Speaker 1: Welcome to another edition of the Chicks on the Right Show.
Speaker 1: We are talking to our friend and sponsor of the show,
Speaker 1: Zach Abraham from Bulwer Capital Management. Zach, there was an
Speaker 1: article in Money Talks News, which is I'm sure a
Speaker 1: publication that you read every single day, and it was
Speaker 1: about the eight expenses that retirees regret not cutting sooner.
Speaker 1: And so I wanted to talk to you a little
Speaker 1: bit about those eight expenses because I myself am spending
Speaker 1: money on all of these things. Of course, so I'm
Speaker 1: freaking out now, totally freaking out, because yeah, there's a lot.
Speaker 1: I mean, I'm sure that there's probably even more on
Speaker 1: the list because you've been doing this for a while,
Speaker 1: you have been advising people on all things financial. I'm
Speaker 1: going to give you some of the examples and then
Speaker 1: we can talk a little bit more about it. But
Speaker 1: like phone bills, telecom bills is one of them, Eating
Speaker 1: in nice restaurants or even not nice restaurants, just eating out,
Speaker 1: and bougie grocery. I mean, like, let's face it, you
Speaker 1: don't really need those tiny mini Reese's peanut butter cups
Speaker 1: from that fougie grocer. I mean, they're really good, but
Speaker 1: you know what I mean. Debt in general was number three.
Speaker 1: Transportation was number four. New cars interests. People like new cars,
Speaker 1: you know, they don't like used cars. Clothing. The average
Speaker 1: American household spends more than two thousand dollars a year
Speaker 1: on apparel and services like dry cleaning, which is kind
Speaker 1: of that's you know, reading materials. I thought this was interesting,
Speaker 1: especially older people they still like to read, whereas these
Speaker 1: young whipper snappers like things in small little bits, you know,
Speaker 1: but they have subscriptions to things that are you know, outdated.
Speaker 2: Then there's a couple more.
Speaker 1: One of them, which I think is very interesting, is
Speaker 1: contributions to traditional retirement accounts. And then there's the whole
Speaker 1: bucket of other stuff, which was the number eight, which
Speaker 1: was like you know, cleaning services, home renovations, stuff like collections,
Speaker 1: lawn services, crap like that description pet food like you know,
Speaker 1: yeah needs. So like, what would you say is the
Speaker 1: first thing that should be cut if you were if
Speaker 1: somebody came to you and said, I want to retire
Speaker 1: in like five to seven years, what what do you
Speaker 1: see in your practice?
Speaker 3: So, first of all, is it relates to is it
Speaker 3: relates to retirement everybody is different, and truthfully, as long
Speaker 3: as you've got a income plan laid out to some degree,
Speaker 3: and you stick inside the confines of that of that
Speaker 3: income plan, meaning let's determine that for whatever year, for
Speaker 3: whatever you're retiring right now, and you're a client of ours, right,
Speaker 3: So we'll have this.
Speaker 2: Conversation at point yep, we will.
Speaker 3: And we're like, okay, so what what are our needs?
Speaker 3: What is that monthly income? And let's say we decide
Speaker 3: with the different things going on that you and your
Speaker 3: husband need to pull And I'm just throwing a number out.
Speaker 3: Let's say it's sixty thousand a year out of your
Speaker 3: retirement assets. And that's right, that's going to be the
Speaker 3: amount of money that we've got going forward, and and
Speaker 3: that's going to be our budget. So sixty grand a year,
Speaker 3: uh five random month income okay, and we plan for
Speaker 3: that as long as you stay inside that budgets. As
Speaker 3: your advisor, I don't really care what you spend it on, right,
Speaker 3: as long as because my whole thing is what is
Speaker 3: your total spend as a percentage of your overall asset base? Right,
Speaker 3: And we want to keep we want to keep that
Speaker 3: number between four to five percent. Okay, Okay, Now different
Speaker 3: conversation is, like you said, I've got five to seven years,
Speaker 3: I want to sock away a lot of extra I
Speaker 3: want to see things as lean as possible. So so
Speaker 3: I would prioritize it this way, and I do that
Speaker 3: with clients. A get rid of as much debt as
Speaker 3: you possibly can.
Speaker 2: That's number one.
Speaker 3: Yeah, because because now and we'll get to other things
Speaker 3: like phones, but you're going to always need a phone,
Speaker 3: so there's going to be a built in cost to that, right. Right.
Speaker 3: Another thing that we talked to clients about, okay, especially today,
Speaker 3: that may or may not mean paying aggressively trying to
Speaker 3: pay down your mortgage. Right, So again I hope we
Speaker 3: mortgage is a debt, okay, but it's a different Cars.
Speaker 2: Our cars a debt. Do you consider cars a debt?
Speaker 3: Yes?
Speaker 1: That was like the whole other thing on this list.
Speaker 1: I thought it was so interesting that they that debt
Speaker 1: was one thing, but then you know, like cars were
Speaker 1: a whole different thing, and I thought cars are a debt.
Speaker 1: Cars a house, I mean those are all come to me,
Speaker 1: that's a debt.
Speaker 3: Yes, yes, Now a house again, okay, so we got
Speaker 3: to treat a house a little bit differently, because a
Speaker 3: house is an appreciating asset over a long period of time,
Speaker 3: and we have to live somewhere, and so housing should
Speaker 3: be looked at really in its own category. Okay. But
Speaker 3: what I would say though, and this is why. Look,
Speaker 3: I'm not saying this to drive business to us, but
Speaker 3: it's just factually true. This is really why you need
Speaker 3: to start working with an advisor or a planner on
Speaker 3: some level prior to retiring, right, because it's the right.
Speaker 3: The last ten years leading into retirement, quite honestly, are
Speaker 3: more important than the beginning of retirement financially right, making
Speaker 3: sure that we're in the right position, right. So, like
Speaker 3: I said, it's prioritizing it. I can't tell you how
Speaker 3: many times I've looked at clients have been like, no, stop,
Speaker 3: do not pay your mortgage off, Zach. Why wouldn't we
Speaker 3: want to pay our mortgage off because you've got ten
Speaker 3: years left on your mortgage, right, And they go yes,
Speaker 3: And I go, okay, well we can go buy a
Speaker 3: ten year treasury paying twice the amount of interest per
Speaker 3: year that your mortgage costs you. Okay, So what we're
Speaker 3: going to do is we're going to take that money
Speaker 3: you were going to use to pay off your house, okay,
Speaker 3: and we're gonna let We're gonna let that excess interest
Speaker 3: pay off your mortgage for you, and that way you
Speaker 3: maintain both assets. You've got the house and you've got
Speaker 3: the cash. Right now, I'm not saying you shouldn't pay
Speaker 3: off your house. I'm saying you should talk to somebody
Speaker 3: like us to see if that's a good idea.
Speaker 1: Right yeah, Okay, So on that vein, I hate to
Speaker 1: interrupt it, but on that vein, like, do you do
Speaker 1: you recommend that people or do you find it? I
Speaker 1: feel like this is probably common sense. You're probably gonna
Speaker 1: I think I probably know the answer. But would you
Speaker 1: rather have a client who is, you know, fifty five
Speaker 1: and getting ready to retire in ten years or would
Speaker 1: you rather have a client that's thirty five and has like.
Speaker 2: Their whole adult life ahead of them?
Speaker 1: Because I have kids who are at thirty and thirty five,
Speaker 1: and I'm like, you got to go talk to Zach
Speaker 1: and then like that, I think, my god, they will
Speaker 1: be able to retire like twenty years, like less than
Speaker 1: twenty years, because you know what I mean, what's like
Speaker 1: what's better? But I'm obviously it's better for them to
Speaker 1: come to you early, right, or come just have a
Speaker 1: financial advisor early.
Speaker 3: Yeah, for them. I mean, now for me, if you
Speaker 3: give me that quar question, I'm going to take the
Speaker 3: fifty five year old person every single time or older.
Speaker 3: Why is that they have more money?
Speaker 2: Yeah? Right, it's a great okay, yeah.
Speaker 3: So and so I get it, you know, and I
Speaker 3: get it. The other thing, truthfully, outside of just financial
Speaker 3: is that they look, if you're thirty to thirty five
Speaker 3: years old, having an awesome retirement is a choice. It
Speaker 3: doesn't take any and and because of that, it's weird
Speaker 3: because it seems like I'm selling our own services down
Speaker 3: down the road. I'm not. But what I'm saying is
Speaker 3: we can deliver substantially more value to somebody that already
Speaker 3: has saved a significant amount of right, and and somebody
Speaker 3: that is time constrained. Right. So, like a fifty five
Speaker 3: to sixty year old person, the clock is ticking. They're
Speaker 3: going to retire at some point in the next ten, ten,
Speaker 3: twelve years right now question yeah, right, and so and
Speaker 3: so risk management at that point becomes much more important, right. Diversification,
Speaker 3: laying things out, planning, that incomes strategy where when I
Speaker 3: look at a young person, do I think that they
Speaker 3: would do better with us over the next twenty or
Speaker 3: thirty years? Sure, but do I think it's going to
Speaker 3: be life changing? No? And I tell all these young people,
Speaker 3: I go, look, if you want an unbelievable retirement, do
Speaker 3: one do one thing and one thing alone. Max out
Speaker 3: your retirement plan every single year yep. And anytime the
Speaker 3: market drops more than twenty percent, throw more money at
Speaker 3: it period end of story. And they're like, well, I
Speaker 3: don't want to lose. I go, You're not going to lose.
Speaker 3: This is all money that's stuck in a retirement account anyway,
Speaker 3: like it eventually will come back. And they're like, you're
Speaker 3: saying the market's going to always go up, And I go, yes,
Speaker 3: if for no other reason, just for inflation over time, right,
Speaker 3: And the people are like, well, if you think that's
Speaker 3: your take, why do you think you need to manage risk?
Speaker 3: And I'm like, well, because guys, there are multiple times
Speaker 3: in the history of our country where stock markets have
Speaker 3: been negative for you know, for over twenty five years.
Speaker 3: So eventually is a eventually is on the side of
Speaker 3: a thirty five year old e thirty five years.
Speaker 2: Old can do that? Yeah, totally do that.
Speaker 3: Well. Well, and here's the thing you can they can
Speaker 3: actually make really good progress too. So for instance, from
Speaker 3: the years of two thousand to twenty thirteen, the stock
Speaker 3: market was flat. Okay, it didn't go anywhere for thirteen years. Hey,
Speaker 3: Yet at the same time, I've got several clients who
Speaker 3: saw substantial gains in their four oh one K. Why
Speaker 3: well because during the downtimes they kept contributing into their
Speaker 3: four oh one k. So when the markets got back
Speaker 3: up to their highs, their account balance was significantly greater. Right,
Speaker 3: And so you can you can even make significant progress
Speaker 3: in a flat market. Well, if you're pulling money out
Speaker 3: of your account every single month, it doesn't work the
Speaker 3: same way, right of a flat market for thirteen years
Speaker 3: will kill you, right because you're just you're pulling money out,
Speaker 3: you're not putting any back in.
Speaker 2: Right.
Speaker 3: So in getting back to what we look at, so
Speaker 3: I would say, look that the number one most onerous
Speaker 3: and odious type of debt is credit cards. Okay, so
Speaker 3: get get rid of that credit card expense.
Speaker 2: And then cars, yep, car cars.
Speaker 3: And hey, and and you know, be smart about cars
Speaker 3: I tell this to you know, I tell this to
Speaker 3: as many people as you you will listen. Every time
Speaker 3: you see a car, just see a money incinerating pit.
Speaker 1: Oh my god, you just literally just set it on fire.
Speaker 1: You set you on fire when you buy a car.
Speaker 3: It is and it is so it is so shocking
Speaker 3: to me when you see people that make good money too.
Speaker 3: And I'm not saying this isn't you know, there's a
Speaker 3: good income. But even even if you go to people
Speaker 3: that are making let's say in the range of two
Speaker 3: hundred and fifty to four hundred thousand dollars a year,
Speaker 3: the average car loan right now is over one thousand dollars.
Speaker 3: Oh my goodness.
Speaker 2: I can't like that.
Speaker 3: I still I think it's average new car loan or
Speaker 3: something like that.
Speaker 1: But it's old where it pains me because I live
Speaker 1: in a world where I'm like, I only want my
Speaker 1: car payment to be like three hundred dollars a month. Yeah, yeah,
Speaker 1: that person, you know what I mean, because I was
Speaker 1: raised in the eighties and I don't even I either
Speaker 1: don't want a car payment, or if I have a
Speaker 1: car payment, I don't want it to be more than
Speaker 1: like three hundred dollars. I'm so cheap when it comes
Speaker 1: to that, I cannot even imagine to wrap my brain
Speaker 1: around one thousand dollars a month of a car payment,
Speaker 1: which I guess.
Speaker 3: Here's well, and here's the crazy part. Okay, let's say
Speaker 3: you've got two Let's say and this is well with
Speaker 3: the normal. Let's say you have two people. You got
Speaker 3: a household making four undred thousand dollars a year, right,
Speaker 3: great level of income total, Okay, And let's and let's
Speaker 3: say you've got twenty three hundred dollars a year in
Speaker 3: car payments. Okay, twenty three hundred dollars a year. You're
Speaker 3: looking at twenty four let's call that, you know, twenty
Speaker 3: eight thousand dollars a year. Okay, Yeah, so you're you're
Speaker 3: four hundred grand, right, let's carve off thirty percent right
Speaker 3: off the top. So you're you're four hundred grand. You're
Speaker 3: you're like two fifty right, So let's call that two
Speaker 3: fifty two sixty take home pay because a tax, that's right, yeah,
Speaker 3: because Texas, so ten percent of your take home pay,
Speaker 3: ten percent you're making thousand dollars a year, ten percent
Speaker 3: is going to a depreciating asset that has absolutely zero
Speaker 3: chance to deliver you a positive net return, right and
Speaker 3: so so quote unquote can you afford that payment? Well, yes,
Speaker 3: but it what cost?
Speaker 2: Right?
Speaker 3: If you have a car payment, it should be a
Speaker 3: rounding error on your annual income, a rounding error and
Speaker 3: buy that. I'm talking like less than five percent of
Speaker 3: your take home Yeah, okay, agree if it's If it's not,
Speaker 3: don't buy that car. If it's not, save up for
Speaker 3: an extra year, right, or buy a lesser car. It
Speaker 3: is like it it just kills me because you sit
Speaker 3: there and you watch it, and you go, look, if
Speaker 3: you made a different decision today, I guarantee you your
Speaker 3: outcome will be better down the road. And yet and
Speaker 3: yet we still do it. I mean, like, think how
Speaker 3: crazy that is, even if you're making foreigner grand a
Speaker 3: year to be driving one hundred and twenty thousand dollars car.
Speaker 1: And I see people do it all the time. I know,
Speaker 1: I see people around me do it all the time,
Speaker 1: and it's like, what.
Speaker 2: Are you doing?
Speaker 3: It's the norm and I and but.
Speaker 1: Again I still go back to the whole I'm I
Speaker 1: guess it's maybe it's an age thing because I'm like,
Speaker 1: I remember when you could buy a condo for one
Speaker 1: hundred and twenty.
Speaker 2: Thousand dollars, I'm like, I just can't. I can't do it,
Speaker 2: and they can't.
Speaker 3: I know, it's crazy, it's all.
Speaker 2: It's all crazy.
Speaker 3: So on the phone thing too, on the phone thing too,
Speaker 3: there's another one right there where I sit there and
Speaker 3: go look at the phone plans. There's all these other
Speaker 3: phone plans out there right now, and they're competing.
Speaker 2: They're all eating with one another.
Speaker 1: I'm doing with that with my mom, who is I
Speaker 1: guess considered elderly. She would really get mad if I
Speaker 1: called her that. But we do that with our mothers.
Speaker 1: My husband and I try to get them better plans
Speaker 1: because they you know, there's no reason that a person,
Speaker 1: one individual, should be spending one hundred fifty dollars a
Speaker 1: month on a phone. So it's like, there's just no
Speaker 1: reason because there's a lot of people, a lot of
Speaker 1: companies competing with one another to get your business. Do
Speaker 1: your research because you can probably get a phone for
Speaker 1: like fifty.
Speaker 2: Bucks a month, honestly, yeah, or loss even in some.
Speaker 3: Yeah, one other quick one to look if you can
Speaker 3: afford it, and it works long term health, long term
Speaker 3: care insurance, right, long term care. Everybody's freaked out about
Speaker 3: long term care costs. If it works, it can be
Speaker 3: a wonderful thing. Okay. The problem is is if you
Speaker 3: are considering that. Again, I'm not saying this to drive
Speaker 3: people to us, but you need to speak to somebody.
Speaker 3: Because long term healthcare, long term care insurance that you
Speaker 3: could buy fifteen twenty years ago, it was incredible, okay,
Speaker 3: but it was so good that it actually drove several
Speaker 3: of the companies issuing it out of business. Really, yeah,
Speaker 3: since then, because people are living so much longer since then. Basically,
Speaker 3: a lot of these quote unquote long term care insurance
Speaker 3: plans that you see effectively, what they are is their
Speaker 3: pre paid long term care. So meaning if I've got
Speaker 3: to put in and this is common, if i have
Speaker 3: to put in two hundred to two hundred and fifty
Speaker 3: thousand dollars into a long term care policy, okay, and
Speaker 3: that gives me a million dollars of coverage. Okay. When
Speaker 3: you start doing some math over a fifteen or twenty
Speaker 3: year period of time, what you start seeing is that
Speaker 3: you're what you're doing is you're be paying the insurance cost.
Speaker 3: It's not really giving you a big insurance You know
Speaker 3: what I'm saying.
Speaker 2: Yep, So there's another place that people need to be Yeah, it'd.
Speaker 3: Be it'd be sort of like paying it'd be sort
Speaker 3: of like paying the equivalent of five hundred thousand dollars
Speaker 3: for a million dollar life insurance policies.
Speaker 2: Oh my gosh.
Speaker 3: Yeah, you know what I'm saying.
Speaker 2: That's such a rate. That's a great analogy.
Speaker 3: Yeah, if something happens to you, it's going to work out,
Speaker 3: but chances are it's not going to and you'd be
Speaker 3: better off because remember seven percent returns your money, double
Speaker 3: your money every ten years. Right. So if I'm buying
Speaker 3: a long term care policy, let's say at the age
Speaker 3: of fifty five, and I'm putting up two hundred thousand
Speaker 3: dollars in that policy, Well, if I just get a
Speaker 3: seven percent rate of return, that two hundred thousand dollars
Speaker 3: is going to be four hundred thousand by the time
Speaker 3: I'm sixty five. Okay, then it's going to be eight
Speaker 3: hundred thousand by the time I'm seventy five. Well, most
Speaker 3: most cases do not. You're not going to run into
Speaker 3: long term care needs typically before seventy three seventy four,
Speaker 3: So you know, then you're looking at it and going, Okay,
Speaker 3: I've got eight hundred thousand dollars of cash sitting here
Speaker 3: versus a million dollars in a long term care policy.
Speaker 3: But the cash I can use for anything the long
Speaker 3: term care policy is you know, if I pull money
Speaker 3: out of it, it affects the it affects the coverage,
Speaker 3: it does all these things. So again it's it's cutting
Speaker 3: back on expenses but also making sure that we're positioning
Speaker 3: our money to where it's giving us, you know, for
Speaker 3: lack of a better term, the biggest bang for our buck,
Speaker 3: and that this is.
Speaker 2: This is the good stuff. I love this stuff. Yeah, yeah,
Speaker 2: it's I turned out over this stuff.
Speaker 1: I totally geek out over it, Like the where can
Speaker 1: I because listen, I Like I was telling our producer
Speaker 1: at Kuran before we got on that I am the
Speaker 1: person who buys all the Starbucks mugs from every single
Speaker 1: like state and Starbucks, Like I'm that crazy old lady
Speaker 1: that I need to stop spending money on that stupid crap, right,
Speaker 1: So I'm guilty of it too. We're all guilty of
Speaker 1: places where we could save money. At certain places and
Speaker 1: people need to come talk to you. I know you're
Speaker 1: saying I'm not trying to sell this or anything, but
Speaker 1: you are the person to talk to Zach. You are
Speaker 1: the guy to talk to you about money. If people
Speaker 1: need to get their crap together, how can they.
Speaker 2: Get a hold of you.
Speaker 3: Yeah, So easiest way is go to Borwercapitalmanagement dot com
Speaker 3: or Know Your Risk podcast dot com. But yeah, Bullwarkcapitalmanagement
Speaker 3: dot com. Give us a call. We've got our roadshows
Speaker 3: that we do every six weeks. We've got one coming
Speaker 3: up where we kind of run through how we do,
Speaker 3: who we are, how we do, what we do, what
Speaker 3: we do, and you know, so you go to one
Speaker 3: of those and it's free, no obligation, and you'll leave
Speaker 3: with a really good understanding of of who we are
Speaker 3: and how we do what we do. So that's probably
Speaker 3: the easiest way to get all of us.
Speaker 2: Yeah, good stuff, you guys. Check them out.
Speaker 3: Thanks Bach, Thanks as always. Investment advisory services offered through
Speaker 3: Trek financialc and SEC registered Investment advisor. The opinions expressed
Speaker 3: in this programer for general informational purposes only and are
Speaker 3: not intended to provide specific advice or recommendations for any
Speaker 3: individual or on any specific security. Any references to performance
Speaker 3: of security so it thought to be materially accurate, and
Speaker 3: actual performance may different. Investments involved risk and are not guaranteed.
Speaker 3: Past performance doesn't guarantee future results Trek twenty four to three,
Speaker 3: Zeroly