My mortgage has over 5 percent interest rate since I bought my house in July 2022. I never had any debt before, paid my car in cash. So I am trying to pay extra every month on my mortgage to pay it off in 10 years. It’s very ambitious since I have only one salary. I am trying and I must push myself since I am 43 now. Thanks for this video!
You may want to consider paying as little as possible until you can refinance at a lower interest rate. You may be overpaying if you try to pay your mortgage early. But if debt free home ownership is a goal for you at your age you may not get that opportunity again if you don't immediately try and pay your mortgage off immediately. Have you consulted a financial advisor?
The thing with personal finance is just that. Personal. I received an inheritance and paid off my mortgage. I wish I didn’t do that I wish I had invested a lot of the cash and then made an extra mortgage payment or paid a little more with each payment. I spent a long time being cash poor and asset rich. I didn’t like that. I like have lots of cash on hand. But again it’s personal. And I was ok with debt. I only had a 15 year mortgage but I Dave Ramsayed it and paid off the mortgage. Then I lost my job and was not able to accrue wealth so again I was asset rich and cash poor. I like a 15 year mortgage with an extra payment or extra money each month. No other debts and to slowly grow and invest your cash
I absolutely love the first point. It is usually quietly assumed that you do have some kind of income but it indeed is a crucial step to reach independence.
The last point… It made me realize that I don’t know what is my ideal lifestyle. And that mostly because all I care about right now is to survive and pay off my debts. I tend to spend all extra money on stuff I don’t need nor really want, just to give myself a feeling of actually living. But wow, I actually don’t. I’m just surviving day by day. Thank you, I really need to define my ideal lifestyle and pursue real happiness instead of short time “pleasures”. You gave me a tough homework. 😂
No fluff, realistic and straight forward advice that normal Americans can follow and execute immediately! Best videos I’ve seen for a long time given the amount of smoke out there.
I don't subscribe to channels often, but you sir have definitely earned it. Found your channel a few days ago when researching the Roth IRA backdoor. I will finally be going through that process this week and giving some additional thought to how I want to proceed in my life financially.
I appreciate Tae's step by step approach, straight forward of financial planning... since no one plans to fail, just fail to plan. See y'all at the top of financial freedom.
Not gonna lie: My wife and I have been quite good with money and, although we didn't know it, were following something close to the Ramsey baby steps for over 20 years. However, we never did a budget until 6 months ago. I wanted to train our kids on money habits and didn't want to be a hippocrite, so I started. Now, it is actually something I look forward to each month. It's good to see slow, incremental progress towards meeting our short, medium and long-term goals.
Did you realize that a budget is not really important for having good money habits? Because it's not. It seems like if it wasn't necessary for you, it'd be silly to push it onto your kids. I do a monthly review, but I've been on the anti-budget for my entire adult life.
Love the video Tae! I think for me step 12 is step 1 and done continuously and iteratively throughout life, because it morphs and changes. Waiting until you're already through steps 1 to 11 in the video I've seen has set up people to not know what they want to do and they can become less happy and/or bored. If you know what you're doing all this for throughout the journey it serves as both a motivator and a gut check on the rest of your strategy.
Completely agree. I imagine what the ideal day looks like for me and try to live it each day, helps me better understand what is important to me. Also reminds me to enjoy the process/journey and minimize burnout.
What many people also overlook about tax advantaged accounts is that even if you retire early AND withdraw from these, the penalty is still lower (10%) than the double hit on a brokerage account (generally 15-20% capital gains). Also, you can always start taking principal from your ROTH IRA tax free. So, these accounts are still a great option to "overfund" even if you want to retire before 59 1/2. Crazy to avoid these and only use a double taxed brokerage account by itself.
I like budgeting lol It's like a giant puzzle in that you want to make everything work together. When you want to increase savings, you need to cut back on something.
I was wondering if you would do a video on what banks would be good for storing savings. Maybe compare pros and cons on some of the bank offering, like savings interests, CDs, things like that. Love all your videos!
Depends on what your goal is. Savings rates change constantly, so you have to google to see the current offerings. Online banks such as Ally can have good savings rate, but the downside is no physical location. Savings Accounts aren't really for growing money, more for holding your emergency fund. To grow your money, you have to look towards real estate or index funds.
Thank you super much for such an informative video! Subscribed, woo! I am not sure if you remember me or not. My name is 빛나, and I used to attend English service in 은혜교회 back in Korea. You might be able to know if I explain myself as a young chubby girl who couldn't speak English at all hahaha Happy new year! :)
Tae, i see you mentioned those index funds in your taxable brokerage accs, but what about your tax advantage accounts ? do you invest in, lets say S&P500 in your roth ira or 401k ?
I need your advice. My employer offers a 401k but no match. Would you recommend a roth ira instead? Also, what should I do with 2 401ks from previous employers?
You've covered budgeting and cash, but could you say something about cash flow? I look at my cash flow in a money management app, but other than checking that ingoing and outgoing is about the same (when I am having an average month) I am not sure what else to do with this information. For example, I have a friend with a high income and net worth who sold some inherited stocks at a loss, presumably for a cash flow issue. I know I could explain to them why stocks are an asset to hold on to for the long term, but I'm not sure how to address cash flow. Could you provide a video with more depth on cash flow analysis?
Step #1: Build career capital Step #2: Master budgeting Step #3: Hold cash (3-6 months of expenses) Step #4: Pay off high interest debt (snowball or avalanche methods) Step #5: Master your expenses Step #6: Hold adequate levels of insurance Step #7: Increase you savings rate (10-15-20% to as much as you can) Step #8: Max out all of your tax-advantaged accounts Step #9: Build up your taxable accounts Step# 10: Diversify your investments Step # 11: Start buying back time 25x your annual expenses Step #12: Identify your ideal lifestyle Thanks, CryptoManDan.
Why do you keep a year of cash on hand? Wouldn't it be better to keep 11 months of that invested? (maybe BND), especially with high inflation. You would need some cash on hand cause it takes time to pull money out quickly. So it must be based on fear of touching your investment accounts and developing bad habits. But you could establish a wall there by creating a separate account. Our am I missing something?
So there are times when liquidating your investments can realize potentially very high loss. One of those times is even now I believe. It is better to have some liquid cash handy for emergencies. They don't happen everyday but they happen too often to try to fix them by a regular income. One year of cash can be an overkill though, mostly just 3-6 months are recommended. But it is not wrong. It just depends on your tolerance of risk.
Question, can I withdraw money from my Roth IRA without questions and put it into an HSA account? Or do I have to have that Roth IRA establish for five years?
I believe in absolutely starting a taxable account before maxing a retirement account because there is no way you wont need the extra money early. Maxing 401k + Roth is 40% of my income but Im supposed to be without an extra bucket if I reach my retirement early? I think 20% of invested $ should be in a brokerage for use before 60.
I would think that if you have the income to do so, multiple steps can be completed simultaneously. For example my current contributions to tax sheltered retirement lowers my taxable income which means I can withold less for taxes since the extra witholdings that generate refunds don't earn interest. I can put those tax savings into my emergency fund which can generste interest when I am not dipping into it.
So in this video at 4:15 you say you and your wife worked to pay of $105k of student loans in 3.5 years. But in your other video "Optimal order for investing your money" you state that you and your wife both had your loans paid for, yours paid by the army and her nursing degree paid by her future employer. Did you guys both get 2 degrees?
I work a remote job from the states while living off of 1200 a month in Colombia, living well. I keep a 66-33 stock to cash ratio, my stocks are a 50-50 split between qqq and tqqq (nasdaq etf and it's leveraged counterpart), I suspect in about 3-4 years it's going to be a great time to buy real estate again at which point I'll put half of my assets into this investment. I'm going balls to the wall to the top baby
Money that can be accessed without having to sell (liquidate) stocks. I go for high yield savings account (like vio), around 6 months of expenses. If the market is down 20-40 percent and you need cash, and are forced to liquidate shares at a loss, it will hurt more. High yield savings accounts (or even certificates of deposit, CDs) are better options for keeping cash "on hand" (accessible with little to no penalties)
Great points, living most of them. The one snag is the wrong choice of career, Accounting, which pays horrible; there are few opportunities. Another snag is my race and gender, which precludes career opportunities, in general. As a white, male working class born on the wrong side of the tracks, I had to enter the military to afford higher education. My SAT score when I took it in High School was a 1570, but despite this, doors were closed, and there were no colleges that would accept my grades and score. I managed to work up in the Army enlisting at 19, earning a commission, my third snag. Military experience especially over the past 18 mos is considered a negative on the resume, now with companies and businesses. Doors are closed to working class people in general in the United States, despite any skills or talents. The Army did give me fluency in Spanish, French, German, Polish and Levantine Arabic as an Intel officer. But along with a strong math - science - analysis background, this is a useless talent, not marketable. I later achieved a masters in accounting graduating at the top of my class at usc. I graduated without debt using the VA bennies to attend what I thought was supposed to be an excellent school. It was a wrong choice in higher education. Another costly mistake made. When I took the ca cpa exam, my rank was 26. But, despite these achievements, no job prospects. I now push wheelchairs for minimum wage at lax. Companies are looking for woke, not skilled, these days. i would have been better off getting a masters in gender studies, or something along those lines. These jobs pay six figures starting. STEM majors, don't get into them. This is an economy which no longer needs STEM grads. Despite these setbacks, and using my stem background , i have used financial models to build a growing nestegg. It can be done without step 1, I find, just more challenging.
Question: How old are you? I’m trying to put your 1570 SAT score in context (I.e., was that over 2 sections or 3 sections) as I’m struggling to understand why you felt no colleges would take you?
I’m former college counselor-with those SAT scores (and assuming average grades), plenty of colleges would want someone with that profile. Now, whether there was a good mix of schools (I.e., reach, target and safety schools) I don’t know.
@@Hidden2u I did divide my college choices then into target, reach, and safety schools. My safety were the state schools. However, recall in the early to mid 80s, the state schools were impacted. Once you reached the minimum acceptance, it was up to a committee to determine who may or may not be admitted. Slots were few and valuable. Most times other factors such as diversity, etc. led to the final determination. I made the cut - grades, SAT - , but was unlucky in admissions. So, like other friends of mine in the same boat, working class, had academic ability, great grades, we fell through the cracks. Recall the USC scandal where socially influential people got their sons and daughters admitted through bribery. If you are working class, all you can compete on is merit. The more influential options are not open. I did not have the economic resources to bribe my way into my choice schools. As I wanted a chance at upward mobility, and unable to get admitted into college, I decided to join the military. The military then, as opposed to now, was merit based. My ASVAB scores were very high. I was able to rise and qualify for OCS after two years. I made the cut.
Tae is amazing. So straightforward, very clear, very helpful and everything people need to hear
My mortgage has over 5 percent interest rate since I bought my house in July 2022. I never had any debt before, paid my car in cash. So I am trying to pay extra every month on my mortgage to pay it off in 10 years. It’s very ambitious since I have only one salary. I am trying and I must push myself since I am 43 now. Thanks for this video!
You may want to consider paying as little as possible until you can refinance at a lower interest rate. You may be overpaying if you try to pay your mortgage early. But if debt free home ownership is a goal for you at your age you may not get that opportunity again if you don't immediately try and pay your mortgage off immediately.
Have you consulted a financial advisor?
The thing with personal finance is just that. Personal. I received an inheritance and paid off my mortgage. I wish I didn’t do that I wish I had invested a lot of the cash and then made an extra mortgage payment or paid a little more with each payment. I spent a long time being cash poor and asset rich. I didn’t like that. I like have lots of cash on hand. But again it’s personal. And I was ok with debt. I only had a 15 year mortgage but I Dave Ramsayed it and paid off the mortgage. Then I lost my job and was not able to accrue wealth so again I was asset rich and cash poor. I like a 15 year mortgage with an extra payment or extra money each month. No other debts and to slowly grow and invest your cash
I absolutely love the first point. It is usually quietly assumed that you do have some kind of income but it indeed is a crucial step to reach independence.
The last point… It made me realize that I don’t know what is my ideal lifestyle. And that mostly because all I care about right now is to survive and pay off my debts.
I tend to spend all extra money on stuff I don’t need nor really want, just to give myself a feeling of actually living. But wow, I actually don’t. I’m just surviving day by day.
Thank you, I really need to define my ideal lifestyle and pursue real happiness instead of short time “pleasures”. You gave me a tough homework. 😂
No fluff, realistic and straight forward advice that normal Americans can follow and execute immediately! Best videos I’ve seen for a long time given the amount of smoke out there.
“There is a difference between being poor and being broke. Broke is temporary. Poor is eternal.” - Robert Kiyosaki
He's a scam artist fyi
I don't subscribe to channels often, but you sir have definitely earned it. Found your channel a few days ago when researching the Roth IRA backdoor. I will finally be going through that process this week and giving some additional thought to how I want to proceed in my life financially.
I appreciate Tae's step by step approach, straight forward of financial planning... since no one plans to fail, just fail to plan. See y'all at the top of financial freedom.
5:45 I'm starting a career as a health and life insurance agent, and I'm so excited! ❤.
Not gonna lie: My wife and I have been quite good with money and, although we didn't know it, were following something close to the Ramsey baby steps for over 20 years. However, we never did a budget until 6 months ago. I wanted to train our kids on money habits and didn't want to be a hippocrite, so I started. Now, it is actually something I look forward to each month. It's good to see slow, incremental progress towards meeting our short, medium and long-term goals.
Did you realize that a budget is not really important for having good money habits? Because it's not. It seems like if it wasn't necessary for you, it'd be silly to push it onto your kids.
I do a monthly review, but I've been on the anti-budget for my entire adult life.
Nuggets of wisdom all the way through. Great video. Thanks a lot!!
Love the video Tae! I think for me step 12 is step 1 and done continuously and iteratively throughout life, because it morphs and changes. Waiting until you're already through steps 1 to 11 in the video I've seen has set up people to not know what they want to do and they can become less happy and/or bored.
If you know what you're doing all this for throughout the journey it serves as both a motivator and a gut check on the rest of your strategy.
Completely agree. I imagine what the ideal day looks like for me and try to live it each day, helps me better understand what is important to me. Also reminds me to enjoy the process/journey and minimize burnout.
There is valuable knowledge in almost every single line you say , it doesn’t get any better . Thanks
What many people also overlook about tax advantaged accounts is that even if you retire early AND withdraw from these, the penalty is still lower (10%) than the double hit on a brokerage account (generally 15-20% capital gains). Also, you can always start taking principal from your ROTH IRA tax free. So, these accounts are still a great option to "overfund" even if you want to retire before 59 1/2. Crazy to avoid these and only use a double taxed brokerage account by itself.
Are you a 'smartvestor?' You give almost the exact advice Ramsey does. Advice I agree with!
Appreciate you addressing the Real estate asset class and the pitfalls to it. It is great for another asset class, but far from 100% passive
No BS no fluff, love these videos Thanks Tae
Great overview Tae! Learn a lot from you! Love seeing your channel explode!!!
I like budgeting lol
It's like a giant puzzle in that you want to make everything work together. When you want to increase savings, you need to cut back on something.
Thank you ❤ warm greetings from Chicago
I was wondering if you would do a video on what banks would be good for storing savings. Maybe compare pros and cons on some of the bank offering, like savings interests, CDs, things like that. Love all your videos!
Depends on what your goal is. Savings rates change constantly, so you have to google to see the current offerings. Online banks such as Ally can have good savings rate, but the downside is no physical location.
Savings Accounts aren't really for growing money, more for holding your emergency fund. To grow your money, you have to look towards real estate or index funds.
Your videos are fantastic, I get wiser with each video. Thank you!
I also have long term disability insurance. The premium isn’t so bad if you have a longer elimination period
So cool to hear you cited on "Stacking Benjamins" today.
Comprehensive information, well said.
LOL the stock footage he used for "soul-sucking job" at 1:24 made me spit out my coffee laughing.
I've read that MMM article so many times it's not funny. Love this video and love your channel!! Keep it up!
Love this stuff. Thanks man!
Just discovered your channel! It’s amazing 👍
Thank you super much for such an informative video! Subscribed, woo! I am not sure if you remember me or not. My name is 빛나, and I used to attend English service in 은혜교회 back in Korea. You might be able to know if I explain myself as a young chubby girl who couldn't speak English at all hahaha Happy new year! :)
Is there a video where you delve more into the calculation of the savings rate and retirement fund?
No umbrella insurance policy? It's pretty cheap and removes some uncertainty once you accumulate wealth.
Tae, i see you mentioned those index funds in your taxable brokerage accs, but what about your tax advantage accounts ? do you invest in, lets say S&P500 in your roth ira or 401k ?
Here is the deal. Don’t work hard. Work smart.
Packing my lunch is the biggest and most annoying thing. And I am definitely downsizing the house the next chance I get.
Hey tae! What do you think about ltd insurance? Love the channel and hope to meet you at econome!
I love budgeting!!! 😅
this is a great video, thank you
I need your advice. My employer offers a 401k but no match. Would you recommend a roth ira instead? Also, what should I do with 2 401ks from previous employers?
You've covered budgeting and cash, but could you say something about cash flow? I look at my cash flow in a money management app, but other than checking that ingoing and outgoing is about the same (when I am having an average month) I am not sure what else to do with this information. For example, I have a friend with a high income and net worth who sold some inherited stocks at a loss, presumably for a cash flow issue. I know I could explain to them why stocks are an asset to hold on to for the long term, but I'm not sure how to address cash flow. Could you provide a video with more depth on cash flow analysis?
Question, if my job doesn’t offers a 401k with no match, should I instead open a Roth IRA ?
LOVE IT
I LOVE AND RESPECT how you shout your wife out. You don't let her effort go unnoticed.
Hsa and 401k maxxeed out. If you have income over 150k is Roth ira worth it ?
Great info 👍
I don't agree with maxing out your IRA, 401K, and HSA before investing in a brokerage account. Why not invest allocate a certain percentage on each?
Totally agree! If you plan to retire before 59.5 you need a brokerage account to bridge the gap before you can do Ira withdraws.
Yeah I would think the order/priority should be 1. 401k up to the matching limit, 2. Roth IRA 3. HSA, 4 brokerage 5. 401k to the contribution limits
Because paying taxes is immoral so you should do it as little as possible.
Step #1: Build career capital
Step #2: Master budgeting
Step #3: Hold cash (3-6 months of expenses)
Step #4: Pay off high interest debt (snowball or avalanche methods)
Step #5: Master your expenses
Step #6: Hold adequate levels of insurance
Step #7: Increase you savings rate (10-15-20% to as much as you can)
Step #8: Max out all of your tax-advantaged accounts
Step #9: Build up your taxable accounts
Step# 10: Diversify your investments
Step # 11: Start buying back time 25x your annual expenses
Step #12: Identify your ideal lifestyle
Thanks, CryptoManDan.
Why do you keep a year of cash on hand?
Wouldn't it be better to keep 11 months of that invested? (maybe BND), especially with high inflation.
You would need some cash on hand cause it takes time to pull money out quickly.
So it must be based on fear of touching your investment accounts and developing bad habits.
But you could establish a wall there by creating a separate account.
Our am I missing something?
So there are times when liquidating your investments can realize potentially very high loss. One of those times is even now I believe. It is better to have some liquid cash handy for emergencies. They don't happen everyday but they happen too often to try to fix them by a regular income. One year of cash can be an overkill though, mostly just 3-6 months are recommended. But it is not wrong. It just depends on your tolerance of risk.
Question, can I withdraw money from my Roth IRA without questions and put it into an HSA account? Or do I have to have that Roth IRA establish for five years?
I think you can but not the capital gain
Honestly, fuck having a rental property. I'd just buy stock in NYSE:O instead of dealing with those headaches
Great videos Tae...Very informative
I believe in absolutely starting a taxable account before maxing a retirement account because there is no way you wont need the extra money early. Maxing 401k + Roth is 40% of my income but Im supposed to be without an extra bucket if I reach my retirement early? I think 20% of invested $ should be in a brokerage for use before 60.
I would think that if you have the income to do so, multiple steps can be completed simultaneously. For example my current contributions to tax sheltered retirement lowers my taxable income which means I can withold less for taxes since the extra witholdings that generate refunds don't earn interest. I can put those tax savings into my emergency fund which can generste interest when I am not dipping into it.
Is finaicial like financial?
Tae when did u get into this ?
Loved this video!
"Eating only rice and beans" felt personal
How is financial independence defined?
Cashhhhhhh is king 🤴
So in this video at 4:15 you say you and your wife worked to pay of $105k of student loans in 3.5 years. But in your other video "Optimal order for investing your money" you state that you and your wife both had your loans paid for, yours paid by the army and her nursing degree paid by her future employer. Did you guys both get 2 degrees?
He stated in another video that his undergrad was paid for by the military, but he took out loans for his masters degree.
I work a remote job from the states while living off of 1200 a month in Colombia, living well. I keep a 66-33 stock to cash ratio, my stocks are a 50-50 split between qqq and tqqq (nasdaq etf and it's leveraged counterpart), I suspect in about 3-4 years it's going to be a great time to buy real estate again at which point I'll put half of my assets into this investment. I'm going balls to the wall to the top baby
I learn a lots fr you ,questions should I buy ibond and Tbill ?or buy bond fr vanguard.thanks happy new year .
2 full time jobs, be frugal, live in your car, and rinse and repeat for 5 to 10 years. Done. Set for life
You should cover that door for better video quality
Define "savings", please.
Money that can be accessed without having to sell (liquidate) stocks. I go for high yield savings account (like vio), around 6 months of expenses. If the market is down 20-40 percent and you need cash, and are forced to liquidate shares at a loss, it will hurt more. High yield savings accounts (or even certificates of deposit, CDs) are better options for keeping cash "on hand" (accessible with little to no penalties)
@@brandonwatson883 makes sense. Thanks.
What do you think about starting a business?
8% Expected Annual Return? That's a bit optimistic.
Great points, living most of them. The one snag is the wrong choice of career, Accounting, which pays horrible; there are few opportunities. Another snag is my race and gender, which precludes career opportunities, in general. As a white, male working class born on the wrong side of the tracks, I had to enter the military to afford higher education. My SAT score when I took it in High School was a 1570, but despite this, doors were closed, and there were no colleges that would accept my grades and score. I managed to work up in the Army enlisting at 19, earning a commission, my third snag. Military experience especially over the past 18 mos is considered a negative on the resume, now with companies and businesses.
Doors are closed to working class people in general in the United States, despite any skills or talents. The Army did give me fluency in Spanish, French, German, Polish and Levantine Arabic as an Intel officer. But along with a strong math - science - analysis background, this is a useless talent, not marketable.
I later achieved a masters in accounting graduating at the top of my class at usc. I graduated without debt using the VA bennies to attend what I thought was supposed to be an excellent school. It was a wrong choice in higher education. Another costly mistake made. When I took the ca cpa exam, my rank was 26. But, despite these achievements, no job prospects. I now push wheelchairs for minimum wage at lax.
Companies are looking for woke, not skilled, these days. i would have been better off getting a masters in gender studies, or something along those lines. These jobs pay six figures starting. STEM majors, don't get into them. This is an economy which no longer needs STEM grads.
Despite these setbacks, and using my stem background , i have used financial models to build a growing nestegg. It can be done without step 1, I find, just more challenging.
Question: How old are you? I’m trying to put your 1570 SAT score in context (I.e., was that over 2 sections or 3 sections) as I’m struggling to understand why you felt no colleges would take you?
@@Hidden2u The early 80s. The rejections were not a feeling. They came in envelopes.
I’m former college counselor-with those SAT scores (and assuming average grades), plenty of colleges would want someone with that profile. Now, whether there was a good mix of schools (I.e., reach, target and safety schools) I don’t know.
@@Hidden2u I did divide my college choices then into target, reach, and safety schools. My safety were the state schools. However, recall in the early to mid 80s, the state schools were impacted. Once you reached the minimum acceptance, it was up to a committee to determine who may or may not be admitted. Slots were few and valuable. Most times other factors such as diversity, etc. led to the final determination. I made the cut - grades, SAT - , but was unlucky in admissions. So, like other friends of mine in the same boat, working class, had academic ability, great grades, we fell through the cracks.
Recall the USC scandal where socially influential people got their sons and daughters admitted through bribery. If you are working class, all you can compete on is merit. The more influential options are not open. I did not have the economic resources to bribe my way into my choice schools.
As I wanted a chance at upward mobility, and unable to get admitted into college, I decided to join the military. The military then, as opposed to now, was merit based. My ASVAB scores were very high. I was able to rise and qualify for OCS after two years. I made the cut.
Rentals are cool but also annoying and stressful.
Tae said "low interest loans like your mortgage". 😢
dood job again, Tae
Good job that is