The 5 Wealth Killers No One Talks About - Part 1: It Starts Here

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In this episode of Your Retirement Guide podcast, George Jameson, a certified financial planner and founder of Capital Wealth Group located in Columbia, SC introduces a series titled 'Five Wealth Killers No One Talks About.' Listen to Part 1: It Start Here now. 

 Welcome to "The Retirement Guide" Podcast! I'm your host George Jameson, owner of Capital Wealth Group, a Fee Only Advisory firm. Whether you’re nearing retirement or already retired, Join me each week as we explore the world of retirement planning and equip you with the knowledge and tools you need for a successful retirement.

Thank you for tuning in to this episode of The Retirement Guide. If you enjoyed this episode, please subscribe & leave a review. If you'd like a free 30-minute retirement review, visit our website at www.capitalwealthplan.com to schedule.

This is for education only.It is not tax, legal, or investment advice. Before  acting on any information consult your tax, legal, or investment advisor.

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Episode Transcript

George Jameson (00:00):
Welcome back to Your Retirement Guide podcast.

(00:02):
I'm George Jameson, certifiedfinancial planner and founder of
Capital Wealth Group.
Today we're kicking off a brandnew series.
I'm calling the Five WealthKillers.
No One talks about.
These are the sneaky, oftenwell-intentioned choices that
can quietly derail yourfinancial life if you're not
careful.

(00:22):
So let's jump into the first oneand maybe the most common wealth
killer of them all.
This is no surprise, but buyingtoo big or too expensive of a
house.
Now, hold on before you clickoff.
Don't get me wrong, homeownership is often a great
financial move, but only if donewisely.

(00:44):
One of the most dangerous trapsI see people falling into is
becoming what we call house richand cash poor.
I'm sure you've heard the term,it's when someone has a large,
beautiful home, maybe in a fancyneighborhood, but they're barely
able to cover the bills eachmonth.
They put their retirementsavings on hold.
They have little to no emergencyfund, and often very high

(01:08):
stress.
And it's not always aboutshowing off.
Sometimes it's a young couplebuying their forever home before
they've built a strong financialfoundation.
Sometimes it's those retirees orempty nesters, upsizing instead
of downsizing because they wantthe extra space for family
visits.

(01:29):
It doesn't always lookirresponsible on the surface,
but beneath it can befinancially suffocating.
So let's now talk about whybuying too much house is so
damaging to long-term wealth.
Number one, it doesn't stop atthe mortgage when you stretch to
buy a bigger or pricier house,the costs don't end with the

(01:53):
mortgage payment.
You often have higher utilitybills,, bigger maintenance and
repair costs.
A bigger roof means moreexpensive replacement, more
bathrooms, more plumbing issuesthen you'll often have higher
property taxes and higherinsurance.
And then number two, it limitsyour financial flexibility.

(02:15):
If too much of your income isgoing toward housing costs, it
squeezes out everything elsethat builds wealth or for those
retirees, it means less moneyfor having fun.
You're not saving, you're notinvesting, and you're probably
not giving.
and you definitely aren'tprepared for unexpected

(02:36):
expenses.
Many financial experts oftenrecommend keeping total housing
costs, which may includemortgage, property, taxes,
insurance, maintenance, and soon below 28% to 30% of your
gross income.
But many people are pushing 40%,50%, or even higher, and that's

(03:01):
not a wealth of buildingformula.
And then number three, theemotional trap.
Let's be honest, houses areemotional.
We grew up believing thatsuccess is a big home in a nice
neighborhood.
We all have watched HGTV, whichmakes it seem like marble and

(03:25):
granite countertops and largewalk-in closets are just the
baseline.
But lifestyle creep is real.
We often upgrade not because weneed to, but because we feel
like we should, and before weknow it, we've sacrificed
long-term goals for termappearances.

(03:46):
And look, I'm not saying don'tenjoy your home.
I'm saying know what you'resacrificing for it.
And make sure it aligns withyour long-term priorities.
And number four, this is forthose nearing retirement.
So age 50 and above.
Now if you're in or nearingretirement.

(04:07):
This topic gets even moreimportant.
Many retirees, are still livingin large homes with extra rooms
with big yards, to maintainutility bills that reflect the
size of a house that no longeris being fully used.
So what's the result?
More cash flowing out everymonth for a lifestyle that may

(04:28):
not even match your currentneeds or wants.
So downsizing even early can bea powerful way to reduce your
financial stress and free upcapital.
It doesn't mean giving upcomfort.
In fact, many retirees find thatmoving to a smaller home with a

(04:49):
smaller yard to maintain, oreven a condo with no yard and or
a property closer to townessentials like doctors,
groceries, restaurants, and soon, actually improves their
quality of life.
Not only do you reduce yourbills, but you may also tap home

(05:10):
equity when downsizing to beefup your retirement accounts
potentially reduce withdrawalsfrom your portfolio and it may
even allow you to delay takingSocial Security.
That can be a huge long-term winin retirement, and if your
retirement plans include movinganyway, maybe to be closer to

(05:33):
grandkids or to enjoy a warmerclimate, then ask yourself why
not do it sooner?
Holding onto a house at asentiment or routine can quietly
drain your wealth in retirement,and for many a strategic
downsizing is the differencebetween just scraping by and

(05:55):
truly enjoying those goldenyears.
So in general, what should youdo instead?
If you're shopping for a home orknow someone who is or
considering upgrading ordownsizing?
Here are a few guidelines Ishare with my clients.
Number one, buy below yourmeans, not at the top of your

(06:19):
budget, just because you can getapproved for a$600,000 loan
doesn't mean you should take it.
And then number two, stick tothe 28 36 rule.
So that's no more than 28% ofyour gross monthly income going
to housing, and then 36% totalon all debts.

(06:44):
And then number three, consideryour future cash flows.
If your cash flow willpotentially be changing in the
near future.
For instance, if you're planningto retire early.
Maybe start a business, maybework part-time before you fully
retire, or even when one spousestops working your home needs to

(07:07):
fit that future lifestyle too.
And then four, think of yourhouse as a place to live, not a
status symbol.
True.
Wealth isn't often what you see.
It's often what you don't see.
It's the savings accounts, theinvestment portfolio, the

(07:30):
freedom to walk away from a jobyou don't love.
That's true wealth.
And then number five, for thosesoon to be retirees or those who
are already retired.
So I'm talking about those 50and above.
Again, looking to downsize orrelocate, I highly recommend
paying cash for a house.

(07:52):
Especially given the currentmortgage rates, it also gives
you a peace of mind to be debtfree when you retire.
And it can greatly reduce yourmonthly expenses in retirement
to free up that often neededcash flow.
So some final thoughts.
Buying a home is often thelargest financial decision we

(08:14):
make.
Done right?
It can build security andlong-term wealth for you and
your family, but buying morethan you need, or more than you
can truly afford is a recipe fordecades of financial stress and
missed opportunities.
So before you fall in love withthat big house on the hill, ask

(08:36):
yourself, what am I giving upfor this?
And is it worth it?
And our next episode, we'regoing to look at the second
major wealth killer.
Thanks for listening.
If you found this helpful,please share it with a friend or
leave a quick rating on yourfavorite podcast platform.
I'll see you next time and havea great day.