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Speaker 1: Welcome to another edition of the Chicks on the Right Show.

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We are talking to our friend and sponsor of the show,

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Zach Abraham from Bulwer Capital Management. Zach, there was an

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article in Money Talks News, which is I'm sure a

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publication that you read every single day, and it was

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about the eight expenses that retirees regret not cutting sooner.

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And so I wanted to talk to you a little

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bit about those eight expenses because I myself am spending

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money on all of these things. Of course, so I'm

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freaking out now, totally freaking out, because yeah, there's a lot.

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I mean, I'm sure that there's probably even more on

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the list because you've been doing this for a while,

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you have been advising people on all things financial. I'm

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going to give you some of the examples and then

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we can talk a little bit more about it. But

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like phone bills, telecom bills is one of them, Eating

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in nice restaurants or even not nice restaurants, just eating out,

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and bougie grocery. I mean, like, let's face it, you

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don't really need those tiny mini Reese's peanut butter cups

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from that fougie grocer. I mean, they're really good, but

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you know what I mean. Debt in general was number three.

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Transportation was number four. New cars interests. People like new cars,

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you know, they don't like used cars. Clothing. The average

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American household spends more than two thousand dollars a year

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on apparel and services like dry cleaning, which is kind

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of that's you know, reading materials. I thought this was interesting,

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especially older people they still like to read, whereas these

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young whipper snappers like things in small little bits, you know,

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but they have subscriptions to things that are you know, outdated.

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Speaker 2: Then there's a couple more.

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Speaker 1: One of them, which I think is very interesting, is

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contributions to traditional retirement accounts. And then there's the whole

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bucket of other stuff, which was the number eight, which

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was like you know, cleaning services, home renovations, stuff like collections,

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lawn services, crap like that description pet food like you know,

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yeah needs. So like, what would you say is the

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first thing that should be cut if you were if

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somebody came to you and said, I want to retire

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in like five to seven years, what what do you

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see in your practice?

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Speaker 3: So, first of all, is it relates to is it

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relates to retirement everybody is different, and truthfully, as long

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as you've got a income plan laid out to some degree,

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and you stick inside the confines of that of that

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income plan, meaning let's determine that for whatever year, for

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whatever you're retiring right now, and you're a client of ours, right,

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So we'll have this.

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Speaker 2: Conversation at point yep, we will.

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Speaker 3: And we're like, okay, so what what are our needs?

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What is that monthly income? And let's say we decide

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with the different things going on that you and your

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husband need to pull And I'm just throwing a number out.

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Let's say it's sixty thousand a year out of your

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retirement assets. And that's right, that's going to be the

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amount of money that we've got going forward, and and

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that's going to be our budget. So sixty grand a year,

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uh five random month income okay, and we plan for

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that as long as you stay inside that budgets. As

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your advisor, I don't really care what you spend it on, right,

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as long as because my whole thing is what is

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your total spend as a percentage of your overall asset base? Right,

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And we want to keep we want to keep that

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number between four to five percent. Okay, Okay, Now different

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conversation is, like you said, I've got five to seven years,

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I want to sock away a lot of extra I

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want to see things as lean as possible. So so

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I would prioritize it this way, and I do that

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with clients. A get rid of as much debt as

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you possibly can.

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Speaker 2: That's number one.

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Speaker 3: Yeah, because because now and we'll get to other things

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like phones, but you're going to always need a phone,

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so there's going to be a built in cost to that, right. Right.

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Another thing that we talked to clients about, okay, especially today,

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that may or may not mean paying aggressively trying to

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pay down your mortgage. Right, So again I hope we

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mortgage is a debt, okay, but it's a different Cars.

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Speaker 2: Our cars a debt. Do you consider cars a debt?

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Speaker 3: Yes?

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Speaker 1: That was like the whole other thing on this list.

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I thought it was so interesting that they that debt

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was one thing, but then you know, like cars were

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a whole different thing, and I thought cars are a debt.

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Cars a house, I mean those are all come to me,

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that's a debt.

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Speaker 3: Yes, yes, Now a house again, okay, so we got

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to treat a house a little bit differently, because a

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house is an appreciating asset over a long period of time,

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and we have to live somewhere, and so housing should

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be looked at really in its own category. Okay. But

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what I would say though, and this is why. Look,

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I'm not saying this to drive business to us, but

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it's just factually true. This is really why you need

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to start working with an advisor or a planner on

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some level prior to retiring, right, because it's the right.

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The last ten years leading into retirement, quite honestly, are

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more important than the beginning of retirement financially right, making

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sure that we're in the right position, right. So, like

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I said, it's prioritizing it. I can't tell you how

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many times I've looked at clients have been like, no, stop,

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do not pay your mortgage off, Zach. Why wouldn't we

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want to pay our mortgage off because you've got ten

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years left on your mortgage, right, And they go yes,

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And I go, okay, well we can go buy a

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ten year treasury paying twice the amount of interest per

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year that your mortgage costs you. Okay, So what we're

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going to do is we're going to take that money

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you were going to use to pay off your house, okay,

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and we're gonna let We're gonna let that excess interest

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pay off your mortgage for you, and that way you

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maintain both assets. You've got the house and you've got

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the cash. Right now, I'm not saying you shouldn't pay

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off your house. I'm saying you should talk to somebody

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like us to see if that's a good idea.

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Speaker 1: Right yeah, Okay, So on that vein, I hate to

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interrupt it, but on that vein, like, do you do

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you recommend that people or do you find it? I

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feel like this is probably common sense. You're probably gonna

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I think I probably know the answer. But would you

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rather have a client who is, you know, fifty five

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and getting ready to retire in ten years or would

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you rather have a client that's thirty five and has like.

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Speaker 2: Their whole adult life ahead of them?

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Speaker 1: Because I have kids who are at thirty and thirty five,

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and I'm like, you got to go talk to Zach

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and then like that, I think, my god, they will

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be able to retire like twenty years, like less than

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twenty years, because you know what I mean, what's like

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what's better? But I'm obviously it's better for them to

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come to you early, right, or come just have a

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financial advisor early.

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Speaker 3: Yeah, for them. I mean, now for me, if you

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give me that quar question, I'm going to take the

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fifty five year old person every single time or older.

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Why is that they have more money?

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Speaker 2: Yeah? Right, it's a great okay, yeah.

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Speaker 3: So and so I get it, you know, and I

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get it. The other thing, truthfully, outside of just financial

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is that they look, if you're thirty to thirty five

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years old, having an awesome retirement is a choice. It

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doesn't take any and and because of that, it's weird

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because it seems like I'm selling our own services down

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down the road. I'm not. But what I'm saying is

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we can deliver substantially more value to somebody that already

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has saved a significant amount of right, and and somebody

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that is time constrained. Right. So, like a fifty five

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to sixty year old person, the clock is ticking. They're

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going to retire at some point in the next ten, ten,

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twelve years right now question yeah, right, and so and

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so risk management at that point becomes much more important, right. Diversification,

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laying things out, planning, that incomes strategy where when I

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look at a young person, do I think that they

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would do better with us over the next twenty or

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thirty years? Sure, but do I think it's going to

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be life changing? No? And I tell all these young people,

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I go, look, if you want an unbelievable retirement, do

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one do one thing and one thing alone. Max out

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your retirement plan every single year yep. And anytime the

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market drops more than twenty percent, throw more money at

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it period end of story. And they're like, well, I

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don't want to lose. I go, You're not going to lose.

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This is all money that's stuck in a retirement account anyway,

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like it eventually will come back. And they're like, you're

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saying the market's going to always go up, And I go, yes,

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if for no other reason, just for inflation over time, right,

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And the people are like, well, if you think that's

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your take, why do you think you need to manage risk?

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And I'm like, well, because guys, there are multiple times

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in the history of our country where stock markets have

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been negative for you know, for over twenty five years.

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So eventually is a eventually is on the side of

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a thirty five year old e thirty five years.

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Speaker 2: Old can do that? Yeah, totally do that.

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Speaker 3: Well. Well, and here's the thing you can they can

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actually make really good progress too. So for instance, from

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the years of two thousand to twenty thirteen, the stock

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market was flat. Okay, it didn't go anywhere for thirteen years. Hey,

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Yet at the same time, I've got several clients who

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saw substantial gains in their four oh one K. Why

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well because during the downtimes they kept contributing into their

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four oh one k. So when the markets got back

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up to their highs, their account balance was significantly greater. Right,

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And so you can you can even make significant progress

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in a flat market. Well, if you're pulling money out

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of your account every single month, it doesn't work the

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same way, right of a flat market for thirteen years

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will kill you, right because you're just you're pulling money out,

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you're not putting any back in.

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Speaker 2: Right.

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Speaker 3: So in getting back to what we look at, so

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I would say, look that the number one most onerous

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and odious type of debt is credit cards. Okay, so

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get get rid of that credit card expense.

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Speaker 2: And then cars, yep, car cars.

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Speaker 3: And hey, and and you know, be smart about cars

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I tell this to you know, I tell this to

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as many people as you you will listen. Every time

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you see a car, just see a money incinerating pit.

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Speaker 1: Oh my god, you just literally just set it on fire.

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You set you on fire when you buy a car.

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Speaker 3: It is and it is so it is so shocking

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to me when you see people that make good money too.

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And I'm not saying this isn't you know, there's a

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good income. But even even if you go to people

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that are making let's say in the range of two

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hundred and fifty to four hundred thousand dollars a year,

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the average car loan right now is over one thousand dollars.

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Oh my goodness.

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Speaker 2: I can't like that.

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Speaker 3: I still I think it's average new car loan or

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something like that.

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Speaker 1: But it's old where it pains me because I live

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in a world where I'm like, I only want my

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car payment to be like three hundred dollars a month. Yeah, yeah,

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that person, you know what I mean, because I was

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raised in the eighties and I don't even I either

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don't want a car payment, or if I have a

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car payment, I don't want it to be more than

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like three hundred dollars. I'm so cheap when it comes

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to that, I cannot even imagine to wrap my brain

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around one thousand dollars a month of a car payment,

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which I guess.

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Speaker 3: Here's well, and here's the crazy part. Okay, let's say

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you've got two Let's say and this is well with

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the normal. Let's say you have two people. You got

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a household making four undred thousand dollars a year, right,

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great level of income total, Okay, And let's and let's

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say you've got twenty three hundred dollars a year in

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car payments. Okay, twenty three hundred dollars a year. You're

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looking at twenty four let's call that, you know, twenty

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eight thousand dollars a year. Okay, Yeah, so you're you're

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four hundred grand, right, let's carve off thirty percent right

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off the top. So you're you're four hundred grand. You're

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you're like two fifty right, So let's call that two

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fifty two sixty take home pay because a tax, that's right, yeah,

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because Texas, so ten percent of your take home pay,

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ten percent you're making thousand dollars a year, ten percent

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is going to a depreciating asset that has absolutely zero

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chance to deliver you a positive net return, right and

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so so quote unquote can you afford that payment? Well, yes,

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but it what cost?

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Speaker 2: Right?

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Speaker 3: If you have a car payment, it should be a

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rounding error on your annual income, a rounding error and

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buy that. I'm talking like less than five percent of

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your take home Yeah, okay, agree if it's If it's not,

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don't buy that car. If it's not, save up for

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an extra year, right, or buy a lesser car. It

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is like it it just kills me because you sit

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there and you watch it, and you go, look, if

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you made a different decision today, I guarantee you your

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outcome will be better down the road. And yet and

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yet we still do it. I mean, like, think how

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crazy that is, even if you're making foreigner grand a

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year to be driving one hundred and twenty thousand dollars car.

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Speaker 1: And I see people do it all the time. I know,

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I see people around me do it all the time,

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and it's like, what.

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Speaker 2: Are you doing?

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Speaker 3: It's the norm and I and but.

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Speaker 1: Again I still go back to the whole I'm I

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guess it's maybe it's an age thing because I'm like,

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I remember when you could buy a condo for one

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hundred and twenty.

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Speaker 2: Thousand dollars, I'm like, I just can't. I can't do it,

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and they can't.

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Speaker 3: I know, it's crazy, it's all.

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Speaker 2: It's all crazy.

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Speaker 3: So on the phone thing too, on the phone thing too,

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there's another one right there where I sit there and

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go look at the phone plans. There's all these other

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phone plans out there right now, and they're competing.

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Speaker 2: They're all eating with one another.

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Speaker 1: I'm doing with that with my mom, who is I

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guess considered elderly. She would really get mad if I

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called her that. But we do that with our mothers.

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My husband and I try to get them better plans

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because they you know, there's no reason that a person,

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one individual, should be spending one hundred fifty dollars a

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month on a phone. So it's like, there's just no

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reason because there's a lot of people, a lot of

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companies competing with one another to get your business. Do

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your research because you can probably get a phone for

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like fifty.

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Speaker 2: Bucks a month, honestly, yeah, or loss even in some.

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Speaker 3: Yeah, one other quick one to look if you can

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afford it, and it works long term health, long term

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care insurance, right, long term care. Everybody's freaked out about

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long term care costs. If it works, it can be

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a wonderful thing. Okay. The problem is is if you

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are considering that. Again, I'm not saying this to drive

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people to us, but you need to speak to somebody.

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Because long term healthcare, long term care insurance that you

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could buy fifteen twenty years ago, it was incredible, okay,

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but it was so good that it actually drove several

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of the companies issuing it out of business. Really, yeah,

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since then, because people are living so much longer since then. Basically,

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a lot of these quote unquote long term care insurance

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plans that you see effectively, what they are is their

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pre paid long term care. So meaning if I've got

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to put in and this is common, if i have

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to put in two hundred to two hundred and fifty

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thousand dollars into a long term care policy, okay, and

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that gives me a million dollars of coverage. Okay. When

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you start doing some math over a fifteen or twenty

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year period of time, what you start seeing is that

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you're what you're doing is you're be paying the insurance cost.

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It's not really giving you a big insurance You know

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what I'm saying.

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Speaker 2: Yep, So there's another place that people need to be Yeah, it'd.

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Speaker 3: Be it'd be sort of like paying it'd be sort

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of like paying the equivalent of five hundred thousand dollars

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for a million dollar life insurance policies.

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Speaker 2: Oh my gosh.

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Speaker 3: Yeah, you know what I'm saying.

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Speaker 2: That's such a rate. That's a great analogy.

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Speaker 3: Yeah, if something happens to you, it's going to work out,

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but chances are it's not going to and you'd be

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better off because remember seven percent returns your money, double

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your money every ten years. Right. So if I'm buying

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a long term care policy, let's say at the age

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of fifty five, and I'm putting up two hundred thousand

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dollars in that policy, Well, if I just get a

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seven percent rate of return, that two hundred thousand dollars

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is going to be four hundred thousand by the time

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I'm sixty five. Okay, then it's going to be eight

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hundred thousand by the time I'm seventy five. Well, most

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most cases do not. You're not going to run into

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long term care needs typically before seventy three seventy four,

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So you know, then you're looking at it and going, Okay,

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I've got eight hundred thousand dollars of cash sitting here

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versus a million dollars in a long term care policy.

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But the cash I can use for anything the long

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term care policy is you know, if I pull money

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out of it, it affects the it affects the coverage,

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it does all these things. So again it's it's cutting

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back on expenses but also making sure that we're positioning

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our money to where it's giving us, you know, for

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lack of a better term, the biggest bang for our buck,

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and that this is.

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Speaker 2: This is the good stuff. I love this stuff. Yeah, yeah,

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it's I turned out over this stuff.

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Speaker 1: I totally geek out over it, Like the where can

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I because listen, I Like I was telling our producer

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at Kuran before we got on that I am the

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person who buys all the Starbucks mugs from every single

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like state and Starbucks, Like I'm that crazy old lady

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that I need to stop spending money on that stupid crap, right,

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So I'm guilty of it too. We're all guilty of

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places where we could save money. At certain places and

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people need to come talk to you. I know you're

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saying I'm not trying to sell this or anything, but

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you are the person to talk to Zach. You are

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the guy to talk to you about money. If people

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need to get their crap together, how can they.

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Speaker 2: Get a hold of you.

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Speaker 3: Yeah, So easiest way is go to Borwercapitalmanagement dot com

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or Know Your Risk podcast dot com. But yeah, Bullwarkcapitalmanagement

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dot com. Give us a call. We've got our roadshows

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that we do every six weeks. We've got one coming

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up where we kind of run through how we do,

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who we are, how we do, what we do, what

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we do, and you know, so you go to one

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of those and it's free, no obligation, and you'll leave

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with a really good understanding of of who we are

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and how we do what we do. So that's probably

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the easiest way to get all of us.

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Speaker 2: Yeah, good stuff, you guys. Check them out.

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Speaker 3: Thanks Bach, Thanks as always. Investment advisory services offered through

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Trek financialc and SEC registered Investment advisor. The opinions expressed

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in this programer for general informational purposes only and are

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not intended to provide specific advice or recommendations for any

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individual or on any specific security. Any references to performance

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00:18:23,359 --> 00:18:25,319
of security so it thought to be materially accurate, and

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actual performance may different. Investments involved risk and are not guaranteed.

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Past performance doesn't guarantee future results Trek twenty four to three,

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Zeroly