October 1, 2025 • 28 mins
In this episode of The Financial Huddle, Brian, Ed, and Ryan take a deep dive into the financial habits that can make or break your future. The conversation starts lighthearted with stories about kids heading off to college and parents still stepping in to guide their finances, but quickly shifts into the core theme: common financial fumbles and how to avoid them.
Ed shares a real-world story of helping his son pay off nearly maxed-out credit card debt, showing the dangers of high-interest balances and the long-term impact of only making minimum payments. Ryan brings in historical perspective, comparing the post-Great Depression generation’s savings habits with today’s consumer-driven culture, illustrating how our shift from saving-first to spending-first has created new financial challenges. The hosts unpack critical lessons around budgeting, cash flow tracking, and building disciplined savings habits, and back it up with stats that show how budgeting and early investing can lead to hundreds of thousands more in net worth over time.
The discussion also touches on the difference between “good debt” and “bad debt,” emphasizing that not all leverage is harmful. With examples like mortgage management and opportunity costs, the guys explain why aggressively paying off low-interest debt may not always be the smartest move, especially when liquidity and flexibility matter just as much as being debt-free. They explore how young adults can get on track with Roth IRAs, 401(k)s, and automated savings strategies, and why starting early—even with small amounts—pays huge dividends down the road.
Packed with relatable stories, data-driven insights, and practical strategies, this episode brings financial planning back to the basics: budget wisely, save early, understand debt, and always keep an eye on the bigger picture. Whether you’re navigating your own financial journey or guiding your kids through theirs, you’ll walk away with clear, actionable takeaways to strengthen your financial foundation.
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Disclosure: Information contained in this podcast is for entertainment and informational purposes only, and should not be considered as financial advice. Financial Planning and Advisory Services are offered through Prosperity Capital Advisors (“PCA”), an SEC registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. Keystone Financial Group and PCA are separate, non- affiliated entities. PCA does not provide tax or legal advice.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Ryan Fleming (00:00):
The financial huddle does not provide tax,
legal, financial, or otherprofessional advice.
Ed Beemiller (00:03):
Listeners are encouraged to consult with their
own advisors in these areas.
Brian Minier (00:06):
Alright, everybody, huddle up.
Plate balls in.
This is the Financial Huddle.
Ready.
Welcome back, Huddle Nation, tothe Financial Huddle.
This is Brian Manier, and asalways, I am joined by my
compadres, Ed B.
Miller, Ryan Fleming.
What's up, everybody?
Ed Beemiller (00:24):
Hello, hello, huddlers.
Brian Minier (00:26):
How you guys doing?
Doing well.
Good, good.
Uh uh Ryan, I see you are uhrepping the OU shirt today.
Oh you oh yeah.
Oh you oh yeah.
And you are uh in the thick ofuh your daughter now attending
college.
That is two out of the housefor you.
I got two in, man.
Ryan Fleming (00:45):
It's uh it's painful.
Brian Minier (00:50):
Financially or emotionally?
Both of them, man.
Ryan Fleming (00:53):
Only above.
I know it's uh it's a it's agood step and a needed step, but
man, let me tell you.
So your daughter's going to OUand she's loving it there and
doing well, just you know, brandnew, moved in in August, and my
oldest is a senior, and it'skind of like one's coming in,
one's going out, and trying toget them off my payroll as fast
(01:15):
as possible, but not speed uptime too much.
Um I I understand and empathizewith that position.
Brian Minier (01:21):
It's it's a different phase, and Ed, you
know this very well, but it's adifferent phase of trying to
parent when your kids are not inthe home.
Don't lose thoseresponsibilities, but uh you're
you're still trying to figureout what is the right cocktail
for that.
Ryan Fleming (01:36):
It is uh it's a very difficult thing, but
ongoing.
Brian Minier (01:39):
Ongoing, yes.
Now now, Ed, you got two uhmarried, two married kids, and
uh a little bit different phaseof life.
Ryan and I are trying to catchuh how's that working out for
you?
Ed Beemiller (01:52):
It's just a little smile on my face.
So, you know, I don't have tolive vicariously through you
guys because I actuallyexperienced it.
Yes, and um it it it's nice tohave them through school uh and
basically living living theirown lives married, uh, but your
children are always yourchildren.
Brian Minier (02:13):
Yeah.
Ed Beemiller (02:14):
And and so from from that standpoint, that
support and the need forparental guidance still exist.
Brian Minier (02:23):
You mean when they graduate, they don't turn into
these supermature young adultsthat we all hope that they
would.
Ed Beemiller (02:30):
No, no.
Ryan Fleming (02:31):
I try to tell my son, listen, man, it if I'm
paying for stuff, I gotta say.
I I can speak into your lifestill.
I think that's fair.
Ed Beemiller (02:40):
There are ongoing life lessons.
Every once in a while, my85-year-old mother will remind
me of some things too.
So we're always learning.
You're never you're never tooold to uh to learn or to be told
uh by a parental figure whatwhat you're doing wrong.
Brian Minier (02:56):
So and and uh if your kids are listening, they're
you're gonna be like, I can'tbelieve he's talking about which
one of your two would you feellike uh from a financial
standpoint, this being afinancial podcast, what would
which one would you say is morewith it mature when it comes to
financial matters?
Ed Beemiller (03:13):
Well, you you always, you know, having my my
daughter um is a couple yearsolder than my son, so my
daughter's 30, my son's 28.
I think girls and and Ryan, youyou can both of you two can
speak to this, you know, maturea little bit quicker than than
the males.
In certain areas, for sure.
(03:33):
Obviously, you know, which I'vetalked about before, my my
daughter is you know an a familydoctor, she's uh an MD.
And and with that comes greatresponsibility, but then also
some uh financial flexibility.
And and both of my children aredoing great, you know, but you
know, part of this when theyinitially got out of school, you
(03:55):
think, all right, I I told Itold both the kids, listen, you
got four years to get yourdegree.
Anything above and beyond, I Idon't believe in the five to six
year plan.
Now both of my children gottheir undergraduate degree in
four years.
Well, then my daughter went tofour years of med school, you
know all that stuff.
But that's that's a little bitdifferent.
Ryan Fleming (04:14):
Yeah.
Ed Beemiller (04:15):
Um but yeah, the kids often will move move home
or or not, you know.
One of mine moved back homesoon after college.
The other one went right intomed school, my daughter did, but
my you know, my son moved backand I said, Listen, you gotta
take advantage of this.
You got someone basically doingyour laundry, because my wife
(04:39):
continued to do his laundry,pretty much, feeding you food,
you got meals prepped, you gotnone of these additional
utilities, but everything's paidfor, but then it only lasts so
long, right?
They're like, I gotta get outof here, you know.
I gotta I gotta live my life,man.
I gotta enjoy stuff.
So, you know, my my son movedout, and with that, you know, he
he moved out in the ta Italianvillage area with with with a
(05:01):
with another uh a friend fromschool, and but his mail kept
coming to us.
Yeah, and so there'd always beno, we'd see him on a regular
basis, and half the time I wouldjust, you know, basically say,
Hey, here here you go, you know,here's your mail.
But uh I like to be a littleinquisitive.
So the parental part of me kindof kicked in.
And you're saying you may ormay have not opened a few pieces
(05:24):
of mail.
Yeah, it's possible.
It's possible.
But you know, once again, ifthere was financial assistance
being provided, I I I I felt Iuh I earned that.
Brian Minier (05:35):
When you when you when you pay the bills, you have
some rights.
Yeah, exactly.
Ed Beemiller (05:38):
So this is a situation, you know, we talk
about obviously this is afinancial podcast, right?
We we we have to remindourselves sometimes when we're
we're just sitting here, youknow, chewing the fat.
Is you know, I decided to openup his credit card.
And and I remember this becausemy my daughter, who was in med
school at that time, gotapproved for a credit card.
(06:02):
My son got approved for acredit card, and his credit
limit was over double mydaughter's.
And she's like, What the heck?
How can this be?
You know, I said, Well, he'sgot a job, he's out of you know,
school, this kind of stuff.
You're still in school.
But um he he I opened it up andI was I was a little bit in
(06:22):
shock because the the creditcard had been utilized and it
was near the maximum amount.
And if if you haven't looked ata credit card statement
recently, and it and you you'relooking at what are the actual
interest rates on them, we'retalking interest rates, you
know, 22, 24, 26% plus.
(06:45):
So in this case, I actuallyread you know the language
attached to it.
It said, listen, if you makethe minimum payment, which was
like, I don't know, I think itwas like $300 and some dollars a
month or high twos, it willtake you 22 and a half years to
pay off that credit card.
So I took the opportunity as aparent and as a financial
(07:08):
professional to sit him down andsay, all right, listen, bud,
here's what we're gonna do.
Dad's gonna pay off your creditcard.
Okay?
Now, he happened to have hisbank account, which I helped him
set up at the same bank that Idid.
So I had the ability totransfer funds, set up different
things.
Little double creditopportunity there.
And and I used access to one ofthe strategies that we talk to
(07:32):
our clients a lot about, umwhich is a high cash value um
insurance base plan, which Ryan,what do you call that?
Bank on yourself.
Bank on yourself.
What's the other term youalways use?
Ryan Fleming (07:46):
LERP LERP LERP Life Insurance Retirement Plan.
There we go.
There you go.
LERP.
Ed Beemiller (07:50):
And what I was able to do for him is lend him
that money, we paid off, and Isaid, All right, that just put
that credit card to the side.
I I actually wanted him to cutit up, but I didn't want him to
not have any credit card.
But he paid me back justslightly more, maybe about 50
bucks more a month.
(08:10):
We had his credit card balancepaid off in two and a half
years, and he would basicallyjust make that payment into my
account.
I set up basically a loanrepayment to automate, he came
out of my account, everythingjust washed, and I probably
saved him, you know, thousandsof dollars in interest expense.
(08:31):
But you know, that's theimportance of what we talk about
and why we're here, the wholefinancial literacy and
understanding.
Hey, listen, just because yougot a plastic card that gives
you the ability to purchase, itdoesn't mean just go all out and
and and buy up to the limitbecause you gotta be able to pay
it back or you pay theconsequences, right?
(08:51):
There's consequences toeverything we do in life.
And a 24 to 26% interestconsequence is is something
that's gonna stay with you.
I got a feeling that I got afeeling it happens a lot.
Yeah, yeah, yeah.
Yeah, more more often than not,you know, we we we become a a
culture that basically buys andspends, and then if we have
(09:13):
anything left over, maybe we'llput it into something, right?
Put it into a money marketaccount or uh you know, some
other type of investment orsavings vehicle.
Brian Minier (09:22):
Yeah, yeah.
In our household, we're we'retrying to have conversations
with our adult kids abouthabits, um, about when you
spend, what does that mean?
Because it's very easy when youdo have the credit card just to
spend and and not even realizewhat you're doing.
And so creating those habits,and and that lends into what
we're gonna talk about today iscommon financial fumbles, how to
(09:45):
avoid them.
And and there's a number ofdifferent things we can talk
about, but I know Ryan, you lovestats.
You know, yeah, you're you'reour stat friend.
I'm a stat man.
Yeah, bring it in, stat man.
Bring it home for us.
So you're gonna talk about youhave some of the habits, some of
the savings that we've seenover decades.
Ryan Fleming (10:03):
I was thinking about this, what would be
interesting for our listeners umand people watching.
Um, and so what I did is Iactually went back to the uh the
post-uh Great Depression era,and I wanted to identify and and
know some stats about theirsavings, their debt habits, um,
their lifestyle numbers uh incomparison to today.
So let me just rattle off somethings.
(10:24):
So back in the 40s, um, thesavings rate um on average was
around 20 to 25 percent of theirincome.
This is during the World War IIera.
That's that's it's incredible.
Today, the savings rate is uhfour to six percent of income.
Uh I mean uh a lot of you knowcautious spending, a lot of
(10:45):
frugalness uh back then withthose people, uh those people
that survived the GreatDepression.
Our culture is all aboutconsumption.
Um, like Ed said, low cashsavings.
Um debt, just minimal,minuscule consumer debt in the
40s, no credit cards.
Uh their mortgages were shorterterm, like 10, 15 year
(11:05):
mortgages.
And um, you know, even today,uh, if you look at today, the
average home is around 2,300square feet.
Um, we mostly have 30-yearmortgages, credit cards,
long-term loans, common likethat, like we talked about.
We have 17 plus trilliondollars of household debt.
Now, an interesting stat aboutthat is uh we actually have more
(11:27):
college loan debt than all thecredit card debt in our culture
right now, which is which iscrazy too.
Ed Beemiller (11:33):
That that's a whole nother topic for a full uh
podcast, also, right?
Yeah, exactly.
Ryan Fleming (11:38):
It's a big deal, it's sets people back years.
People in the 40s, theirlifestyle, their average home
was right around a thousandsquare feet.
So just basic amenities, um,one car or no cars, um home
cooked meals all the time,simple entertainment.
Uh and you know, now today, theuh you know, today, like I
said, the the houses are 2,300square feet, multiple cars,
(12:01):
multiple households, frequentdining out, streaming, smart
devices, chipotle all the time.
And then this was kind of thekill kicker um in in the in the
world of taxation.
So in the 40s, the highest taxrate that's ever been in our
country ever during World War IIat the peak was 94 percent.
I don't know if a lot of peopleknew that.
Ed Beemiller (12:21):
Highest bracket.
Ryan Fleming (12:22):
Yeah, highest highest tax rate.
Yeah, crazy.
Uh the highest tax rate rightnow in 25 is uh 37 percent.
Um there's uh you know somerumblings that you know those
could maybe go up higher in thefuture.
That's a different podcast fora different day.
Uh a lot of Americans, theyjust didn't even file taxes
pre-World War II.
You know, very few Americansfiled taxes pre-World War II.
(12:44):
Most all Americans file federalincome taxes, low payroll
taxes, and our we havesignificant payroll taxes now,
7.65% employees um uh payrolltaxes.
So, you know, as I'm thinkingabout this and talking about
like rookie mistakes that that alot of us make is it's just
(13:04):
this idea of not tracking ourcash flows, not tracking our
inflows and our outflowoutflows, which can go into
budgeting, but it's also they'rethey're a little subtly
different, right?
You know, budgeting andtracking your in inflows and
outflows are are reallyimportant.
A couple more stats I thoughtwould be very helpful for people
to understand.
Um, US Bank back in 2023 foundthat 74% of people who budget
(13:29):
regularly, they just feel inmore control of their finances.
Um, people who have writtenbudgets, I don't know if you
know, back in the day, Iremember my mom and dad doing
this, like budgeting or likebalancing their checkbook by
with a pencil and then writingdown their expenses like with a
pencil.
But it says people who havewritten budgets save an average
of $300 more per month.
(13:50):
So that's $3,600 a year.
That's you know, over a 30-yeartime frame, that's that's
$180,000 before any rate ofreturn.
Um, and we all will knowtracking over you know prevents
overspending.
Um, gosh, the average Americanspends over $7,400 per year on
impulse purchases.
(14:11):
I'm dealing this with thisright now uh with some loved
ones in my family.
Ed Beemiller (14:15):
Yeah, I hit that grocery store and I'm I'm
waiting to check out and allthose goodies up there by the
checkout stand.
I I have a tendency to grab afew of them now.
Ryan Fleming (14:26):
And this might this be the last one I'll share,
but you know, uh, if youbudget, it's gonna boost your
net worth.
And and Schwab, uh CharlesSchwab put out a study in 2022
that says that households whomaintain a budget um are two and
a half times more likely toreport a net worth over
$500,000.
(14:46):
So I think one of the biggestrookie mistakes that we see is
just this lack of tracking yourinflows and outflows.
And there's some there's somestatistics that put some meat uh
you know on that statementthere that it's real tangible
dollars.
And that's where we always sayis like we want to avoid wealth
for uh wealth transfers, uhmoney that we unknowingly or
(15:09):
unnecessarily uh spend that justgo away from us.
Brian Minier (15:13):
Right, and it's so easy to do because there's a
there's a million different appsyou can put on your phone.
Some of them do itautomatically.
I have one that I actually domanually, and my wife makes fun
of me because you guys know I'ma little bit OCD at times, and a
little bit, a little bit.
And uh so, like if I'm pumpinggas or going out to eat, she'll
see me pull up the app and justtrack it.
(15:33):
And and I tell the classes thatI teach, you know, when they're
asking, well, how do I knowwhat to plan for retirement?
Well, you got to know what youspend, and the only way that you
can do that is to track it.
Yeah, and so I I know is evenfor as much as we go out to eat,
and it's nauseating when youlook at that number, but at
least it's something that thatwe can plan for.
Ed Beemiller (15:53):
We we've become a consumer society that spends,
and then if there's anythingleft, yeah, maybe we'll save.
Or or maybe we'll find someimpulse by, as opposed to what
you're talking about back in the40s.
And even I would say, you know,our our grandparents and
parents basically they savedfirst.
They put that into theirbudget, they put that into their
(16:14):
cash flows, which is kind oflike I equate it to like 401ks
nowadays where it comes outautomatically.
Yeah, and then people just getused to it.
It's almost this forcedsavings, but you know, taking it
a step further, but it'sactually doing budgeting.
Ryan Fleming (16:30):
So, but there's power in that, right?
So if we start saving early,even if it's just a little bit,
uh I think another thing we canreally educate our listeners on
is like, you know, what quantifythe power of saving early.
Brian Minier (16:41):
Oh, there's no doubt.
And I know we we have youngadult children.
We do like working with youngclients because if you can get
them in that habit of savingearly, it makes a big
difference.
I did a quick exercise whereEd, you said it, most people
save into their 401k.
They get a job, they're forcedto do it.
Hopefully, you're getting amatch, and which is why you're
doing it.
(17:02):
So I I ran some numbers, andit's not obviously in life, it's
not going to work this clean.
But let's say you get anincome, whether it's your own or
whether it's combined, and it'sit's $100,000 out of college.
Maybe 25, you graduate, you geta job.
So I ran these numbers startingat age 25, where you invest in
a 401k, and let's say you get amatch, and together between what
(17:23):
you invest and what youremployer is contributing as
well, it's it's $9,000 that'sadded to that account every
single year.
And if you did that from 25,you did that to age 60, and you
use the market.
And what I did with this is Iused the market returns of the
SP 500 over the last 25 yearsand then just repeated it.
It came out to about $814,000between the ages of $25 and the
(17:48):
age of 60.
Now, as you get raises and youcan contribute more, that's
obviously going to change.
Ed Beemiller (17:54):
Right.
Brian Minier (17:55):
Now, what if you were in the same age and you and
your spouse, you were married,and you were disciplined, and
you each contributed fivethousand dollars to a Roth IRA
every single year.
That's an additional over$900,000 with those same market
returns.
Ryan Fleming (18:11):
Over the same time?
Brian Minier (18:12):
Over the same time period.
Ryan Fleming (18:13):
So basically, the 401k.
Brian Minier (18:16):
So basically, you're looking at instead of
$814,000, it's almost a milliondollars more by being
disciplined and contributing tothat Roth IRA every single year.
Ryan Fleming (18:27):
And you said $5,000 a year to the Roth?
Brian Minier (18:30):
Each of you did $5,000.
I mean even if you did half ofthat.
Even if you did half of that.
It's profound.
It is because of it's it'smarket compounding, it's saving,
and by starting earlier, itjust makes that much more of a
difference.
Ed Beemiller (18:42):
Does that analysis take into um taxation?
Brian Minier (18:47):
Well, that's the thing.
If you did the Roth, there wasno taxation on that.
Ed Beemiller (18:50):
Right, but versus that 401k.
Brian Minier (18:52):
Depending on what kind of 401k.
Right, yeah.
So so doing that early is soprofound.
And if you can get young peoplein the habit of doing that,
automate it.
Let it come out of yourchecking account so that you
don't see it.
It's so powerful.
Ryan Fleming (19:07):
And one of the cool things in our practice
we've seen over the past severalyears are people sending us
their kids and saying, hey, youguys have done a great job
educating us.
This means a lot.
We want will you talk to ourson or daughter who just got
that job?
They're 24, like you said, 23,24, and get them on a path
early.
And that's that's been a superfruitful thing in my practice.
But again, the reason why we'redoing that is exactly why you
(19:28):
just said it it's tangible.
It and I mean it just shows up.
It shows up.
And and let me tell you, withpensions not being around and
the onus on uh people'sfinancial future being on their
habits of saving, more so thanever.
It's you know, for ourlisteners out there, like get
going, like get your kids goingearly.
Um have to be disciplined.
(19:49):
Even yeah, even startingcustodial Roth IRAs if they're
not 18 yet, you know, andhelping feed that and perpetuate
that, it doesn't take a lot tocreate some compounding over
time.
For sure.
Brian Minier (19:58):
Yeah.
And you you talked about debtearlier, yeah, and you were
talking about the the story ofyour your son.
Is all debt bad?
Ed Beemiller (20:07):
Great, great question, B.
You know, and and when we lookat that, it it goes to the
previous two things we talkedabout.
Budgeting, saving, early, youknow, the earlier the better,
everything else.
Well, the biggest one of thebiggest hindrances to being able
to do that is the spending indebt.
(20:28):
And unlike the federalgovernment, you as an individual
somewhat have to balance,meaning what you what you spend
has to be or should be no morethan what's what's got it.
Brian Minier (20:43):
I gotta put some reins on it.
Ed Beemiller (20:45):
Yeah.
And so from that standpoint,well, how do we how do we spend
more than what we earn?
Well, that's that's debt.
And there's there's good debtand bad debt.
And a saying that I always useto my clients is as long as
you're in control of the debtand the debt does not control
you, then it can be a goodthing.
We we we hear a lot of thefinancial talking heads out
(21:09):
there that really just have thislaser-like focus on you gotta
reuse your debt.
You can't, no debt.
You don't want any debt.
You know, debt's bad.
Well, no, it's it's not bad.
Now, racking up twenty thousanddollars of credit card debt
that you then carry over and youcan't pay the balance on, is
that bad debt?
Yes.
Brian Minier (21:26):
Yeah, 20% interest rate.
Ed Beemiller (21:28):
At 24%, you know, 26%, yeah, that's bad debt.
But there's a lot of good debt.
Leverage is not necessarily abad thing, and and we talk about
it with some of the financialstrategies that that we use, but
something here more relevantand current, when we're meeting
with clients and we're lookingat, you know, one of the biggest
debts most clients have istheir mortgage, you know, or uh
(21:52):
as Ryan has referred to before,their their total outstanding
college loan debt.
Ryan Fleming (21:56):
Yeah.
Ed Beemiller (21:57):
Which is a whole other issue.
But remember, not too long ago,several years ago, what were
mortgage rates?
Two and a half, three.
People were getting two and ahalf to three percent fixed.
Thirty years fixed.
So now they come to us and say,well, listen, I I I listened to
Dave Ramsey or Susie Orman orsome other talking head, and
(22:19):
they're just telling me I'mmaking double payments on my
mortgage, I gotta get that debtpaid off.
I'm like, okay.
Your loan's at 2.75% fixed for30 years.
You're making, you know,instead of 1,500 a month, you're
paying $3,000 on that mortgage.
Well, what if you redirectedthat second overage that you're
(22:42):
paying?
Basically, the second paymentyou're making, in this
environment, can you get morethan 2.75%?
Ryan Fleming (22:51):
Yeah, in a lot of different areas.
Ed Beemiller (22:53):
I mean, there's high yield money markets, even
you know, now that are over fourpercent.
And other investments, evenmore building wealth, we talked
about building wealth earlier.
Take that and invest, maybethat's a longer-term bucket
where you can take some morerisk to gain that long-term
upside.
(23:13):
And at the end of the day,you're comparing, all right,
should I be aggressively payingdown a debt that's at 2.75%
interest when I have the optionor opportunity, this gets into
the opportunity cost of goingout and doubling or tripling
that without taking asignificant level of risk.
Ryan Fleming (23:34):
Yeah, I think you're talking about just the
concept of liquidity use andcontrol of your dollar.
I mean, don't get us wrong, wewant our clients to have their
house paid off too.
There's diff there's a coupledifferent ways to do that.
That the the way you're talkingabout, the traditional way,
where you know, you go from a30-year fix, 30-year fix down to
a 15-year fixed, and you put afew extra payments on that.
(23:54):
And, you know, it's it's notinherently wrong to do it that
way.
Um, and it accomplishes thegoal of getting it paid off.
Um, but many times it's it'sgood to think about the other
way, like you said, you know, tohave more liquidity, use, and
control throughout your life, tohave a big 30-year fixed
mortgage, give the bank aslittle as your hard-earned money
(24:15):
as possible, and save the restin an account that is liquid,
that's usable, that'scontrolled.
I mean, you know, life rearsits head.
So you, you know, having accessto capital makes you a very
powerful person.
And so therefore, I wouldn'tview that as a horrible debt.
I would, you know, I mean, andreally at the end of the day,
you know, for our listeners outthere, a lot of people are
(24:36):
thinking, you know, well, yourhouse is an asset or it's a
liability.
You know, what which one is it?
Right.
And I would say, and you guys,I think, would agree, is that
your house is a tool.
And probably one of the mostmismanaged debt instruments, if
that's what you want to call itin our culture, is home equity
management.
A lot of people just don'tunderstand how to manage home
equity.
They don't understand leverage,they don't understand.
(24:57):
I mean, some of the wealthiestpeople that we know of have
massive amounts of leverage thatcreates massive amounts of cash
flows.
So if I've got a if I've got amortgage over here of $100,000,
but I have a side fund that Ihave liquidity use and control
of of $150,000, one could argueI'm not really in debt.
(25:18):
I mean, if I if I really,really wanted to, I could snap
my fingers, not get one personinvolved at the bank and get rid
of my mortgage in a in aminute.
But I could never, if I gotsick or lost my job, I could
never go back and say, oh, can Igo back out from my 15-year
mortgage to a 30-year mortgage?
Because I really need to lowermy payment.
And um, you know, can I getsome home equity out now?
(25:41):
Uh can I do a HELOC or a HELOCor can I do a cash-out
refinance?
Because I really uh have somemedical medical issues and
things of this nature.
They're they're laugh in yourface, right?
It's it's ill liquid, it'slocked up in jail.
Ed Beemiller (25:53):
So because you no longer have an earned income.
Correct.
The scenario that you you poseis maximum utilization of an
asset.
Ryan Fleming (26:01):
Correct.
And and and the home is areally, really uh inflammatory
topic amongst amongst a lot ofpeople.
And I think that the the houseis a tool, um, it's not
necessarily a liability all thetime, and it's not necessarily
an asset all the time.
It can be a phenomenal tool asyou think about how to build
wealth and maintain liquidity,use, and control.
Ed Beemiller (26:22):
But it it it goes back to planning.
It's customized for eachindividual.
You can't just say one debt isbad and the other debt is good
at all times.
It just depends on thefinancial situation of each
individual that we're workingwith.
Brian Minier (26:36):
Yeah, and I'm sure you guys have gotten this
question as it pertains to thehome.
Someone is talking to you andthey ask, well, well, should I
use this to pay off my house?
Well, if you don't have a lotof assets saved up, and the
little bit that you do is to payfor that house, and now you
don't have anything left over,is that really a good use of
that money just for the sake ofpaying off the house?
It's a understanding not justabout the house, it's the
(27:01):
overall picture.
Ed Beemiller (27:02):
That that's the the concept I like to call asset
rich cash poor.
Ryan Fleming (27:06):
That's right.
Hey, isn't interest deductibleon your mortgage still?
Ed Beemiller (27:10):
Well, the last I heard, you know, but who knows?
Ryan Fleming (27:13):
So that you're if you're itemizing, yeah.
That 2.75 interest rate'sactually less than that after
deductions.
Yeah.
Right?
Yeah, yeah.
Brian Minier (27:19):
So that's right.
Yeah, this was this was a greatconversation, and and a lot of
times people when they thinkabout financial planning, it's
well, I gotta figure out thesetax management strategies and
what is my rate of return on myinvestments.
And and sometimes it's justgood to get back into the
basics.
If if you can do simple thingslike you can budget because you
know what you're spending, youcan save your discipline, you've
(27:42):
started that early, especiallyif you're young.
Understanding the differencebetween good and bad debt, and
you understand that and and youincorporate those concepts into
your own financial outlay.
Sometimes simpler is better.
Ed Beemiller (27:55):
Yeah, and and it's a focus on the outcome and
objective you're looking toaccomplish.
So often, you know, well,what's my rate of return?
How much am I gonna earn onthis?
It's like, okay, if you want toget to point A to point B, and
point B is retirement.
Brian Minier (28:11):
Got to have a process, right?
You gotta talk about that.
Ed Beemiller (28:13):
And you gotta have a what?
A plan.
That's what it all comes downto.
Brian Minier (28:17):
That's right.
There we go.
Yeah, well, good stuff.
I mean, guys, I appreciate theconversation today.
And and uh Huddlers, thank youso much for spending time with
us.
We look forward to talking toyou during our next podcast.
Everybody, take care.
Ed Beemiller (28:31):
See ya, everybody.
The financial huddle does not provide tax,
legal, financial, or otherprofessional advice.
Ed Beemiller (00:03):
Listeners are encouraged to consult with their
own advisors in these areas.
Brian Minier (00:06):
Alright, everybody, huddle up.
Plate balls in.
This is the Financial Huddle.
Ready.
Welcome back, Huddle Nation, tothe Financial Huddle.
This is Brian Manier, and asalways, I am joined by my
compadres, Ed B.
Miller, Ryan Fleming.
What's up, everybody?
Ed Beemiller (00:24):
Hello, hello, huddlers.
Brian Minier (00:26):
How you guys doing?
Doing well.
Good, good.
Uh uh Ryan, I see you are uhrepping the OU shirt today.
Oh you oh yeah.
Oh you oh yeah.
And you are uh in the thick ofuh your daughter now attending
college.
That is two out of the housefor you.
I got two in, man.
Ryan Fleming (00:45):
It's uh it's painful.
Brian Minier (00:50):
Financially or emotionally?
Both of them, man.
Ryan Fleming (00:53):
Only above.
I know it's uh it's a it's agood step and a needed step, but
man, let me tell you.
So your daughter's going to OUand she's loving it there and
doing well, just you know, brandnew, moved in in August, and my
oldest is a senior, and it'skind of like one's coming in,
one's going out, and trying toget them off my payroll as fast
(01:15):
as possible, but not speed uptime too much.
Um I I understand and empathizewith that position.
Brian Minier (01:21):
It's it's a different phase, and Ed, you
know this very well, but it's adifferent phase of trying to
parent when your kids are not inthe home.
Don't lose thoseresponsibilities, but uh you're
you're still trying to figureout what is the right cocktail
for that.
Ryan Fleming (01:36):
It is uh it's a very difficult thing, but
ongoing.
Brian Minier (01:39):
Ongoing, yes.
Now now, Ed, you got two uhmarried, two married kids, and
uh a little bit different phaseof life.
Ryan and I are trying to catchuh how's that working out for
you?
Ed Beemiller (01:52):
It's just a little smile on my face.
So, you know, I don't have tolive vicariously through you
guys because I actuallyexperienced it.
Yes, and um it it it's nice tohave them through school uh and
basically living living theirown lives married, uh, but your
children are always yourchildren.
Brian Minier (02:13):
Yeah.
Ed Beemiller (02:14):
And and so from from that standpoint, that
support and the need forparental guidance still exist.
Brian Minier (02:23):
You mean when they graduate, they don't turn into
these supermature young adultsthat we all hope that they
would.
Ed Beemiller (02:30):
No, no.
Ryan Fleming (02:31):
I try to tell my son, listen, man, it if I'm
paying for stuff, I gotta say.
I I can speak into your lifestill.
I think that's fair.
Ed Beemiller (02:40):
There are ongoing life lessons.
Every once in a while, my85-year-old mother will remind
me of some things too.
So we're always learning.
You're never you're never tooold to uh to learn or to be told
uh by a parental figure whatwhat you're doing wrong.
Brian Minier (02:56):
So and and uh if your kids are listening, they're
you're gonna be like, I can'tbelieve he's talking about which
one of your two would you feellike uh from a financial
standpoint, this being afinancial podcast, what would
which one would you say is morewith it mature when it comes to
financial matters?
Ed Beemiller (03:13):
Well, you you always, you know, having my my
daughter um is a couple yearsolder than my son, so my
daughter's 30, my son's 28.
I think girls and and Ryan, youyou can both of you two can
speak to this, you know, maturea little bit quicker than than
the males.
In certain areas, for sure.
(03:33):
Obviously, you know, which I'vetalked about before, my my
daughter is you know an a familydoctor, she's uh an MD.
And and with that comes greatresponsibility, but then also
some uh financial flexibility.
And and both of my children aredoing great, you know, but you
know, part of this when theyinitially got out of school, you
(03:55):
think, all right, I I told Itold both the kids, listen, you
got four years to get yourdegree.
Anything above and beyond, I Idon't believe in the five to six
year plan.
Now both of my children gottheir undergraduate degree in
four years.
Well, then my daughter went tofour years of med school, you
know all that stuff.
But that's that's a little bitdifferent.
Ryan Fleming (04:14):
Yeah.
Ed Beemiller (04:15):
Um but yeah, the kids often will move move home
or or not, you know.
One of mine moved back homesoon after college.
The other one went right intomed school, my daughter did, but
my you know, my son moved backand I said, Listen, you gotta
take advantage of this.
You got someone basically doingyour laundry, because my wife
(04:39):
continued to do his laundry,pretty much, feeding you food,
you got meals prepped, you gotnone of these additional
utilities, but everything's paidfor, but then it only lasts so
long, right?
They're like, I gotta get outof here, you know.
I gotta I gotta live my life,man.
I gotta enjoy stuff.
So, you know, my my son movedout, and with that, you know, he
he moved out in the ta Italianvillage area with with with a
(05:01):
with another uh a friend fromschool, and but his mail kept
coming to us.
Yeah, and so there'd always beno, we'd see him on a regular
basis, and half the time I wouldjust, you know, basically say,
Hey, here here you go, you know,here's your mail.
But uh I like to be a littleinquisitive.
So the parental part of me kindof kicked in.
And you're saying you may ormay have not opened a few pieces
(05:24):
of mail.
Yeah, it's possible.
It's possible.
But you know, once again, ifthere was financial assistance
being provided, I I I I felt Iuh I earned that.
Brian Minier (05:35):
When you when you when you pay the bills, you have
some rights.
Yeah, exactly.
Ed Beemiller (05:38):
So this is a situation, you know, we talk
about obviously this is afinancial podcast, right?
We we we have to remindourselves sometimes when we're
we're just sitting here, youknow, chewing the fat.
Is you know, I decided to openup his credit card.
And and I remember this becausemy my daughter, who was in med
school at that time, gotapproved for a credit card.
(06:02):
My son got approved for acredit card, and his credit
limit was over double mydaughter's.
And she's like, What the heck?
How can this be?
You know, I said, Well, he'sgot a job, he's out of you know,
school, this kind of stuff.
You're still in school.
But um he he I opened it up andI was I was a little bit in
(06:22):
shock because the the creditcard had been utilized and it
was near the maximum amount.
And if if you haven't looked ata credit card statement
recently, and it and you you'relooking at what are the actual
interest rates on them, we'retalking interest rates, you
know, 22, 24, 26% plus.
(06:45):
So in this case, I actuallyread you know the language
attached to it.
It said, listen, if you makethe minimum payment, which was
like, I don't know, I think itwas like $300 and some dollars a
month or high twos, it willtake you 22 and a half years to
pay off that credit card.
So I took the opportunity as aparent and as a financial
(07:08):
professional to sit him down andsay, all right, listen, bud,
here's what we're gonna do.
Dad's gonna pay off your creditcard.
Okay?
Now, he happened to have hisbank account, which I helped him
set up at the same bank that Idid.
So I had the ability totransfer funds, set up different
things.
Little double creditopportunity there.
And and I used access to one ofthe strategies that we talk to
(07:32):
our clients a lot about, umwhich is a high cash value um
insurance base plan, which Ryan,what do you call that?
Bank on yourself.
Bank on yourself.
What's the other term youalways use?
Ryan Fleming (07:46):
LERP LERP LERP Life Insurance Retirement Plan.
There we go.
There you go.
LERP.
Ed Beemiller (07:50):
And what I was able to do for him is lend him
that money, we paid off, and Isaid, All right, that just put
that credit card to the side.
I I actually wanted him to cutit up, but I didn't want him to
not have any credit card.
But he paid me back justslightly more, maybe about 50
bucks more a month.
(08:10):
We had his credit card balancepaid off in two and a half
years, and he would basicallyjust make that payment into my
account.
I set up basically a loanrepayment to automate, he came
out of my account, everythingjust washed, and I probably
saved him, you know, thousandsof dollars in interest expense.
(08:31):
But you know, that's theimportance of what we talk about
and why we're here, the wholefinancial literacy and
understanding.
Hey, listen, just because yougot a plastic card that gives
you the ability to purchase, itdoesn't mean just go all out and
and and buy up to the limitbecause you gotta be able to pay
it back or you pay theconsequences, right?
(08:51):
There's consequences toeverything we do in life.
And a 24 to 26% interestconsequence is is something
that's gonna stay with you.
I got a feeling that I got afeeling it happens a lot.
Yeah, yeah, yeah.
Yeah, more more often than not,you know, we we we become a a
culture that basically buys andspends, and then if we have
(09:13):
anything left over, maybe we'llput it into something, right?
Put it into a money marketaccount or uh you know, some
other type of investment orsavings vehicle.
Brian Minier (09:22):
Yeah, yeah.
In our household, we're we'retrying to have conversations
with our adult kids abouthabits, um, about when you
spend, what does that mean?
Because it's very easy when youdo have the credit card just to
spend and and not even realizewhat you're doing.
And so creating those habits,and and that lends into what
we're gonna talk about today iscommon financial fumbles, how to
(09:45):
avoid them.
And and there's a number ofdifferent things we can talk
about, but I know Ryan, you lovestats.
You know, yeah, you're you'reour stat friend.
I'm a stat man.
Yeah, bring it in, stat man.
Bring it home for us.
So you're gonna talk about youhave some of the habits, some of
the savings that we've seenover decades.
Ryan Fleming (10:03):
I was thinking about this, what would be
interesting for our listeners umand people watching.
Um, and so what I did is Iactually went back to the uh the
post-uh Great Depression era,and I wanted to identify and and
know some stats about theirsavings, their debt habits, um,
their lifestyle numbers uh incomparison to today.
So let me just rattle off somethings.
(10:24):
So back in the 40s, um, thesavings rate um on average was
around 20 to 25 percent of theirincome.
This is during the World War IIera.
That's that's it's incredible.
Today, the savings rate is uhfour to six percent of income.
Uh I mean uh a lot of you knowcautious spending, a lot of
(10:45):
frugalness uh back then withthose people, uh those people
that survived the GreatDepression.
Our culture is all aboutconsumption.
Um, like Ed said, low cashsavings.
Um debt, just minimal,minuscule consumer debt in the
40s, no credit cards.
Uh their mortgages were shorterterm, like 10, 15 year
(11:05):
mortgages.
And um, you know, even today,uh, if you look at today, the
average home is around 2,300square feet.
Um, we mostly have 30-yearmortgages, credit cards,
long-term loans, common likethat, like we talked about.
We have 17 plus trilliondollars of household debt.
Now, an interesting stat aboutthat is uh we actually have more
(11:27):
college loan debt than all thecredit card debt in our culture
right now, which is which iscrazy too.
Ed Beemiller (11:33):
That that's a whole nother topic for a full uh
podcast, also, right?
Yeah, exactly.
Ryan Fleming (11:38):
It's a big deal, it's sets people back years.
People in the 40s, theirlifestyle, their average home
was right around a thousandsquare feet.
So just basic amenities, um,one car or no cars, um home
cooked meals all the time,simple entertainment.
Uh and you know, now today, theuh you know, today, like I
said, the the houses are 2,300square feet, multiple cars,
(12:01):
multiple households, frequentdining out, streaming, smart
devices, chipotle all the time.
And then this was kind of thekill kicker um in in the in the
world of taxation.
So in the 40s, the highest taxrate that's ever been in our
country ever during World War IIat the peak was 94 percent.
I don't know if a lot of peopleknew that.
Ed Beemiller (12:21):
Highest bracket.
Ryan Fleming (12:22):
Yeah, highest highest tax rate.
Yeah, crazy.
Uh the highest tax rate rightnow in 25 is uh 37 percent.
Um there's uh you know somerumblings that you know those
could maybe go up higher in thefuture.
That's a different podcast fora different day.
Uh a lot of Americans, theyjust didn't even file taxes
pre-World War II.
You know, very few Americansfiled taxes pre-World War II.
(12:44):
Most all Americans file federalincome taxes, low payroll
taxes, and our we havesignificant payroll taxes now,
7.65% employees um uh payrolltaxes.
So, you know, as I'm thinkingabout this and talking about
like rookie mistakes that that alot of us make is it's just
(13:04):
this idea of not tracking ourcash flows, not tracking our
inflows and our outflowoutflows, which can go into
budgeting, but it's also they'rethey're a little subtly
different, right?
You know, budgeting andtracking your in inflows and
outflows are are reallyimportant.
A couple more stats I thoughtwould be very helpful for people
to understand.
Um, US Bank back in 2023 foundthat 74% of people who budget
(13:29):
regularly, they just feel inmore control of their finances.
Um, people who have writtenbudgets, I don't know if you
know, back in the day, Iremember my mom and dad doing
this, like budgeting or likebalancing their checkbook by
with a pencil and then writingdown their expenses like with a
pencil.
But it says people who havewritten budgets save an average
of $300 more per month.
(13:50):
So that's $3,600 a year.
That's you know, over a 30-yeartime frame, that's that's
$180,000 before any rate ofreturn.
Um, and we all will knowtracking over you know prevents
overspending.
Um, gosh, the average Americanspends over $7,400 per year on
impulse purchases.
(14:11):
I'm dealing this with thisright now uh with some loved
ones in my family.
Ed Beemiller (14:15):
Yeah, I hit that grocery store and I'm I'm
waiting to check out and allthose goodies up there by the
checkout stand.
I I have a tendency to grab afew of them now.
Ryan Fleming (14:26):
And this might this be the last one I'll share,
but you know, uh, if youbudget, it's gonna boost your
net worth.
And and Schwab, uh CharlesSchwab put out a study in 2022
that says that households whomaintain a budget um are two and
a half times more likely toreport a net worth over
$500,000.
(14:46):
So I think one of the biggestrookie mistakes that we see is
just this lack of tracking yourinflows and outflows.
And there's some there's somestatistics that put some meat uh
you know on that statementthere that it's real tangible
dollars.
And that's where we always sayis like we want to avoid wealth
for uh wealth transfers, uhmoney that we unknowingly or
(15:09):
unnecessarily uh spend that justgo away from us.
Brian Minier (15:13):
Right, and it's so easy to do because there's a
there's a million different appsyou can put on your phone.
Some of them do itautomatically.
I have one that I actually domanually, and my wife makes fun
of me because you guys know I'ma little bit OCD at times, and a
little bit, a little bit.
And uh so, like if I'm pumpinggas or going out to eat, she'll
see me pull up the app and justtrack it.
(15:33):
And and I tell the classes thatI teach, you know, when they're
asking, well, how do I knowwhat to plan for retirement?
Well, you got to know what youspend, and the only way that you
can do that is to track it.
Yeah, and so I I know is evenfor as much as we go out to eat,
and it's nauseating when youlook at that number, but at
least it's something that thatwe can plan for.
Ed Beemiller (15:53):
We we've become a consumer society that spends,
and then if there's anythingleft, yeah, maybe we'll save.
Or or maybe we'll find someimpulse by, as opposed to what
you're talking about back in the40s.
And even I would say, you know,our our grandparents and
parents basically they savedfirst.
They put that into theirbudget, they put that into their
(16:14):
cash flows, which is kind oflike I equate it to like 401ks
nowadays where it comes outautomatically.
Yeah, and then people just getused to it.
It's almost this forcedsavings, but you know, taking it
a step further, but it'sactually doing budgeting.
Ryan Fleming (16:30):
So, but there's power in that, right?
So if we start saving early,even if it's just a little bit,
uh I think another thing we canreally educate our listeners on
is like, you know, what quantifythe power of saving early.
Brian Minier (16:41):
Oh, there's no doubt.
And I know we we have youngadult children.
We do like working with youngclients because if you can get
them in that habit of savingearly, it makes a big
difference.
I did a quick exercise whereEd, you said it, most people
save into their 401k.
They get a job, they're forcedto do it.
Hopefully, you're getting amatch, and which is why you're
doing it.
(17:02):
So I I ran some numbers, andit's not obviously in life, it's
not going to work this clean.
But let's say you get anincome, whether it's your own or
whether it's combined, and it'sit's $100,000 out of college.
Maybe 25, you graduate, you geta job.
So I ran these numbers startingat age 25, where you invest in
a 401k, and let's say you get amatch, and together between what
(17:23):
you invest and what youremployer is contributing as
well, it's it's $9,000 that'sadded to that account every
single year.
And if you did that from 25,you did that to age 60, and you
use the market.
And what I did with this is Iused the market returns of the
SP 500 over the last 25 yearsand then just repeated it.
It came out to about $814,000between the ages of $25 and the
(17:48):
age of 60.
Now, as you get raises and youcan contribute more, that's
obviously going to change.
Ed Beemiller (17:54):
Right.
Brian Minier (17:55):
Now, what if you were in the same age and you and
your spouse, you were married,and you were disciplined, and
you each contributed fivethousand dollars to a Roth IRA
every single year.
That's an additional over$900,000 with those same market
returns.
Ryan Fleming (18:11):
Over the same time?
Brian Minier (18:12):
Over the same time period.
Ryan Fleming (18:13):
So basically, the 401k.
Brian Minier (18:16):
So basically, you're looking at instead of
$814,000, it's almost a milliondollars more by being
disciplined and contributing tothat Roth IRA every single year.
Ryan Fleming (18:27):
And you said $5,000 a year to the Roth?
Brian Minier (18:30):
Each of you did $5,000.
I mean even if you did half ofthat.
Even if you did half of that.
It's profound.
It is because of it's it'smarket compounding, it's saving,
and by starting earlier, itjust makes that much more of a
difference.
Ed Beemiller (18:42):
Does that analysis take into um taxation?
Brian Minier (18:47):
Well, that's the thing.
If you did the Roth, there wasno taxation on that.
Ed Beemiller (18:50):
Right, but versus that 401k.
Brian Minier (18:52):
Depending on what kind of 401k.
Right, yeah.
So so doing that early is soprofound.
And if you can get young peoplein the habit of doing that,
automate it.
Let it come out of yourchecking account so that you
don't see it.
It's so powerful.
Ryan Fleming (19:07):
And one of the cool things in our practice
we've seen over the past severalyears are people sending us
their kids and saying, hey, youguys have done a great job
educating us.
This means a lot.
We want will you talk to ourson or daughter who just got
that job?
They're 24, like you said, 23,24, and get them on a path
early.
And that's that's been a superfruitful thing in my practice.
But again, the reason why we'redoing that is exactly why you
(19:28):
just said it it's tangible.
It and I mean it just shows up.
It shows up.
And and let me tell you, withpensions not being around and
the onus on uh people'sfinancial future being on their
habits of saving, more so thanever.
It's you know, for ourlisteners out there, like get
going, like get your kids goingearly.
Um have to be disciplined.
(19:49):
Even yeah, even startingcustodial Roth IRAs if they're
not 18 yet, you know, andhelping feed that and perpetuate
that, it doesn't take a lot tocreate some compounding over
time.
For sure.
Brian Minier (19:58):
Yeah.
And you you talked about debtearlier, yeah, and you were
talking about the the story ofyour your son.
Is all debt bad?
Ed Beemiller (20:07):
Great, great question, B.
You know, and and when we lookat that, it it goes to the
previous two things we talkedabout.
Budgeting, saving, early, youknow, the earlier the better,
everything else.
Well, the biggest one of thebiggest hindrances to being able
to do that is the spending indebt.
(20:28):
And unlike the federalgovernment, you as an individual
somewhat have to balance,meaning what you what you spend
has to be or should be no morethan what's what's got it.
Brian Minier (20:43):
I gotta put some reins on it.
Ed Beemiller (20:45):
Yeah.
And so from that standpoint,well, how do we how do we spend
more than what we earn?
Well, that's that's debt.
And there's there's good debtand bad debt.
And a saying that I always useto my clients is as long as
you're in control of the debtand the debt does not control
you, then it can be a goodthing.
We we we hear a lot of thefinancial talking heads out
(21:09):
there that really just have thislaser-like focus on you gotta
reuse your debt.
You can't, no debt.
You don't want any debt.
You know, debt's bad.
Well, no, it's it's not bad.
Now, racking up twenty thousanddollars of credit card debt
that you then carry over and youcan't pay the balance on, is
that bad debt?
Yes.
Brian Minier (21:26):
Yeah, 20% interest rate.
Ed Beemiller (21:28):
At 24%, you know, 26%, yeah, that's bad debt.
But there's a lot of good debt.
Leverage is not necessarily abad thing, and and we talk about
it with some of the financialstrategies that that we use, but
something here more relevantand current, when we're meeting
with clients and we're lookingat, you know, one of the biggest
debts most clients have istheir mortgage, you know, or uh
(21:52):
as Ryan has referred to before,their their total outstanding
college loan debt.
Ryan Fleming (21:56):
Yeah.
Ed Beemiller (21:57):
Which is a whole other issue.
But remember, not too long ago,several years ago, what were
mortgage rates?
Two and a half, three.
People were getting two and ahalf to three percent fixed.
Thirty years fixed.
So now they come to us and say,well, listen, I I I listened to
Dave Ramsey or Susie Orman orsome other talking head, and
(22:19):
they're just telling me I'mmaking double payments on my
mortgage, I gotta get that debtpaid off.
I'm like, okay.
Your loan's at 2.75% fixed for30 years.
You're making, you know,instead of 1,500 a month, you're
paying $3,000 on that mortgage.
Well, what if you redirectedthat second overage that you're
(22:42):
paying?
Basically, the second paymentyou're making, in this
environment, can you get morethan 2.75%?
Ryan Fleming (22:51):
Yeah, in a lot of different areas.
Ed Beemiller (22:53):
I mean, there's high yield money markets, even
you know, now that are over fourpercent.
And other investments, evenmore building wealth, we talked
about building wealth earlier.
Take that and invest, maybethat's a longer-term bucket
where you can take some morerisk to gain that long-term
upside.
(23:13):
And at the end of the day,you're comparing, all right,
should I be aggressively payingdown a debt that's at 2.75%
interest when I have the optionor opportunity, this gets into
the opportunity cost of goingout and doubling or tripling
that without taking asignificant level of risk.
Ryan Fleming (23:34):
Yeah, I think you're talking about just the
concept of liquidity use andcontrol of your dollar.
I mean, don't get us wrong, wewant our clients to have their
house paid off too.
There's diff there's a coupledifferent ways to do that.
That the the way you're talkingabout, the traditional way,
where you know, you go from a30-year fix, 30-year fix down to
a 15-year fixed, and you put afew extra payments on that.
(23:54):
And, you know, it's it's notinherently wrong to do it that
way.
Um, and it accomplishes thegoal of getting it paid off.
Um, but many times it's it'sgood to think about the other
way, like you said, you know, tohave more liquidity, use, and
control throughout your life, tohave a big 30-year fixed
mortgage, give the bank aslittle as your hard-earned money
(24:15):
as possible, and save the restin an account that is liquid,
that's usable, that'scontrolled.
I mean, you know, life rearsits head.
So you, you know, having accessto capital makes you a very
powerful person.
And so therefore, I wouldn'tview that as a horrible debt.
I would, you know, I mean, andreally at the end of the day,
you know, for our listeners outthere, a lot of people are
(24:36):
thinking, you know, well, yourhouse is an asset or it's a
liability.
You know, what which one is it?
Right.
And I would say, and you guys,I think, would agree, is that
your house is a tool.
And probably one of the mostmismanaged debt instruments, if
that's what you want to call itin our culture, is home equity
management.
A lot of people just don'tunderstand how to manage home
equity.
They don't understand leverage,they don't understand.
(24:57):
I mean, some of the wealthiestpeople that we know of have
massive amounts of leverage thatcreates massive amounts of cash
flows.
So if I've got a if I've got amortgage over here of $100,000,
but I have a side fund that Ihave liquidity use and control
of of $150,000, one could argueI'm not really in debt.
(25:18):
I mean, if I if I really,really wanted to, I could snap
my fingers, not get one personinvolved at the bank and get rid
of my mortgage in a in aminute.
But I could never, if I gotsick or lost my job, I could
never go back and say, oh, can Igo back out from my 15-year
mortgage to a 30-year mortgage?
Because I really need to lowermy payment.
And um, you know, can I getsome home equity out now?
(25:41):
Uh can I do a HELOC or a HELOCor can I do a cash-out
refinance?
Because I really uh have somemedical medical issues and
things of this nature.
They're they're laugh in yourface, right?
It's it's ill liquid, it'slocked up in jail.
Ed Beemiller (25:53):
So because you no longer have an earned income.
Correct.
The scenario that you you poseis maximum utilization of an
asset.
Ryan Fleming (26:01):
Correct.
And and and the home is areally, really uh inflammatory
topic amongst amongst a lot ofpeople.
And I think that the the houseis a tool, um, it's not
necessarily a liability all thetime, and it's not necessarily
an asset all the time.
It can be a phenomenal tool asyou think about how to build
wealth and maintain liquidity,use, and control.
Ed Beemiller (26:22):
But it it it goes back to planning.
It's customized for eachindividual.
You can't just say one debt isbad and the other debt is good
at all times.
It just depends on thefinancial situation of each
individual that we're workingwith.
Brian Minier (26:36):
Yeah, and I'm sure you guys have gotten this
question as it pertains to thehome.
Someone is talking to you andthey ask, well, well, should I
use this to pay off my house?
Well, if you don't have a lotof assets saved up, and the
little bit that you do is to payfor that house, and now you
don't have anything left over,is that really a good use of
that money just for the sake ofpaying off the house?
It's a understanding not justabout the house, it's the
(27:01):
overall picture.
Ed Beemiller (27:02):
That that's the the concept I like to call asset
rich cash poor.
Ryan Fleming (27:06):
That's right.
Hey, isn't interest deductibleon your mortgage still?
Ed Beemiller (27:10):
Well, the last I heard, you know, but who knows?
Ryan Fleming (27:13):
So that you're if you're itemizing, yeah.
That 2.75 interest rate'sactually less than that after
deductions.
Yeah.
Right?
Yeah, yeah.
Brian Minier (27:19):
So that's right.
Yeah, this was this was a greatconversation, and and a lot of
times people when they thinkabout financial planning, it's
well, I gotta figure out thesetax management strategies and
what is my rate of return on myinvestments.
And and sometimes it's justgood to get back into the
basics.
If if you can do simple thingslike you can budget because you
know what you're spending, youcan save your discipline, you've
(27:42):
started that early, especiallyif you're young.
Understanding the differencebetween good and bad debt, and
you understand that and and youincorporate those concepts into
your own financial outlay.
Sometimes simpler is better.
Ed Beemiller (27:55):
Yeah, and and it's a focus on the outcome and
objective you're looking toaccomplish.
So often, you know, well,what's my rate of return?
How much am I gonna earn onthis?
It's like, okay, if you want toget to point A to point B, and
point B is retirement.
Brian Minier (28:11):
Got to have a process, right?
You gotta talk about that.
Ed Beemiller (28:13):
And you gotta have a what?
A plan.
That's what it all comes downto.
Brian Minier (28:17):
That's right.
There we go.
Yeah, well, good stuff.
I mean, guys, I appreciate theconversation today.
And and uh Huddlers, thank youso much for spending time with
us.
We look forward to talking toyou during our next podcast.
Everybody, take care.
Ed Beemiller (28:31):
See ya, everybody.
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