4 Ways to Pay for BIG Expenses

[@levihelms1912]

3:27 Cash 10:27 Liquidate Brokerage Assets 20:25 HELOCs 33:20 Asset backed loans

[@loganerb3952]

Doing Gods work! Thank you

[@nicholasnoriega1205]

Thank you I wish they had time stamps

[@jakinchapman9864]

Thank you for being a weekly source of positive media.

[@gasmice]

This is the first time I heard of the concept of using dollar cost averaging (DCA) to unwind an investment. The pros make sense for the same reason to use DCA to get into an investment - remove the emotion, temptation to time it. I believe it also gives you time to determine and plan for your tax liability (example, increasing payroll deductions or planning quarterly estimated tax payments).

[@theryster77]

Yeah, I believe Humphrey Yang or Bob Sharp talked about it in a video I watched not too long ago, cool stuff

[@TR-lh9yz]

I am so excited that Bo is so excited!

[@joeltrain]

If Bo ain’t excited, I ain’t watching

[@thepreston1021]

FINALLY! I've been asking about Asset Backed Loans for years. Would love to see a more in-depth video on the topic

[@jdp486]

Thank you for diving deep! I love personal finance, but because debt scares me, I haven't researched these. SO helpful - I had never considered an asset-back loan for downsizing, and I didn't know the differences between the 3 types of home improvement loans.

[@davisamills597]

Your content is soooo good! Long time listener. I'm surprised you're not at 1M subscribers. Looking forward to more content!

[@TheOtherUser]

You guys are really amazing. So much knowledge that you share for free. Thanks Bo, Brian and the money guy team! We really appreciate you guys.

[@TV_Art4k]

Could you do a show on explaining what all goes into an average emergency fund. Take an average 75k household and go through an example with the highest deductible. Give a dollar amount that Manny would need off of a generic health insurance plan! What would he need to save for 6 months 9 months. 2-3 different insurance plans including HSA or PPO.

[@chemquests]

It’s simpler to just know your burn rate.

[@lonz0_0]

Lol just look at your budget and how much you spend per month on necessities...now multiply by 3 or 6. Done

[@heidiortiz9352]

Don’t over think… look how much you spend per month times 6. If you don’t know, get set up on Rocket Money and they make you a nice graph

[@MrsBrookaltimore]

Great show! I've been watching/following for years and haven't seen this topic covered in such detail.

[@victorbaird8220]

I am SO EXCITED for today’s episode 😊

[@walkertr5685]

one question i had that wasn’t exactly addressed in the video: if you’re in the position to make a big purchase outright but really want to optimize financial decisions, does it make sense to look for 0% financing options to take advantage of high yield savings percentages or market returns?

[@xaldath4265]

I personally think yes, on two conditions. 1. Ensure you keep the cash(equivalent) to pay it off in a pinch/before any intro rate drops off. 2. Don't make it a habit to live through debt, even at 0%.

[@jordanstrobel3464]

We’re not misers, we’re strategizers

[@josecruz2924]

You guys should make a cheat sheet that one can reference for making smart purchases.

[@casondrastinson8525]

A decision tree!

[@andreysvidenko9865]

Great content, as usual. Much appreciated.

[@Jack-fw4mw]

My HELOC lets me pull out a loan at a fixed rate (or an adjustable rate, if I prefer). Not sure how common this is, but I use a credit union.

[@1aadam]

When do any of these make sense for an investment (a personal business, real estate/segmentation, buying a business, etc.)????

[@JohnJohn-nt9mf]

Save cash, pay using credit cards (to get credit card points or cash back), and then pay the credit card in full. Don't carry balance.

[@DallinBunnell]

Awesome stuff!

[@colegreene2153]

I recently decreased retirement contributions to save up for a down payment faster.

[@jillpruett4772]

I consider a down payment or other home investment to be part of retirement funding. The goal is a paid for house before retirement.

[@Vazcov1609]

I'm a high income proffesional and I save 20% those years that I'm saving for soemething (house, var, etc.). Other years I'm saving and investing 50% of my income.

[@travissteadman5435]

​@@jillpruett4772Though I understand your premise, Idon't believe that is in line with the FOO. In particular after you have a house and a mortgage, prepaying the mortgage is a step 8 activity, prepaying future expenses. Steps 5 and 6 are to max out your tax advantaged retirement accounts and to save 25% of your income towards retirement (I always mix up which is which). If you are prepaying your mortgage, you are prepaying future expenses. The FOO would suggest that you ought to invest in your tax advantaged retirement accounts up to the 25% mark before you begin paying down that mortgage more rapidly.

[@brandonhousel266]

Not sure if any of these comments/questions get answered but...how do you factor in Child Support? I pay Child Support on a weekly basis, just wondering if I should be reducing any savings or retirement contributions to make up for my weekly payments? Also, when it comes to Step 1 and Step 4 of the FOO, do you add enough to cover deductibles AND living expenses or does Step 4 cover both? If my deductible is $6K and living expenses are $10K/3mos., do I save $16K or is the $10K enough for both?

[@saraashkir5793]

Child support is just factored in as part of the monthly need costs, same as rent or food. So yes, if paying it requires lowering your investment rate you have to do that. Also only the first step looks at deductible total. Step 4 is just 3-6 months of necessary spending. So you’d just have to save $10K. The emergency fund covers anything like car repairs or other costs, but the biggest emergency tends to be losing a job, which is why that is the basis used to save for. It’s the biggest common emergency

[@brandonhousel266]

@@saraashkir5793 thank you for your reply! So after saving the $10K total in Step 4, I should be able to move to Step 5, correct? The $10K would cover highest deductible OR 3 mos. expenses.

[@KenDakan]

Pay down debt like a crazy man. preserve the castle.

[@dianaP14]

I’d be retiring or working less in 5 years, and curious to know how best people split their pay, how much of it goes into savings, spendings or investments, I earn around $250k per year but nothing to show for it yet.

[@J.woltz48]

money advice is subjective, what works for you may not work for me. I would suggest getting rid of any unnecessary purchases, especially things that cost you monthly, or better still consider financial advisory

[@everceen]

Agreed, I'm quite lucky exposed to finance at early age, started full time job at 19, purchased first home 28. Going forward, got laid off 36 amid covid-outbreak and at once consulted an advisor. As of today, I'm barely 10% short of $1m after 100s of thousands invested.

[@everceen]

Karen Lynne Chess is my FA. Just google the name and you’d find necessary deets to work with and set up an appointment. Honestly, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.

[@katieiri]

thanks for putting this out, curiously googled Karen Lynne Chess and at once spotted her consulting page, she seems highly professional from her resumé

[@christinab9133]

❤❤❤

[@carterwgtx]

Yep, cash in an emergency fund is key - it’s easy to put it in a CD or seemingly safe investment…until your AC breaks or tree punches a home in your roof and you have to cut a check today to get it fixed. Sometimes even that business day for a transaction or money move can be too long for some emergencies. I’ve always said your emergency fund should not be viewed as a source of return - its first, second, and third job is to be easily accessible cash.

[@vaderwashere365]

Is there any plan for the Money Guys to have a separate channel/videos for more advanced financial techniques? As people graduate to Step 6 or 7 or 8 on the FOO, it appears these videos provide nothing for us. I like listening, but was in Step 8 when I started, and probably always will be - as I don't plan on completing step 9 to pay off my 3.5%-4% mortgages - I would just buy more investment property instead. This video is close, as it is almost touching on "Prepaid Future Expenses", but it isn't quite there. Some of us can pay for our cars in cash, remodel in cash, or kids' weddings in cash if we want to (but will likely use a credit card to make sure to earn the maximum points/rewards). When do we get to learn about putting real estate in irrevocable trusts? Or trust brokerages vs custodial brokerages? How about hedging? Or they talk about different portfolio mixes when you get to certain stages of financial freedom... when do we get to see example portfolios for different lifestyles/goals? I am sure some of this they will only divulge if you pay them as financial advisors, but it seems interesting that after step 6... you outgrow this channel.

[@hectoralmaraz7052]

I get what you are saying but it’s free content. You can always contact them and hire them t advise you on all the subjects you mentioned. There is plenty of other videos of those subjects, if you are just willing to play.

[@vaderwashere365]

@@hectoralmaraz7052 Yup, I stated as such. It is just interesting that financial advice for those struggling or in the early steps is plentiful and free, but very little for anyone who is succeeding. Again, not hurting at all financially, just interesting that no one has targeted people in steps 6-9 for free - like many have for people in steps 1-4. It just seems like a demographic with a lot of disposable income that no one seems to want to tap into.

[@greenlantern1986]

Bo's numbers when it relates to people always make me laugh. At least he didn't say hundreds of thousands of people will watch this episode...like he has in the past. 29:12 He literally said hundreds of thousands of people are telling us to use HELOCs to buy real estate. Is it even ones of a thousand people saying that? Come on Bo!

[@M_SC]

Take it as color

[@Zorlig]

The key is portfolio loans at the effective federal funds rate plus 1% and limiting your borrowing to 30% or at least 40% of the account. Several points cheaper than a HELOC. You can let the dividends go back to apply to the loan.

[@Bacciagalupe]

: )

[@pkris2237]

What do you mean no credit card!? You can pay car down payment with it that you would have paid with cash otherwise but you get nothing for cash and with credit card sign up bonus you can get a free flight or 3-5 free hotel stays

[@mlsasd6494]

credit cards are fine, credit card debt is not. If you pay it off same month (or with 0%) good, but the moment you pay interest you probably made a bad deal

[@BostonCycling_]

Surprised they didn’t mention opening a 0% interest card then arbitraging that 18 months of cash earning YOU interest then pay it off before the promotion period ends

[@jmorris023]

Agree with all but there is one point you leave out. Regular people just spend more on their credit card, and it’s usually stuff they didn’t need or really want. We’re all guilty of it. So there is an added expense there.

[@mlsasd6494]

@@BostonCycling_ i think this is one of the points, if you are diciplined enough to execute this you are educated enough to not need someone else to tell you. While their audience in general is more educated than the average they probably dont want to recommend such an inherently dangerous strategy. You see it time and time again at places like Caleb Hammer that people think they can manage such a plan and then fail to pay it off because "life happened", so its probably not worth it for the 4ish% pa arbitrage for them.

[@anniealexander9616]

Home equity lines should be to purchase rental homes. Home improvements should be paid in cash. Emergency home improvements like heat and air units can be put on a 0% roof.

[@anniealexander9616]

Home equity should cover the entire purchase of the rental home. Not the down payment only. The key is to purchase a nicer home. For instance, I only have 4 bedrooms and 3 bathrooms. The rental I'm watching has 5 bedrooms 4 bathrooms....both have great curb appeal but the one I'm watching has a balcony.

[@BigJohnson666]

very cool

[@burkles4456]

Maybe I’m misunderstanding but you are saying to take a loan against your home to outright buy another house? Even a nicer house at that?

[@anniealexander9616]

@@burkles4456 Yes. That's how I got my primary. I was in a 3br 2 bath and brought the home I live in now on a HELOC.

[@anniealexander9616]

@@burkles4456 But I'll only buy if they reduce the price. I watched my primary go through 2 price reductions before I made an offer.

[@jdp486]

@@anniealexander9616 So if you cannot pay the HELOC you lose your primary residence? Risky