Five New Steps to Recession-Proof Your Finances – Avoid Investing with Emotion

Episode 22: Audio automatically transcribed by Sonix

Episode 22: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.

Speaker2:
Welcome to All Things Financial, the show that helps upgrade your financial literacy. Trey Peterson and Yellow Coots are retirement planning specialists here to provide a unique and conservative approach to managing your money. Now, here are your hosts, Trey Peterson and Yellow Coots.

Speaker3:
All right. Welcome to All Things Financial Podcast. And we're excited. We've got a great show today. Uh, five new steps to recession proof your finances. And if you're in or nearing retirement, uh, yellow and I, we have a financial firm in Burnsville, Minnesota. We also have an office in Saint Louis Park, and we work with those that are in and nearing retirement. And our goal is to do holistic planning for those that maybe you are preparing for retirement or you just retired and you've spent years drawing down a paycheck. And now, for the first time, you're wondering, do I turn on Social Security? Do I pull life from my IRA, from my Roth, from my individual account or joint account? Where do we pull from and when? And what are the things that we need to be thinking about? So we've got a great episode today.

Speaker4:
And now for some financial wisdom, it's time for the quote of the week.

Speaker5:
The quote of the week. Actually, not just the day. It's from Suze Orman. And, uh, I don't know if you're a fan of Suze Orman. I know that she sometimes gets a mixed reviews. Uh, but the quote is a big part of. What's that?

Speaker3:
She has some good stuff. Yeah.

Speaker5:
She does. Um, a big part of financial freedom is having your heart and mind free from worry about what it about the what ifs of life.

Speaker3:
Yeah. So I think one of the things that we talk about often is even though we talk about taxes and investments and insurance products and Medicare and Social Security, at the end of the day, everybody wants financial peace. And really the goal of our podcast is to give people that financial peace. And so this is episode number 22. So I want to encourage anybody that's listening, whether it's on YouTube or Apple, wherever it's at, we we've got 22 episodes, if you count this, one of just great information to help people have financial peace and retirement. So check us out. All things financial. We've got a number of episodes. Uh, but today we're going to focus on five steps to recession proofing your finances. I'll start off with this. Before we dive in. You'll say, do you think that we have a recession coming?

Speaker5:
Yeah, for sure. We have a recession coming. It's not a matter of if we have one. It's it's when is it coming? And depending on how long you're retired, you might experience more than one recession. That's definitely possible. We were all familiar with the lost decade when we had two recessions in one decade. Um, you know, so that's that's definitely happening. Uh, is it is it happening right now or are we in the middle of one? Are we on the brink of one? Uh, I don't know, I don't know. That's something we can talk about.

Speaker3:
Yeah. All right. Uh, what are the biggest expense expenses for retirees today? Let's start off with number one. I'll hand this to you, and I'll jump on number two. Healthcare. Talk about healthcare a little bit, if you would.

Speaker5:
Yeah. So we're going to have a whole section on healthcare later on when we get to the biggest expenses for retirees. Um, we will talk a little bit about inflation, how it's measured CPI, you CPI w the two standard forms of inflation, inflation measurement and then experimental inflation or oftentimes what's referred to as CPI for the elderly, those that are over the age of 62 and how their spending habits are different from what maybe CPI, Wii U or Cpi-w might measure.

Speaker3:
Yeah, absolutely. Well, I'll cover this quick. I actually skipped this, but I'm going to go back for a moment. So I want to touch on what are the five steps. Number one, we're going to talk about having more money in your emergency savings. One of the things that we often talk to people about is considering an emergency fund. Beyond that, 3 to 6 months, you know, Dave Ramsey, if you're not familiar, he's probably the number one guru on paying off debt, living below your means. And he always talks about whatever your monthly expenses are. And we do. You know, let's say there's 6000 a month. You should have 3 to 6 months worth of expenses. However, given the unpredictability of the market, one of the things that we're encouraging people is whether it's checking savings, CDs, you know, an annuity, whatever those safe investments are, consider having more money in that bucket today than maybe you normally would, in case the recession is bigger than we anticipate. So talk about that. The second one is, you know, if you're getting close to retirement, consider increasing what you're putting into your 401 K. So we'll talk about potentially saving more money at the end of your retirement just to bolster those funds that you'll have throughout retirement. Number three is side hustles. Let's say you want to touch on side hustles just for a moment or hit the last. Yeah.

Speaker5:
Side hustles are actually quite common for those that are in retirement. I can't tell you how often we have somebody who's counting down the days they can't wait to retire. They have all these big plans of what they're going to do, and the last thing that's on their mind is going back to work. But then we meet with them 3 to 6 months later and they find a part time job. And sometimes it's not even a part time job. Sometimes they're consulting, or maybe they've started a business or they're doing something else to occupy their time. And the one thing that's important to note here is if you're someone who's retired early, and by early, I mean let's just say 62, because that's when most of us are eligible to turn on our Social Security benefits. If you file early, Social Security wants you to be retired. And the way that they enforce that is by giving us an earnings threshold. And this year, that earnings threshold is $22,320. That's how much you're allowed to earn. Nobody's living off of $22,320. So that's where it becomes challenging, where you either you have your Social Security benefit, but you can't make more than 22,000. In addition to that benefit, because for every $2 you have in earnings that exceed that threshold, $1 of Social Security has to be returned. So they're giving you a 50% penalty.

Speaker5:
They're really trying to tell you you should be retired if you file for that Social Security benefit. So there's two things to to consider here. Number one, make sure that if you've retired and that you're considering turning on that benefit, make sure you plan to stay retired. Don't just turn on that benefit and then go back to work. Uh, certainly you can do a withdrawal application. You have 12 months to do that from the time that you file. Most people don't do the withdrawal application. So it's better just to know, like, hey, um, you know, maybe try retirement by going part time, maybe give it a, you know, give it a couple of months before you turn on that Social Security benefit. If you have a, if you have other means from which to, to bridge that gap. Um, you know, so that's just an important thing. And Trey, what would you say to that? You know, there's a couple other things I can add, but just out of curiosity. Bridging the gap and whether or not you should file for that benefit immediately right after you've retired. Because I know that a lot of times you've given people advice and and really help them in that transition period of, yeah, working full time to transition potentially part time or other things that people have done.

Speaker3:
I yeah, I think what we find often is when it comes to Social Security, a lot of people think it's synonymous, meaning that with retirement. So you retire and you turn your Social Security on. And, well, for many of the families and the individuals that we work with, it may make sense to do that. A lot of people don't realize that there may be a strategy that gives you more tax free income in the future, or depending on how the market's doing, it may make sense to delay your Social Security that for the first 4 to 5 years is getting a guaranteed 6.25%, and then the last four years it's getting a guaranteed 8%. Part of that is, you know, when we look at what happens if you're married and one of you passes away early, how can you use your Social Security to make that nest egg last longer, especially if you know you're somebody that, uh, maybe you've had something happen towards the end of your career, or maybe you didn't save as much as you hoped you would. Your Social Security is one of the ways that you can stretch those retirement assets, by making sure that you're taking it at the right time, between the guaranteed growth, between the Cola or the cost of living increase on that, which over the last ten years has averaged 2.75. And then between creating more tax free income because a portion and maybe all of your Social Security is tax free depending on your other income sources. So we can get into that. But those are the things that I just tell people is before you turn it on, don't assume that you turn it on right away and that's the only option. Look at your options. That way, once you turn your Social Security on, you don't have to wonder if you made the right decision.

Speaker5:
Yeah. And then another misconception that I think people have is they think that $1. One additional dollar from their Social Security benefit is equivalent to a dollar from their IRA or their pre-tax accounts. And that's just not true, because, you know, at the very most $0.85 in the dollar from Social Security can be taxable. So 15% will always be tax free in the federal level. Um, so the biggest thing that I often tell people is making sure that you're coordinating your Social Security benefits with everything else. Uh, don't make a decision where you isolate Social Security and you simply, you know, a lot of times people want to know, like, hey, when should I file for my Social Security? And they don't really care to share any, any of the other details. I want to know, do you have a pension coming in? What are the projections in terms of your required minimum distributions? Do you have a spouse who's five years younger than you? Do you plan to continue working? Uh, what do you have coming in from interest or dividends or rental property income? All of those sources of income will determine when you should file for Social Security, or I should say it will help to determine and help you make a good, educated decision on filing for Social Security. Because everything needs to work together, especially when it comes to the sources of income that you have in retirement.

Speaker3:
Yeah, absolutely. Uh, all right. What's next?

Speaker5:
Paying off high interest debt. Um, gosh, this really needs to be more of a priority, I think, for a lot of people. Um, you know, we're not necessarily going to get into, you know, folks who end up going, uh, getting into debt in terms of credit card debt that ends up just spiraling out of control, that maybe they're struggling to make their payments or they make only the minimum payment. Uh, we've talked about that in previous podcasts, but just prioritizing some of the high interest debt. And, you know, even though there's like no strict definition of what high interest debt is, um, most people consider it anything that's like above whatever the average rate is for like a mortgage or maybe your student loans. And the reason for that is like, you know, a mortgage or a car payment. Um, typically those are a little bit lower, maybe not in today's market, but those, those types of debt, um, it's secured debt, right? It's secured by the house itself. If you don't pay that debt, if you don't pay your mortgage payment, uh, the mortgage company company will simply take your home. If you stop making your auto payment, well, then they can take the car. Those forms of debt that are secured. Um, and typically, you know, I would say that, you know, in today's environment that's probably anything over 8%. I would say anything over 8% is probably high interest debt. And usually we see higher interest debt on things like credit cards, personal loans, private student loans, uh, things that have higher interest rates. I would prioritize those things first, uh, making extra payments if you can, um, you know, credit card debt, credit card debt on average, I think it's like north of 20%, you know, making sure that we don't have credit cards that are forcing us to be in this endless spiral of debt that we can't climb out of. So I think that's a huge one, especially as you're getting closer to retirement, where you don't have that paycheck coming in the way that you used to for the last 30 or 40 years.

Speaker3:
And I think a lot of people that we meet with, they know that they have credit cards that are high, but they don't realize they're at 25 and 30%. I actually I just ran into somebody, uh, there must have been something that changed because I had thought that legally, the highest interest of credit card company could charge was 29.99%. But we recently had somebody that had a credit card that they were being charged 35% annually, uh, which is insane. So one of the things I just encourage people as we move on is, you know, take a look at your credit cards. One of the things a lot of people don't realize is that you can negotiate that interest often and say, hey, I was offered and look for something else that's low, and you can go back to your company and say, hey, they offered to drop it to, you know, 18 or 15% from 29%. Would you guys match that or do I need to move everything over? And a lot of times they will match it. So I just want to share that with some people that maybe you have credit card debt and you know that you need to get it knocked off. You want to get it out so that you can have some financial peace, that when you retire, your expenses are lower.

Speaker3:
So that can be helpful. Uh, number five is refinancing opportunities. Now, obviously, there's a lot of us that have lower interest rates because we got a loan at the right time, whether it's mortgage or or vehicle, but we still run into people that, you know, they missed that 3% interest rate. And, uh, you know, they don't they don't realize that there there are some opportunities depending on when they bought their home to lower rates, you know, so whether it's your own, whether it's, you know, your vehicle, uh, there are times where I know for my wife and I, our credit union, when we moved a portion of our banking to them, we lower rates when we bought a family SUV. So the other thing I would say is, you know, there are refinancing opportunities. Take a look to see if there's anything that you can get to a lower rate. Another one of those areas is potentially, you know, school loans. If you're carrying your kids or your own school loans, make sure that you're paying the lowest rate possible because there are third parties out there that may take it over at a lower rate.

Speaker5:
Yeah, a couple of things to add to that. You know, we we've had the Federal Open Market Committee, they had their meeting at the end of July and interest rates were kept exactly the same. They haven't changed. Right. So the rates were five and a quarter to 5.5%. But the next open market committee meeting, it's on September 17th to the 18th. And a lot of people have penciled in that date on their calendar because, uh, most people are expecting the fed to actually lower interest rates, uh, at least maybe, maybe once this year, maybe more than that. And it's expected to happen in September. In fact, based on what's been happening in the market, they thought maybe there'd be an emergency rate cut, uh, before that date. Uh, but the reason why that's important when it comes to refinancing is, you know, the average 30 year fixed mortgage rate has been below 7% since the first week of June, and it's actually been going down. Uh, it ended in the last, I'm sorry, the first week in August. It ended at 6.47%. So rates are coming down a little bit, but there's a lot of anticipation to see, hey, what is the fed going to do in the next open market Committee.

Speaker5:
Uh, to what extent are they going to go down? And I think it's actually reflected in a lot of the real estate trends that we're seeing today. So I looked up, uh, the most recent housing report in Minnesota. And I know that Minnesota doesn't reflect every market. Um, but looking at June over June, the latest data that we have, new listings are actually down by 9%. Pending sales are down by 13%, closed sales are down by 17%. And I think there's a little bit of a hesitancy between because people are wondering like, hey, do I lock myself in a 30 year mortgage today? Or if rates drop substantially in the third or fourth quarter this year, or in the first and second quarter of next year, maybe I can be in a better position in terms of my 30 year mortgage. So considering refinancing. A big part of that, though is timing it correctly. And there's so many unknowns because we really don't know what the fed is going to do ultimately. Obviously, a lot of people are holding out for for those rate drops, but we'll see what happens.

Speaker3:
And a good rule of thumb a lot of people don't know this is it typically does not make sense to refinance unless you can save at least 1%. And that's just based on all the different things that they run for the cost of refinancing, all those things. Yeah, the.

Speaker5:
Closing costs that you'd have to pay for sure. Yeah.

Speaker3:
So, you know, if it's a half a percent or 0.75, it's very likely that you know, someone's going to recommend it because they're getting a commission. But if you can't save at least 1%, you're likely better off staying with what you have until you can. So all right, five steps. We've kind of covered, you know, some of those high levels. Let's get into the weeds on some of these. So healthcare we touched on fitness and wellness. You know I think one of the things that people know about. But you know, would you rather I heard somebody say the other day, you know, quality food is so expensive. And I was like, sick, you know? Um, so, you know, one of the things that we would just encourage is maybe you've been somebody that's always been fit and healthy, or you've been somebody that's always prioritized those. Or maybe, you know, you're about to retire and you haven't found a hobby and you're like, man, uh, I haven't gotten that the way I wanted to, but but now's the time. So one of the things we'd encourage you is spend a little bit of that time, even pencil it into your calendar to improve your health and fitness. Maybe this is the season that that's your focus, because we found that financially it pays to be healthy.

Speaker5:
Yeah, I think as we go through some of the biggest, biggest expenses, um, I don't think most of these are going to surprise anyone because a lot of these we we, we pay for already. Um, but I think it's the, it's how they change a little bit in retirement. You know, the healthcare one specifically. Um, you know, out of all the spending categories in retirement, this one over time for almost everyone is is expected to be the biggest expense that they end up having. Um, you know, especially like if you're considering long term care needs and, um, you know, we had an entire episode on long term care. Um, let's see, I think it was I think it was episode 15. Uh, and I would definitely recommend giving it a listen. We did a deep dive on many of the most common concerns, the questions that people have, the options that are available. Uh, what if you're already retired? You're probably thinking about these things. But even if you're not close to retirement, you might have parents who have retired or or maybe they're getting close. I think it'd be worth giving it a listen, because there's a lot of things that most people are just simply unaware of and long term care related costs. I mean, that's that's a huge one. We've seen, like even huge estates that have been just decimated by the cost of long term care. And, you know, it's it's, you know, there's a lot of fears that are some of them are justified, some of them maybe not. You know, one of the biggest fears that we found, just based on surveys that have been conducted, is that, you know, if somebody needs long term care and if you're married, it's typically, you know, the the man of the house, right.

Speaker5:
The men generally need care sooner, right? Women typically outlive men. Women in general are healthier than men. So if you're the man in the relationship and you need care first, um, and you end up depleting a lot of the assets because a lot of your assets are going to be spent on your care, what happens to the surviving spouse? What if eventually your surviving your your your wife ends up surviving you? What if they need care? But there aren't you don't have the assets that you once had to pay for that care. And now the surviving spouse is forced to rely on Medicaid to pay for their long term care needs. Um, so there's all kinds of considerations. We really just just like I said, we do a deep dive on all these topics on episode 15, and I think it'd be worth a listen, especially if that's something that's a concern for you. Uh, it's something that we take very seriously. And I know that a lot of times, you know, when you meet with a financial advisor, they have their areas that they specialize in. We really want to make sure that we have we've made we've made it available where people can get the information that they need, but also that they can explore all the different available options that are out there, especially in the area of long term care.

Speaker3:
Yeah. That's great. Number three is taxes. You know, so even though it does seem like taxes are going to decline in retirement, I mean, I can't tell you how many times in a week I sit down with the couple and they'll say, I've been told for 30, 40 years I'm going to pay less taxes in retirement. And then they find out that based on drawing off the IRA or pulling from highly appreciated assets, that their tax bracket didn't change, or maybe it was reduced for a few years until they started taking those vacations, or they did that home remodel, or they helped their kid. Like last week I got a call from a family that we serve and and the wife basically said to me, she said, hey, I, I want to pull 30,000 to help our son buy a condo, you know, and it was from an IRA that they ended up pulling it, which they had to pay the taxes on that. So the other big thing is a lot of people are not aware that when they had aged 73 or 75, depending on their birth date, they're going to come in to required minimum distributions.

Speaker3:
And one of the things the LSA that we talk about so often is do you have a plan for your RMDs? A lot of people don't know that, even though they don't need to pull from the IRA, or maybe they don't need to pull significantly, the government is going to force distributions so they can get their piece. So, you know, one of the things that we look at is our government since 2020 has doubled our debt. We went from 17 trillion to over 35 trillion in debt. I just read a statistic online that said that 30% of every dollar that you and I pay into taxes goes towards funding the interest on our debt, not even the principal. So what does our government likely to do? You know, we're coming into an election season. Are we more likely to increase revenue by increasing taxes, or are we more likely to cut spending? And I know each party can make promises, but I think it's very likely that they increase taxes before they cut spending. Any thoughts on that? You'll say?

Speaker5:
Yeah, lots of thoughts on this. I'm always surprised at, um, I think people I've talked about this before, but it's worth mentioning, uh, people seem to think that the government is out there innovating. They're generating revenue from the goods and services they provide. They're out there kind of doing what we do. You know, a small business owner sometimes, you know, maybe we're in the business of selling goods and services sometimes, you know, just kind of like that. Right. And I need to remind people that the government doesn't really generate revenue in those ways. The way that the government generates revenue is typically through taxation, like income taxes. Income taxes represent about like individual income taxes. It represents about half of the revenue that the government generates Social Security and Medicare FICA taxes. That's about 30% of all the revenue that the government generates. And an interesting thing is, you know, this year, the government's expected to collect about $5 trillion in tax revenue. Right. Last year, they collected 4.4 trillion. And I mentioned this before when we talked about the debt and the deficit and how we how we get to those numbers. But, you know, prior to 2020, if you look at the government spending in 2020, it was about $5 trillion.

Speaker5:
Like that's how much we spent. And I'm talking like all federal spending was $5 trillion. In other words, this year, the revenue that they're going to bring in through taxation in various ways that would cover all of our spending if we just kept our spending at 5 trillion. But we haven't. Right. We haven't done that. Last year we spent over $6 trillion. Um, and one of the biggest ways, as you mentioned, you know, the things that we spend money on and the reason why we talk so much about Social Security, about 22% of our, of our entire budget goes towards Social Security. Right? Some of the obligations that we have as a country, that our social safety net that we've committed to 22% of all government spending is spent on Social Security. Uh, and what you mentioned on interest, about 14% is spent on interest, 13% on Medicare. So we have a lot of things that, you know, are that are the the allocations that we have in terms of the money that we bring in. You know, it's some of the stuff is already I'm sorry. Well, I was.

Speaker3:
Just going to interrupt you. Yeah. Go ahead. Musk said it was 30%, so I don't I don't know if you're cutting. Ellen.

Speaker5:
What did he say? What did he say? 30% on the interest.

Speaker3:
Goes towards our interest.

Speaker5:
Yeah, I mean, that might be right. I, you know, I'm just going off of memory here, so I, you know, I would probably trust Elon Musk over myself, but.

Speaker3:
I just want to challenge your source a little bit. Yeah. No. Go ahead and then I'll go to number four.

Speaker5:
Yeah. So it's it's just one of those things where, you know, we end up we talk about running our household budget in a way that, you know, if we were to do it the way the federal government does, all of us would have some challenges. Um, you know, so, like I said, in 2020, if you look at all the all the spending and I think for many years before 2020, it was right around $5 trillion. That's kind of what we spent. Um, you know, and some of the things that that some of the other items that generate government revenue, we mentioned payroll taxes, excise taxes, corporate income taxes, customs fees and services and estate and gift taxes. That's really how the government generates money. It's not through innovation. It's not through the products that they sell, the services that they that they have. Um, that's really not how they generate income. And I think that there's a misunderstanding of how that actually works. So I thought it was worth mentioning.

Speaker3:
Yeah, absolutely. Uh, well, one of the things I'll say I'll mention on that, I'll go to number four is one of the questions I get often. And a lot of people know, you know, we teach dozens of financial classes a year between Social Security and Medicare, minimizing Rising taxes, estate planning and really everything. Retirement planning. A to Z. But one of the questions I get is, hey, Trey, would it make sense to live off my Roth money for the first one, two, three, four, five years so that we're not, uh, they're not creating any taxable funds to keep, you know, our insurance low to maximize those credits. Uh, you know, does that make sense? And what's interesting is, well, a lot of people know that when you enter, when you add money to a Roth account, that you typically can't touch it for at least five years. And there are some rules around that. If you're over 55, um, as we just found out, was it 55 or 59 for what? I'm sorry, on the Roth account or the five year rule doesn't apply.

Speaker5:
The five year rule, as in where you can't have access to the earnings until they've been in there for five years without penalty.

Speaker3:
Yeah. Remember we said we just met with somebody that one of the things that we looked at is if that still applied over a certain age and we were surprised that it doesn't.

Speaker5:
Yeah, man. It's not not exactly ringing a bell, but, you know.

Speaker3:
Uh, let me just say this. So, you know, typically you can't touch it for five years. Uh, but a lot of people don't know that it doesn't benefit you to touch it for at least ten. If you're going to touch the Roth before a ten year time clock. It typically has not had the time to grow that it needs to grow. So one of the things I would just say to save some of our listeners is, you know, traditionally as we teach in the class and, you know, we have, uh, certified tax strategists that are that would share this with you. You know, you want to take from your pre-tax first and then your non-qualified and then your Roth last. So one of the things I would just encourage people is if you don't have a spend down plan, come meet with us. We've got great tax advisors I'd love to introduce you to that can give you a plan where you should pull your money from and in what order. Your first year, second year, third year of retirement all the way up until you have the required RMD. So if you have a question. On that, feel free to give us a call, email us. We'd love to help you. We've got a great team of tax strategists, um, that can help with that. So number four is home maintenance. Man it's so funny all the time. You always say I read these articles that talk about how, you know, for most Americans their home is their greatest investment. And I look at what I spend annually on maintenance and, uh, just everything to take care of my house. And I'm like, I don't know if this is actually an asset. It feels like a poor savings account. Yeah.

Speaker5:
It's a bottomless pit.

Speaker3:
Yeah. Bottomless pit. But, uh, you know, one of the things that we find is a lot of people have big costs on home maintenance. And so, you know, one of the things that that we consider is, uh, on your house, you know, looking at are you in a season that you don't need a four bedroom or five bedroom house because. Well, that's one of the biggest costs that a lot of people can cut. Uh, you know, one of the things you want to look at, obviously, is interest rates. But if you're looking to reduce your spending to make your retirement money last longer. One of the things that I'd consider are what are your biggest fixed expenses? You know, I think one of the mistakes that we see people make that isn't under a home maintenance, but it's related to budgeting, is we'll see people cut their expenses in all these areas, and then they'll go buy a new vehicle. And their car payment is 750 or 800 or $850 a month. You know, those are some things you're going to want to be thoughtful of coming into retirement because one of the keys is lowering expenses, not increasing them when you stop your paycheck. So, um, I just mentioned that. And anything on home maintenance before we move into utilities.

Speaker5:
A lot of people, they they think about downsizing, right? When the kids are out of the house and they're finally getting closer to retirement. And I think very few people do it. Well, I think that sometimes they're one of the biggest things is that they just overestimate how much their house is worth. And then they have so much sticker shock and what it takes to to actually purchase something, even though they're buying a much smaller home, but their standards are a little bit different. And there are certain things that they're that they're looking to pay for that are just more costly, whether it's association costs, whether they can take care of certain exterior maintenance items. Um, but one thing that actually is positive when it comes to downsizing. I think that's how much you end up paying on, like, items like utility costs. Right? It's going to be a much smaller home. You don't have to worry about your kids taking, you know, 30 minute showers or cooking at all hours of the day and night, right? Things like that that are no longer a concern, but also just like heating and cooling your home, it's a much smaller home generally. So, you know, there could be some savings there that I think are probably worthwhile. Um, but I think the biggest thing for me, like I look forward to downsizing just because I can't stand maintenance, upkeep, everything that home ownership brings with it. Um, gosh, it's it's not for the faint of heart.

Speaker3:
Yeah, absolutely. Uh, anything else on utilities or transportation? I know you touched on that.

Speaker5:
Yeah. Let's go to transportation.

Speaker3:
I think one of the things that we see a lot of people do successfully, and obviously this isn't for everybody, but we see a lot of couples, they'll go from two vehicles down to one car, and that's a good way to cut costs if you're just looking for areas that what's an easy way that may not impact us. And obviously this doesn't fit any everybody. You know, if one of you is still working part time or you have a hobby job and your other spouse is running around, you know, you wouldn't reduce how many vehicles you have. But what we've found is a lot of our clients, you know, they're they're doing things together. And if they downsize to one vehicle, they're not just downsizing to an SUV. They might downsize, you know, to an EV, something that reduces their cost by not taking any gasoline. I know we have one family that we serve, and she was talking about how she sold her SUV that was getting like 15 miles per gallon. And now she has a Toyota Prius and she was averaging, I want to say it was like 119 miles per gallon, uh, because I think it's like half electric, half gas.

Speaker3:
And so she was just talking about how she saves hundreds of dollars a month because their big thing is local travel. You know, so there there are things like that that can have a huge impact. And I think one of the big surprises when I meet with people is when I show them that if they were just to reduce their monthly expenses by $500 a month, $6,000 a year for the rest of their life, oftentimes it's the difference between having just enough money or having more than enough that it gives them that extra financial peace. And I think what we found is most people can cut 4 to $600 a month in expenses between taking those adult kids off their cell phone plan or between, you know, not, uh, not going out to eat one more time per week. And so there's so many different things that you can do to help make or stretch those dollars in retirement that after a couple of months of practice, really feels like you didn't lose anything.

Speaker5:
And I think that you do need a couple of months of practice, because initially when you talk about these things, almost everything seems like it's such a necessity and people are reluctant to do that. But like you said, after a couple of months, it feels pretty normal. Um, and there's there's probably a lot of areas that if you were just like to, to comb through your budget to look at it really objectively, to see, hey, what are the areas that I can cut back on? I think you'll find that there's there's a number of things you can do, even if it's, you know, ten, 15, 50 bucks in one area or maybe one category. Um, it all ends up adding up. And I really think that for most people, there's probably a significant amount that they can that they can cut back on without really compromising much of their lifestyle. Um, I think a lot of times, especially on transportation, sometimes, you know, people end up buying larger vehicles because they have 15 grandkids, right, or whatever that, you know, maybe not 15. Uh, but they, you know, they want to be able to, to, to be a good grandparent and be able to bring everybody, you know, to help out with, you know, soccer practice or whatever that is. Um, but I think for most people, you know, we do see a lot of people that downsize to one vehicle, if that's possible, or maybe have a more efficient vehicle, like a Prius or something like that. Um, but yeah, you know, I think that's a transportation is a great opportunity to consider some some savings for sure.

Speaker3:
Yeah. Number seven is travel. You know, travel costs and retirement vary based on obviously where you go, where you stay. Is it international? Is it in the US? Are you flying or are you driving? You know, we have a lot of families that we serve that they have a goal of visiting every state park, you know, so they're able to drive to those state parks, they camp out or they stay in their camper trailer. And, you know, they're doing incredible traveling and trips and creating amazing memories and bringing back great pictures for us. And they're doing it on a really low cost, and they're having a blast, you know? So one of the things I hear people say sometimes is, oh, you know what? It doesn't look like we have the money to do the travel that we want. And, you know, maybe they're not traveling internationally and staying at four star hotels, but travel is one of those things that you can do on a low budget. If you're creative, you know, you let's say you're you're, uh, you're big on budgeting and traveling low expenses. What's what's a few tips that you have for people that love travel, like you and your wife, Alicia, but want to keep their expenses down?

Speaker5:
Um, you know, I don't know if this applies to everybody, but, you know, a couple of years ago, and I think you did the same thing, I just went online and did a little bit of research to find out what which credit card is going to give me the best rewards for travel, specifically. Um, you know, there's all kinds of credit cards that give you points for a variety of different things, but we love to travel. Um, I don't like to take a lot of time off work, so I try to take advantage of my weekends. So a lot of times we'll travel maybe Friday to Monday. Um, and we do it on a budget. You know, I'm always making sure that we're utilizing our points. I'm very judicious when it comes to that. Um, you know, it's it's not it isn't as big of an expense as you would expect it to be. Uh, the biggest challenge for us is, you know, we have three kids, so finding a sitter while we're traveling, that's that's been a challenge for us.

Speaker3:
Is it one of the ways you save money is you. You book one plane ticket and Alicia sits on your lap.

Speaker5:
That is one of the ways.

Speaker6:
Yeah.

Speaker5:
You know, when it comes to.

Speaker3:
I bet if you could, you would.

Speaker5:
So every year we we, uh. It's funny that you say that because our son just turned two so he can no longer sit on our laps whenever we travel. But, you know, for those who who remember, if your kids are under the age of two, they actually get to fly for free on most domestic flights. Uh, but they do have to sit on your lap. Uh, but every year, my my family, we travel to New York. My family's from upstate New York, and we go there for Christmas and, uh, for for most of the trips. Um, I'd actually, I'd, I'd fly Alicia out there and I'd drive with the kids because it's, you know, it's a 16 hour drive, and, uh, not everybody likes to drive the way I like to drive. And by that, I mean I don't like to stop. You know? I want to minimize the travel. I want to get to my destination. I'm not interested in making a thing of it. Right. I don't need to see things along the way. I need to get there as efficiently and as quickly as possible. And not everybody's interested in that. So. So we get Alicia a flight and she meets us in New York, so.

Speaker3:
Well, all that means is you have greater satisfaction in watching your savings and investments grow than you do in getting on an airplane where I choose the airplane.

Speaker6:
Okay?

Speaker3:
That's what makes us great, is how different we are. Number eight is kids and grandkids. You know, anybody that has grandkids, you know, you know, uh, not only are kids expensive, but if you have if you're blessed enough where you've got local grandkids and you can just spend time with them, uh, as great as that is, it isn't cheap. You know, you're likely taking those grandkids to the zoo. And, you know, we have clients that they're lavish with their grandkids. They do an annual trip on a Disney cruise or take them to Disney World, and they'll pay for the whole family. So, you know, some, some, some really generous people. But the reason I say that is, is maybe you're in a spot to be generous and take your grandkids to Disney. Or maybe, you know, you're having to be thoughtful of your costs. And one of the things I would say is, you know what's great about kids? And a lot of people know this, but I think grandparents have to be reminded is a lot of our greatest memories are at the local park. And I would say a lot of them are maybe just as great as when we did go to Disney World those two times. So I would encourage you that if you're on a budget and you're head over heels in love with your grandkids, don't don't be discouraged that you can't take them to Disney World. I think some of the memories they'll have going to Mall of America on some rides, or doing something local or even, you know, if you're in the Burnsville area, the Burnsville Mall, they just opened a petting zoo inside of the Burnsville Mall that's super affordable, you know, so if you've got grandkids, don't feel bad that your friends are taking their kids to Disney World. Take your kids to the park, take your kids to the Burnsville mall and check out the petting zoo. There are some really great things. Water parks in our area that are inexpensive, that you're going to create amazing memories with the kids and kids that you love most. Other ideas that you might have USA.

Speaker5:
Those are some great ideas. We actually we've just we got a zoo membership this year, and I think we've already been 3 or 4 times. The kids absolutely love that. I don't think they're having any more fun at Disney than they are at the local zoo. You know, I mean, it's just it depends on the age too, right? The older your kids get, their needs will change. And and what they want from grandma and grandpa will change too. And I think that sometimes just spending time and being there for them and with them, I think that's just as valuable as as the activity itself, and maybe more so.

Speaker3:
Are you going to the zoo often because your kids love it, or because you got to get your money's worth?

Speaker6:
Well, I gotta.

Speaker5:
Get my money's.

Speaker6:
Worth.

Speaker5:
I think that's where the break even point is. Once you. Once you've been there at least three times.

Speaker6:
So.

Speaker5:
So now that we've been there at least 3 or 4 times, I don't think we'll be going back.

Speaker3:
We But you feel better now.

Speaker5:
I do feel so much better.

Speaker3:
Uh, one of the things we get a lot is, you know, we have people actually, this morning say we had a gal that came into our office and she was referred by a family that we served to come. Just take a look at how does your retirement plan work? And, um, what's interesting is I heard her talking to Jessica and Lisa in the, in the entrance of the office, and she said, I have to be honest. She said, I'm just so nervous to be here. I'm concerned that I don't have enough. She goes, it basically took everything I had to show up. And so the reason I say that is, you know, while we we joke and we laugh about expenses and, and investments and all of these things, we also understand that you've spent decades working hard to save so that someday you could retire. And a lot of these conversations are difficult. You know, you always say, one of the things that I have people say to me, you know, for sure monthly, if not close to weekly, is they're sharing information with us? You know that their kids don't know and their closest friends don't know. And so, you know, it's really sensitive for a lot of people to talk about what is life like without a paycheck? How long is my money going to last? And so one of the things I just want to say to those listening is, you know, if you haven't sat down with a retirement planning specialist, one of the things I think we do really well is we help give people financial peace.

Speaker3:
And even if there isn't good news, I think what's great is, you know, we can create a plan that people leave feeling better than they've ever left. I'll never forget one of our clients. And I won't share her last name, but her first name is Sherry is. She's a single woman that raised her kids on her own. She worked 60 plus hours a week for 40 plus years, and she would tell me and it made me feel good. So I'm not saying to pat me on the back, but she would say, Trey, I always get so anxious. I get so nervous about money. And every time I leave your office, I feel better than when I leave my counselor that I would meet with on a bi weekly basis that's helping me get through some difficult things. And so the reason I say that is one of the things I want people to know is we really handle these conversations with care. You know, one of the reasons why I'm passionate about money is I have a grandfather, my dad's dad, he was a hair barber, never made more than $30,000 in a year or $11 a haircut.

Speaker3:
And for him, you know, he he was so private, my grandma didn't even know what they had for retirement. I mean, he he kept everything kind of as close as he could because, honestly, he just lived with a lot of fear. And he ended up having a partnership with a great advisor that gave him what I would say was financial peace. That helped him walk through conversations that he didn't want to have. And that's part of what gave me a desire to do that for other people. So I just say that to say is what we talk about these things, we know how serious they are. We know how hard you've worked. And if you just want to have a good idea of how things look so that you can walk out of our office with the financial peace that so many people have. We'd love to put that together for you. So I just wanted to mention that you can reach us on the phone number that will be on the screen or our email addresses and just let us know, hey, I haven't done this before. I'm nervous, but I know I need to have the conversation and we can handle that with you. So I just wanted to mention that.

Speaker5:
Uh, so we we started the podcast on the topic of financial peace. Um, you know, and it's a good place to for us to end, too. I think that it's there. You can't say enough about it. Right? It's it's so important to have. And I think that a lot of the uncertainty comes from just simply not knowing where you stand, not having anything reviewed in a long time, maybe just kind of becoming a little complacent, even if you have a financial advisor, doesn't mean that you have financial peace. Uh, sometimes it's worth getting a second set of eyes, getting a second opinion on what you do have. Um, and we're not trying to break up relationships. Like, if you have an excellent financial advisor, a great CPA, somebody who's helping you in certain things, uh, sometimes all it is is a second opinion and we're more than happy to do that. As Trey mentioned, you can reach out to us. For those of you who are listening. Um, you know, you can email us at Trey or jealousy at G. Wealth.com if you do have questions, we'd be more than happy to answer those and have a conversation. That's really where it all begins having a conversation.

Speaker3:
Yeah, absolutely. Well, thank you for joining us today. I love the fact that, you know, we have so many people that are on with us joining us. Uh, we really look forward to meeting with you and we hope that you have a wonderful week. Good things ahead.

Speaker2:
Thanks for listening to all things Financial. You deserve to work with retirement planning specialists who care about your money, and take a unique approach to your financial and retirement needs. Visit all things financial.com and set an appointment today.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including world-class support, upload many different filetypes, share transcripts, enterprise-grade admin tools, and easily transcribe your Zoom meetings. Try Sonix for free today.