good at saving some bucks that she was tight she was brutality was a super power of hers i grew up in a household where every dollar had a purpose including laundry detergent and you know my mother and also soap i've told this story is so laundry detergent in our household was bought at pace a membership this is before costco's before sam's club we had pace that we drive to and i kid you not our laundry detergent would come in these big five gallon containers that you'd scoop this dry powder it's granulated powder it's not like the liquid stuff it's like granulated hard coarse powder because by the way i had to say laundry detergent it must have been cheap because you could you could turn your reds into pinks you could turn your blues into purples just in a matter of about three washes if it was blue jeans or what you were going to thin out your clothes whatever clothes you had were going to come out one degree thinner after you watch it so it wasn't until i got older that i realized that the value proposition was probably not that good it was actually when i got married that my wife was like oh my gosh i can't believe that this is the detergent that you grew up with you can actually preserve the color of your clothing because i just wouldn't wash clothes yeah you just wear undershirts you just do other things that's not probably the the cleanest thing to do and the same but that leads to the soap my mom was doing etsy before etsy existed or even was cool is that we would take our little soap slivers and my mom would melt them down and then we would put them in these big ice trays and make recycled soap that's disgusting i just want to make sure that i understand so bar soap was something that was used in the preston household and when it would get down to where it was a little sliver the little flakes you'd recycle it rather than discarding that and going to grab the new box of dove to put in the shell she would take them and she would combine all the soaps from all the different bathrooms and melt them down and have a new congee did she at least have like molds where it was like it was an ice tray it was an ice trap it was an ice tray you know so make big chunky bars that is so it's um but what's funny though is that this actually led to i had daniel go pull because we did a little research because like i said etsy this is a thing where you can create your own fancy soap put lavender and oil of essence or whatever those essence of oil what's the fan essential oils essential oils yeah whatever the fancy oils that i'm sure my wife buys but it's uh but you put that stuff in the soaps well this is a thing by the way there's actually a charity out there that takes hotel soap and turns it into and they have a way of cleaning it so people like bo aren't grossed out but i thought that was worth a pitcher to put it up there but it is one of those things where and it's not just because i give my parents a lot of credit they did know every dollar was super important but they were making growing up preston had one thing that i do pick on my parents is the opportunity cost is that they never ever ever would ask somebody to help them financially meaning like hire a financial advisor or other things because they didn't want to spend the money yep so they were being cheap and i think the wrong way that's next category and you know i think uh i think this is one i think a lot of people struggle with this because they think about all right i want to build to financial independence i want to build to a certain level of wealth and success but anything you know if i don't have every dollar moving towards that goal or perhaps i do something that shifts some of those dollars away i'm going to prohibit myself from actually getting there and i think i imagine that's what your parents thought well no if i incur a new expense trying to build my arm of dollar bills well that's not going to be good right so no way could that be a positive so but that's why i had daniel i said daniel i want to actually put some numbers this i want to put some meat to it so let's do another tell of two savers um because i think it's interesting when you get older i got married and i met my wife's family who were also you know didn't make a ton of money but have done really good things with their well with their money by the fact that they actually put their army of dollars to work so i told daniel i said i want you to do because my parents idea of investing was cds that's that's what i grew up with my dad used to tell me this cautionary tale of the only time he did equities was when this son of a gun stockbroker cold called him convinced him to buy two stocks and then he lost his money on him so he was just never ever going into this crazy gambling type thing of stocks so cds were in his mind perceived as super safe so that's what we always did meanwhile my in-laws you know my my father-in-law and my mother-in-law were buying the fidelity magellan fund back when it was the thing to do i mean this is peter lynch who you know set up some incredible opportunities in the long term for his investors and i got to tell you guys this one decision you face this same decision yourself this one decision can change your life so make sure your army of dollar bills is working but walk them through the illustration so what we said is if we just take the time period from 1985 through 2000 because that's kind of the time when your parent your parents were doing the cds and then your in-laws are in the fidelity magellan fund what does it actually look like if you grow your investments through there well if they both started with fifty thousand dollars in 1985 didn't add anything else to it just both started with 50 000 you can see that by the year 2000 your in-laws would have had almost 836 thousand dollars but your parents who were doing the perceived safe thing the the the steady as it goes investing that 50 000 using one-year cds would have been about 118 000 so it would have grown it would have doubled it would have done well but not nearly what using that investment mutual fund would have done for them well i mean and i think the results are in and the fact that and by the way if you're wondering how did we choose this time period i met my wife in the mid-2000 i'm in the mid-90s we got married in 98 just had my 22nd wedding anniversary this weekend happy anniversary so the 2000 seemed like a good shutoff because that's where you know my in-laws came into my life was in the late 90s and i saw my father-in-law actually retire at age 55. i mean how many people actually get back then this is like i said in the late 90s early 2000s actually retire at 55 that's incredible and this is what kind of shows that that one decision of buying into the fidelity magellan fund got him closer to seven figures versus my parents you know they doubled their money but yes the army of dollar bills didn't get to turned into the peak maximum opportunity of what they could have been and so what i hear is you know it makes me so sad to know that your father had this very poor experience with a financial advisor a guy cold called him and told him to buy some stocks that's not a financial advisor that's a stock broker focusing on selling a product so but i think had your parents had some appropriate education around how to make sound financial decisions and they would have had a true financial advisor perhaps they would have been in the same situation as your in-laws with a little bit of education and a little bit of product so one of the things that we want you guys to have access to is our eight questions to ask a financial advisor if you're someone who's thinking about hiring a financial advisor or starting to look into it or perhaps you're already working with one you can go out to our website moneyguy.com i got corrected for the backslashes moneyguy.com resources and you can go download this just walk through eight great questions you can ask to know what type of financial advisor you're working with to make sure you're making a wise decision yeah go maximize that money so your money can actually do something for you because i think that that's the thing that i realized and that's what made me i mean i'm telling you when i read the millionaire next door when i read the wealthy barber the light bulb went off and i said look i can do this you too can learn how to make your money work just as hard for you so don't let this opportunity pass you by love it so let's transition i want to talk about things that you can do that are pennywise pound foolish now my favorite thing when we do these shows i think is when we get to pick on you so not only was there a segment called growing up preston we wouldn't really pick on you but we just kind of got to relive your childhood this one this first one is not growing up preston this is adult preston yeah this is brian preston present day and we want you guys to learn from our his mistakes now look i'm the first to admit i'm a weirdo who has learned how to turn all my quirky quirks to where they're profitable somehow you guys actually show up to find out about my quirkiness and one of the things is is that i like leftovers you know i know some leftovers gross a lot of people out but i look at it as a value spreader meaning that if you go eat a meal and that meal comes especially like think about italian food well it's always way better than italian food they've even by the way businesses have caught on to people like myself like i was and you guys made fun of this in the fact that olive garden now when you go to by the way i still eat olive garden because they were making fun of me in our show meeting that i eat olive garden probably twice a month but olive garden has a deal now when you go to olive garden because let's face it we all fill up on the unlimited breadsticks the salads and all that stuff they have something on the menu that says hey on your way out if you want to tell your server that you're willing to give another five bucks and we'll pack you up an extra sting of spaghetti or italian food i do it because i love leftovers that much not only have my leftovers i have this extra meal that i'm getting for five dollars so okay so i hear all this and that all just sounds like wonderful financial management you're spreading out meals you're having extra food it sounds like where's the negative because it doesn't sound like that's a bad thing to do the problem is is that leftovers sometimes life throws you a few curveballs and the leftovers sit in the fridge you just kind of hang out for a while so i asked daniel i said daniel let's do a value this could be kind of like our public services we're going to actually share how long you should keep leftovers in your fridge so this is a public service announcement for your health your safety we're going to show you we pulled together the research and this is what we found on leftover rules of thumb and look this isn't just us fted didn't make this up this is from foodsafety.gov if you have fresh chicken or beef and i think that means raw when it says fresh i think it can last for about one to two days before you probably ought to get it cooked and get it eaten uh pizza three to four days uh i have not always abided by that one i kind of sometimes we blow past that but salads three to four days that one makes sense to me because salads always get slimy that one's you can pretty much tell and then cooked meats three to four days now okay true or false brian if you look at these categories have there been times in your life oh every one of these ought to be doubled or tripled i mean this is i mean look the government obviously got in conjunction with the people who sell these goods and decide to limit them oh you know i've put a conspiracy on because if there's nothing growing on some of these things i'm i'm probably eating it so but but this is a problem is because i will admit you you want me to be honest uh-huh i've been sick a couple of sick profile leftovers including sometime this year and um and i will tell you that that does it is one of those things and this falls into a recent show we did i i attribute this this this desire to spread value i call it cost of fun ratio can lead to also where it overlaps with sunk cost fallacy is that just because you throw leftovers over away for your own health and safety doesn't mean you actually cost yourself additional money it just means you probably gotta throw the leftovers away but if you do eat leftovers and you're up you know throwing up for a day and you miss work and you all these other things perhaps the cost of finishing off those leftovers just wasn't worth it so make sure you abide by the moneyguy aka foodsafety.gov rules of how long you should let leftovers last so let's transition to a serious one because this is something i also know a little bit about let's talk about like tax prep because you can be pennywise pound foolish on who you hire as a professional to help you prepare your taxes and i think this is interesting because i have 16 years of professional tax preparation experience i've represented clients before the irs before and other other things and it always amazes me as there are some distinct personalities of your tax preparers that i want to cover and we work with clients all over the country so we have a pretty wide berth of different types of tax preparers and they are not all created equal so let's go through some of these we'll call them stereotypes of tax preparers the first one you've seen this this this type in a in a few commercials i think for h r block or some of the others this is the tax taxes are optional prepare now see i'm reminded of a quote by uh benjamin franklin right because i think they're all him there's only there's only two certainties in life right death and taxes that's the other one so i don't know that i would agree these tax prayers that taxes are optional so who who was the the hollywood celebrity the action star that didn't pay taxes and went to jail wesley wesley snipes the taxes are optional preparer because this is the guy who says everything's deductible what he doesn't tell you is everything's deductible until you get caught and so that's what so be very careful that could be something that you're pennywise pound foolish on the the repercussions that impact you and look that that's a cute idea everything's deductible do you get caught well i'm sure if they call me out it'll be okay true or false you've actually been in or or got a call from a client in an irs audit who was physically crying in the middle of the audit because it was that intense and that scary and that uncomfortable and that nerve-wracking yeah here's another little tidbit because i know a lot of you guys you know a lot of these things we talk about in the show so you're always waiting for that little morsel of information that'll serve you well here's another little little snack and the fact that if you ever get a true audit i'm not talking about just a letter from the irs i'm talking about where they actually want to meet with you in person hire somebody yep because i've had clients that um an in person was requested they didn't want to pay me the hourly rate so they went by themselves and then that's that said client called me crying because here's what happens in an audit they can mushroom they can they can go because look if you're the taxpayer sitting down with the irs they can say hey tell us about this deduction and if they don't like your answer you actually say well tell me about last year when you took the same deduction oh you took that deduction for your personal taxes how about for your business what did you do so you see how it all just starts going further and further out with the question here's how it goes if you have a paid preparer or an attorney that's representing you um before the irs they ask you i um guys i'm going to go ask my client i just don't know question ends you move on to the next thing you have to then provide clarifying data to the irs later but at least you move on and that's that's that's the reality of what happens in an audit is that they are going to ask you questions that you need to be prepared to answer but when you are the tax preparer they're counting on you to know all answers so be very careful with that so the first type of tax repair is the too aggressive one the uh everything's deducted one what's the second type well this is the not my job tax preparer now i i just would be most frustrating to me well i see it all the time and this is the ones that you see typically the the tax preparers that are in shopping centers and others where whatever you show up to get your taxes done with that today is what's going to show up on your tax return meaning that there's not a lot of questions there's not a lot of prying to figure out how can we save more taxes legally because that's one of the things i think that when i was doing tax preparation i would actually i would not just send out the questionnaire i'd actually ask the client get on the phone with them and say talk to me about what you got going on financially so i can figure out if there's additional deductions because what i was trying to do is figure out how i could pay my fee if you can find them some tax savings that covered your fee it's a win-win and they'll stay a client forever but that's not everybody a lot of you guys you probably have dealt with tax preparers this is a transaction you're going to show up with your shoe box full of documents whatever's in that shoe box is what your taxes get prepared with that's not ideal either and look it's not always the preparers fault because the game is kind of set up against them tax season is it's a short period of time and they've got to crank through hundreds and hundreds of returns so a lot of times stuff slips through word to the wise right now if you're not reviewing your tax return sort of line by line making it make sense or if you work with a financial advisor and you're not letting them review your tax return there's a chance that stuff is just get putting on because a tax preparer got a 1099-r and just threw the income on there we see this all the time with roth conversions income shows up on a tax return that should not be there if you would just spend a little bit of time reviewing it show them how the flow happened you can save yourself hundreds or even thousands of dollars in taxes just by going a little bit further taking the loans and that leads you that's actually a great segue into the third category tax preparer which is what is that because what is that tax preparer it's exactly you just said it is like we deal with all the time roth conversion strategies where the cpa you know will be like i i've never dealt with there's an art it must be like it's taxable you know so sometimes so if you are dealing with transactions because we we've we've dealt with clients that have if you have solo 401k if you have roth conversions you know there's real estate real estate is a great example i mean these things if you're if your preparer is not experienced does not know what they're doing in these certain specific areas you can get yourself in a lot of issues so that's why pennywise pound foolish know what you're getting don't cut a corner just trying to save a few bucks because it is sometimes these professionals that you hire we talked about financial advisors previously here it is with you know tax preparers is also think about with attorneys just make sure that you're getting good value and you're actually getting the service that's going to cover the needs instead of just saving a few bucks love it that leads to bo this is yours so i feel like you ought to set this up because you even though ft daniel put a construction picture this is an athletic yeah this is an athletic term this is what i always used to hear now i heard this from high school coaches and i also heard it from college coaches do it right do it light do it wrong do it long not to me that's just intuitive but what that means is if you do something right the first time you only got to do it once you don't have to do it over and over if you screw it up like you know if you're kind of lollygagging in the middle of sprints coach going to make you do it over and over and over until you do it right so we aptly titled this do it right do it light do it wrong do it long now this led to and what we put in here now i guess we i couldn't find it on youtube this is what's so frustrating as you get older is that you'll remember seeing something that's hilarious and you get older in five six years seven years ten years goes away and you can't find the thing bernie mac on his show if y'all know bernie mac had a tv show he and this is the first time i'd heard it because i know this has been around a long time but he talks about in home improvements there's the two out of three tests and bo explain to him what the two out of three rule is yeah so the two out of three tests you know what actually hold on let's i want to play game first right because this is going to set this up really well again if you're out there in itunes stitcher i heart radio spotify fill in the blank we just went and found some home improvement pictures let's see if you can spot what's wrong with these pictures i'm embarrassed to say by the way before you put them on the screen the second picture i had to have daniel show me once we couldn't find it i was like so on the left there's a guy who you know installed some stairs leading upstairs uh and there's a bit of an issue these stairs might not have been constructed thinking about who would be walking up and down these stairs pretty regularly so if you're not looking at the picture obviously it's way too close to ceiling the guy's running into it photo on the right you may be thinking huh is that commode or toilet too close to the bathtub or is something wrong with the tile or is the floor messed up no no no if you look closely the toilet paper dispenser is located in the shower it's in the shower it's in the shower every time the first time you take a shower that toilet paper is ruined uh it this would not be a good place to put that so that leads to bernie mac he had this thing that when it comes to home improvements when it comes to doing stuff you get three options your things can either be fast it can be done fast it can be done cheaply you know inexpensively or it can be done well you get two of them you can't ever find all three i love that the cheap fast good you see this applied not only to home improvements but it is kind of true i mean if you want something cheap and good it's definitely not going to be fast somebody's going to be fitting you in look i'll tell you from a tax preparer standpoint when i was doing that this is why the family and friends discount sometimes where i was doing taxes for 50 wasn't the greatest thing yes it was cheap yes i was doing a good job but i definitely you were back of the line i mean you were not going to be in front of the line when you're doing it for 50 bucks as the friends and family it's the same thing you can do it cheap and fast but it is not gonna be probably not gonna be good that's that previous example where i was talking about the tax preparer that just did your taxes based upon what showed up in the shoe box and then the last one of course is you can have it fast and good but by goodness and look i dealt with when i was on the school board we had to build some schools fast because we had a timeline that we didn't want kids you know caught in this weird pickle we had to bid it where they actually ran construction sites 24 hours a day that does not sound you can imagine if you want fast and good it's not going to be cheap because you're going to be making some concessions somewhere else you can apply this to a lot of things in your life so make sure do it right do it right do it wrong do it long did we i mean that's yeah we nailed it and i think a really easy example to think about in the financial world and we see this all the time is with attorneys or with legal service legal professionals but walk them through because it is it's not uncommon matter of fact i had a phone call with somebody last week that they were like well can i just do my own will you know can i just go on the internet do a google search and just do it or is is there some problem with that so you i've heard you do be on the phone with either prospects or clients and you've shared that you kind of have a tiered structure that you walk people through truth i call it the estate planning financial order of operations and when i say i call it that i just made that up right now just thought about it uh ruby let's put that down but here's the way it works essentially when you are just starting out and things are really simple you just want to have documented your wishes so maybe get a piece of paper write down hey if something happens this is where i want the money to go and this is this and this is that and just sign that and put it somewhere safe and then let someone know where that is right so that's kind of like your first i call that the back of the napkin estate plan well then maybe you get married or things become a little more complicated but still not complicated it's great to use an online service one of the legal services where you can go on and get like a will or a state document template and you fill in your information and adjust a few things you know print it make sure it's signed and witnessed and notarized and all the things you're supposed to do but at some point it does make sense once you graduate to complexity whether you have children in the picture or you have financial assets that complicate things or you have different stuff in different places it does make sense to meet with an actual estate attorney that can make sure documents are drafted to match your specific needs and circumstances not just some boilerplate template well there's i think there's even tears within the attorney world fact that you could go i mean if you're if you're a situation where you just have children you want some health care directives and but you're you're pretty standard on that you own a house you have a job you know you got investments and retirement accounts they'll have their own beneficiary designations you're pretty simple so you can just go to a general attorney you just want to the biggest things you're trying to make sure you protect the kiddos you make sure you have the health care directors directives and maybe a trust set up correctly but then there's specialists you know because there are people large estates or what if you're somebody who has a special needs child you know i've run into that or you have unique family considerations maybe you're a mixed a blended marriage where you've been married before with kids and your spouse is the same way and you're kind of combining these two you know these two families now those are unique situations that you might need to have an attorney that kind of is willing to has walked that path before to protect you so just make sure that you're focusing on doing it right the first time so that you're not screwing this up and having a long-term impact that you weren't counting on i love it all right let's talk about the last segment the grouping that we did for this one it's pretty straightforward and i thought that's a beautiful one to end on and we just said frankly life is too short now this is in the category of i think as you get older like i pick on you you know 20 year olds i pick on you guys all you guys in your 20s is because i look back in my own life is that i could put up a lot in my 20s i could sleep anywhere sleep on the floor with no pills i could sleep anywhere i could you know cleanliness didn't necessarily bother me as much as it does now now i i've turned into it like i'm in this entrepreneur group and we're going out for like a planning session first thing i want to know is do i get my own bed do i get my own bathroom because i've gotten where i'm just crotchy a little bit bad college brian would have had no i could i literally it's not just stayed there for a week if you could see the places i lived and slept in college it's very different i mean i mean it was just like give me a couch and i was good i don't know what changes in your in your life but i've realized this is the category where life is too short but you don't want to screw it up and and here's the first one and guys i grew up in a household and and y'all go after after i talked about in a previous show like last week's show was like the doodoo dollar and i told that whole story y'all gonna be like what's going on with brian but this is something i didn't realize until i was out on my own in college that this word pla had any meaning whatsoever because the house i grew up with in in my childhood my parents bought the cheapest toilet paper you could and what i think is interesting is that in the year 2020 this has been the year of tp oh no literally the year literally this this year is so screwed up that we have made toilet paper one of the most valuable resources on the planet forget gold forget bitcoin get out there and get you some tp because it is one of those things where i think we all our relationship with tp has been changed forever but it is one of those things when i look back at my own childhood this is what i want to know now because i grew up where cheap cheap cheap toilet paper and then i get on my own i'm in college and i'm like well there's a charm well there's this costume there's four or five dollar fifty but i'm understanding life's too short just because i can save 250 on this pack of toilet paper probably should spend more now what i want to know i have some anger in my heart that i'm scared to ask my mom because i don't want to know the answer i want to know were they just giving us kiddos the sandpaper and then they had luxurious stuff in their bathrooms or if this was just the whole thing it was just the family of spartans when it came to this yeah man you know i was just it wasn't until college that i realized there was such a thing as nice toilet paper and i remember the first time i went to the to the grocery store i bought like just the stuff that i'd recognized from home and then i like somebody one of my roommates or something who grew up in a much nicer part of town but had like the good stuff so you started using their stuff of course i started using their stuff that's that's the bonus way of course i started using their stuff so let's turn this into something that's actually serious which is i always think about in the fact that life is too short because i mean and i don't wanna because by the way we have done this where we ended on something that is a super serious topic bo and that is not typically the way we in the money guys show but it is something i think is important i'll think of a good joke to close out that make everyone laugh but life is so short it was nobody's promise any additional days is that i did think it's one of those things that i want people to think about insurance i mean in a lot of ways we we're trying to figure out how we can save money one of the places you do not want to cut the edge off of is insurance and i'm talking about life insurance disability insurance even the way you look at you the way you're structuring your health insurance pay attention to the risk versus what the financial difficulty remember that whole opportunity cost analysis i was talking about what's the good stuff that happens if you make this decision what's the bad and i think it could give you some clarity look we all get it life insurance is kind of a morbid scary subject but the good news is is that a lot of us i would say the majority of the population a good term policy not whole life but a good like 20-year term policy will serve your needs so you could if you're if you're trying to figure out where the value is like a 30 year old can get one this is a woman can get one million dollar 20-year term for about 299 dollars that that's 299 dollars for the whole year for the year per month for the whole year 299 million man because we know that you know this is one of those situations because um the ladies outlived the guys sure 373 for the same 30 year old 40 year old because you're probably definitely in the kid territory at that 40 years of age 1 million for the ladies is 501 a year and for a 40 year old man it's 5.93 guys life is too short that if you weigh the opportunity cost if something happens to me today the the the good i guess if you're looking at the decision between life insurance or not is that i saved that 593 dollars of insurance premium the bad is i my family is stuck with unfunded things like college debt and just making sure that they have the money to provide things i think you quickly can see man i really wish i'd have paid 5.93 for this term life insurance to make sure my family's protected it gives you the clarity not to make one of those full-hearted decisions that actually hurt your long-term financial success and frankly even if you extrapolate okay that hundred dollars over the course of 20 years what if i pay it for 20 years and i don't end up getting the life insurance payout that's pretty good news you made it for 20 plus years that's not necessarily a bad thing the other thing you want to make sure of is when it comes to like property and casualty insurance you may not want to choose the cheapest life and the cheapest insurance company out there that you've never heard of that has some poor rating because ultimately when you buy insurance what you're counting on is that that company will be able to satisfy the claims when you have them whether it's homeowners or auto owners or disability or long-term care so make sure you're not just going with the cheapest solution you want to make sure you have a company that's actually going to show up and be there when you need them the most and i think there's some positive steps you can do like if you just mentioned property and casualty don't just go with the cheapest carrier but you can find savings by maybe pushing up your deductible so that's that's the way you actually do it right same thing life insurance you know pay attention because i like term life insurance if you're trying to figure out you're like okay this is gonna be the day i'm gonna actually go make sure my family's protected go multiply your income times 10. you've heard that but i would tell you on top of that add what are your outstanding debts so because if you have a mortgage a big mortgage or some other debts that are hanging out there stack that on top of the 10 times income and then maybe even consider adding on some of those unfunded goals like college and so forth because you'll find that you can buy enough protection to make sure your family's on stable ground going forward look there's nothing wrong with being frugal and there's nothing wrong with saving money and there's nothing wrong with building your army of dollar bills early on but it's okay to spend money on some things and dare we say sometimes it's appropriate to spend money on certain things to make sure that you're covering the bases to make sure the quality of life that you're living is actually worth doing it because you know we hear stories all the time about the person who you know they they never indulged they always saved they did everything and they get to retirement and then the next day they get hit by the bus right they get the medical condition comes down there's a balance if you're following the financial order of operations if you're doing the things you're supposed to be doing it's okay to be able to enjoy the present right now you just have to understand what are those things that you place value on where it's worth spending money and what are the things you don't care about that you can get rid of well i think you just said some key things and this is a great closing value know the value of what's important do you know what's why what your why is on things know where it fits into your plan i mean that you mentioned financial order of operations if you go into life your financial life without a plan all you've done is set yourself up for failure because you're just out there flopping around think about you're a ship without a rudder in the back that's guiding you you cannot do those type of things and then it's that last part look i know a lot of coping mechanisms assume hey i see because i see this in the comment section people say i'm you know i'm not guaranteed tomorrow i'm going to spend like today is my last day i've listened to tim mcgraw and i'm going to go do it no i'm telling you guys statistically the lion's share of you who are watching this who are hearing it you're good to be a ripe old age start acting like it yep because there's a whole population that they get there and they go uh-oh what do i do and then i'll tell you what you do you move in the basement of your kiddos and that's not what plan a should be that should be just kind of for the peop for the people who didn't take the steps that's what use the information we share on the money guy get motivated and go out there and start creating abundance in your life if you've not gone out to our website yet go out to moneyguy.com resources go check out all the stuff that we have if you've not been spending time on our website moneyguy.com giving us your email maybe you haven't noticed some really really exciting things some huge things that are going on in the money guy world so go to our website check that out make sure you subscribe right now we are closing in on 77 000 subscribers on youtube we want to get to 100 000 and we can't do that without you if you're renting your seat do two favors for us right now click subscribe and then smash the like button so the youtube algorithm will give us some loving somebody's been watching you i know i heard somebody else say that i heard him say something i totally stole that i stole that guys thanks so much i'm your host brian preston mr bo handsome money got team out i thought that was pretty good you can watch tumblers yeah we can give away some tumblers he's like i don't know do i is that what we do is that what we do right now i just wait for you guys to tell me you know it's it it works on the weekends where i come home everybody like i'll go do something somebody say what are you doing this weekend like i don't know whatever my wife tells me we're doing she's kind of like the event coordinator for the weekend i'm slowly letting you guys kind of seep into the my daily calendar that way too um you want to do a uh promotional question okay okay this is from mike risch uh on youtube he says hey on last week's podcast both brian and bo mentioned they had a fidelity visa that's true i was just curious where they allocate their two percent cash back 529 brokerage ira etc i'm looking at getting this card here's how i want you to answer this question yeah it's true we both use a fidelity visa card how should we think about the credit cards that we choose right and the credit cards that we use and then you can share how you use the cache and i'll share how i use the cache well i think there's multiple things in that question first is i use my fidelity visa is it goes straight into my brokerage account i do the same um the reason i do is if i put it in my 529 first of all every state might have a state tax benefit you need to pay attention to your state's 529 look at the rankings look at how they're structured and the benefits um and and for me it made sense to because i was living in georgia when my children were born and there was definitely a great state tax deduction so i didn't want to go into the fidelity 529 i wanted to go have more control over that also it was another thing is a lot of people because i do like cash back cards because they give you maximum flexibility on how you use it whereas i know there's a lot of credit card gamers that use a lot of these travel cards i i don't use those i think covet has shown that cash is king on flexibility and usage because i can still go buy airline tickets with my cash i can still use them to book hotels um so i i think cash definitely dominates in that aspect i do i mean some honorable mentions the amazon prom card if you if you're if you have a lot of small boxes coming are you getting the four percent right now did you do that i know this is not timely i'm going to go on a little slider i got the email or they said hey if you sign up from now to february 4 on all restaurants and four percent on all travel and all gas how is it not shocking that amazon's trying to dominate another category it really is another category for jeff bezos to have world domination three percent card for the restaurant now i'm using four it's like making free money from now until february so that's a good card to get by the way these are just benchmarks of things we've noticed i'm not giving because we don't we're not we don't participate in all that cash you know affiliate affiliation fees and all that stuff so um and then the other one i have i have a costco card because i do like my costco that's my favorite that's my three percent on gas and all that stuff but that's how i use my credit cards i think that's great i i had a client of the day who said hey i've got 15 different credit cards i don't use half of them should i close them down i said yeah go close down every credit card except for the oldest one because that's the one you want to leave out there and you know i think i have like a a four you know i've got the target card because we do target a lot got the amazon card i got the costco card i got the fidelity card i got four it's pretty easy to manage pretty easy to set up and i let all my cash back just flow into my brokerage account yeah i would say measure twice on that closing of credit cards though because you do need to be careful they could have a short-term detrimental impact to your credit score and also i always say be careful of having too many lines of credit um just because you don't want to you don't want to have something slip through the cracks because you're going to find guys when you get older as you become more successful complexity naturally happens to you just because as you build success your life gets complicated don't create complexity when it's unnecessary i mean now when i i can tell you just seeing behind the curtain my wife i guess nordstrom just had their annual sale oh yeah my wife's been talking about i i don't my wife doesn't have a store credit card so she doesn't get to go the early access points and she tells me how it's costing us a fortune my wife has that i'm still staying you have that guy i've got the nordstrom card oh that probably means it's going to push my needle over the other five so uh so it's just funny how you be careful of store credit cards i'll probably end up losing that battle at some point but it is something be mindful keep your financial life as simple so because complexity is going to happen now here's what my wife told me because now that we have the noise required we're practically making money right she shares with me all these deals with the sale it's basically like we're making money i'm probably gonna get in trouble haven't fortunately my wife doesn't watch the show so she hopefully she doesn't figure out that that your wife has that card all right this next oh that was a great hey mike if you like a tumblr you can write rebecca r-e-b-e-c-c-a at moneyguy.com this next one's from douglas this is a youtube listener too he said question can i roll over my 457 the same way the same way you can roll over a 401k you do have abilities to roll 457s but the question is should there we go well no i mean because because look 457s are so unique in the fact that they don't we all know that one of the big things you have to pay attention to with 401ks and 403bs is that while they're in plan meaning that while they're at the 401k while they're at the 403b provider if you once you've separated service and say you're you know you get access to those plan assets at 55 versus the 59 and a half for the avoiding the underpayment penalties or early withdrawal penalties that's what not underpayment early withdrawal penalties 457s don't have those early withdrawal penalties so a lot of people that's why you'll notice a lot of your firefighters your police your their government type entities where you do have a lot of people retiring you know military where they're retiring when they're 50 51 these 457s are great assets because they can start pulling that money out at 50 years of age and not have an early withdrawal penalty so just measure twice on on taking those 457 assets because they do have some unique access benefits that other 401ks don't don't allow and keep in mind if you do have access to a 457 and you also have access to a 401k 403b salary deferral limits don't aggregate so if you're under 50 you can put 19.5 into your 401 k 403 b and another 19.5 india 457 it's the only type of plans like that like 401 k 403 b they aggregate the others aggregate 457 is unique it's not under the same code section so it's a great hyper accumulation strategy for folks who have access to both yeah so you see a lot of doctors that work at hospitals and other things that actually can maximize both a 457 and a 401k douglas that's a great question if you would like a tumbler you can write rebecca r-e-b-e-c-c-a at moneyguy.com uh oh here's one i think you know the answer to this oh gosh i think i know the answer good you can be my backstop i hope we know the answer now this is from will uh he's a financial question awesome it's a financial show it's a good place to ask one of those what does a church have to do to allow members to contribute using qcds qualified charitable distributions well first i think it'd be helpful to hear what is a qualified charitable distribution well a qualified charitable distribution this is a great planning technique for clients because we all know one of the things you're going to find we talk about tax location a lot on our shows that because there is a tendency for my hyper savers out there you're going to have a lot of tax deferred accounts you're going to have big 401ks big four 3bs big iras that are going to build up the problem is and this just got updated um was that you have a required minimum distribution at age 72. so the government makes you start pulling money out based upon your life expectancy so they can collect income taxes on that money so what qcd qualified charitable distributions allows you to do is you can actually take a portion you can distribute directly from your retirement accounts to the qualified charity meaning you you actually fill out the distribution paperwork then but have the money go directly to the charity instead of to you so that's a big setup is just make sure your your your church knows hey you got to check distribution check coming to you sometimes the paperwork from your custodian that provides the that holds your iras will be a little weird so it is going to require you to have better record keeping because your distribution might you know your 1099r at the end of the year might have that number in there so you need to make sure that you can separate that out but a lot of you guys because here's the thing you're going to say well wait a minute if this shows up why would i do this because if it went directly to them and because it doesn't show up as like on a schedule a as a charitable distribution but what it does do is you don't actually pay the income you don't have to recognize remember if the government is making you pull this money out of your retirement account but you you have a portion go to your charity you're not going to pay income tax on that portion that went to the charity and you're probably like well but why is that a big deal here's why this is a huge deal also realize when you're since you're over 65 and you know you're going to have probably social security coming in you're going to have medicare that you're on medicaid for your health insurance because you won't have that income in your camp because it went directly to the church your taxability on your social security could go down that's right the premiums you pay in your medicare could be impacted and make them go lower there's some really good side benefits and it lets you check the box on your charitable desires to answer your question about what does the church need to do to my knowledge nothing because what happens is actually just get a check just like any other check all your church has to do is be willing to accept a check from a financial institution so that's pretty low maintenance there in order for them to be able to receive that you as the individual though do need to check some boxes because like i said that 1099-r could come out at the end of the year the qcd might not be highlighted so you need to make sure you're telling your tax preparer how this deal was structured so that um it doesn't happen it doesn't get screwed up i see you see you're throwing me off there with this whole moving forward and backwards that was a great question if you would like a tumblr you can write rebecca r-e-b-e-c-c-a at moneyguy.com all right one more question i'm gonna answer this one quickly and then you just fill in the blanks of what i miss all right this is from grayson uh on youtube financial question love it i love that you guys are letting us know that their financial questions how do you determine if a roth conversion strategy is worth it if so how much does it cost very simply there are two types of roth conversion strategies the kind that you don't pay any tax on and the kind that you do pay any tax on so i'd make the argument if you're someone who can do a roth conversion and not trigger any taxes like you're doing an after tax contribution to an ira and you're not taking the deduction you convert that and it's not taxable it's pretty standard if you have the ability to do that you should do that we walk through that in the financial order of operations the other is if i want to convert pre-tax assets to roth i just need to go look at what my tax rate is and do i think that it's going to be more advantageous to pay the tax now convert those dollars to roth let them grow tax-free or is it better let them grow tax deferred and pay tax when i pull them out you have to make an estimation on where your tax rate is now and where you anticipate it will be when you pull those dollars out whether that be in retirement or after age 72 due to rmds we like roth conversions in lower tax brackets that's where it generally makes a lot of sense but it's very customized very individualized where we see this there's two because i want to give real world practicality to what you just said is that the ones that that because that first scenario is kind of what they call a backdoor contribution that's um i don't like that terminology because it's really a roth conversion strategy if you have a if you don't have separate ira assets like sep iras simple iras you know rollover ras where you have to prorate the basis but you don't have any of that you can even if you make over the funding income limits for iras you can make a traditional non-deductible ira contribution exactly what beau said and then convert that into a roth but for the other when you are going to pay taxes where we really see it this happen all the time in a great planning opportunity if you retire somewhat early let's say you somebody who retires it used to say really early before 70 and a half now it's 72. your income like if you retire at 60 your income if you're in a high income situation and then you retire and now you're living off the portfolio you might find that your income tax situation has gone way down yep and if it has go pay attention exactly what beau shared where are the marginal next marginal step up rate is and maybe you should maximize that area now as you get into later years where you have social security income coming in or you're taking medicare once you're over 65 pay attention to where your income on those thresholds there's a lot of moving parts there that's why i think this is a great planning strategy if you have a financial advisor to kind of walk through some of those unintended consequences but but definitely something you ought to be checking the box on because why not we talked about tax location because how great is it if you get to legally manipulate your income taxes in retirement by having after tax meaning like a brokerage account having tax deferred like your traditional 401ks your rollover iras your 403bs and then tax-free which are your roth accounts if you have all three of those you can kind of move things around and use those assets in a very tax efficient way love it grayson great question if you'd like a tumbler you can write rebecca r-e-b-e-c-c-a at moneyguy.com guys as always thank you so much for letting us do this show with you uh quick question have you hit the like button if not do that now make sure you subscribe we love you we're going to keep smash that like button that way i thought i could only get that i thought i could only say it once in this show thank you thank you thank you thank you thank you we're going to be here for you now if you want to check out the websites go to aboundwealth.com go to moneyguide.com we have contact us forms there let us know what you think let us know how we can be a resource and we're going to keep dishing out the content for you and give us your email address go to moneyguy.com put your email address in so you can know about some 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Channel: The Money Guy Show

Views: 45,052

Keywords: money guy show, debt, budget, cash, real estate, insurance, how to make money, save, credit card, compound interest, buying house, buy stock, success, personal finance, 11 Things You Should NEVER Buy for Cheap!

Id: sfitYCCUfl8

Length: 62min 38sec (3758 seconds)

Published: Fri Aug 28 2020