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Untucked Episode 90

Click here to listen to our discussion about Dave Ramsey and the reality behind his claims.

Click here to listen to the full Untucked Episode 90. You can also listen on Apple, Spotify or Google podcasts.

Episode 90

Meghan Tait: [00:00:00] Want to get into Coach’s Corner? Let’s do it. Uh, so there was a clip, I don’t know that it went viral on Twitter, I mean it made its way onto my Twitter, but, um, it is a clip of Dave Ramsey making the statement that it’s not hard to beat the S& P 500. I guess Dave has some sort of like, quasi podcast radio call and show where people call in with their situation and look for advice.

And we’ve obviously made our feelings on the Dave Ramsey’s, the Susie Ormans of the world very clear. Uh, but we wanted to maybe tackle that statement in particular and why it’s just. Irresponsible,

Jeff Mastronardo: so what are I should have done this research prior to today? What are Dave Ramsey’s qualifications? What does he think?


Mike Traynor: does he do? He doesn’t have any qualifications at all from a Professional standpoint. He’s literally just a [00:01:00] guy who’s written some books launched a radio show and talks to the American public via those platforms and, um, tells them what to do with their money. He, I mean, very, in a general sense,

Jeff Mastronardo: not financial advice.

Meghan Tait: So people will call into a show and give a, you know, 15 second summary of their situation. I have X amount in student loan debt. I want to buy a house. I make this much and I have this much credit card debt. And he tells them what to do.

Jeff Mastronardo: And that’s

Meghan Tait: allow what? Yeah. And is also extremely critical of people’s situations.

Mike Traynor: Yeah. And so, yes, he, in his defense, he, he consistently tells people to don’t ever get yourself in credit card debt. Um, don’t spend more than you make those kinds of basic things that [00:02:00] so he like

Jeff Mastronardo: basically tells people like. Breathe air and drink

Mike Traynor: water. Yeah. Yeah. Captain obvious for sure. But he also, um, on the other side of things, way overstates the impact of what you will have if you invest over time.

Uh, cause he uses expectations of probably like 12 plus percent returns. Um, he doesn’t, he, he, he advises. Anyone and everyone, no matter their age or situation, to have everything in stocks. Um, and he’s, and he’s really a douchebag about how he treats people and talks to people and ridicules them for their, the situations that they’ve gotten themselves in, which is probably the most off putting thing about the guy, in my opinion.

Jeff Mastronardo: I completely agree. Okay, I’ve seen a little bit of him and that’s what I’ve taken

Meghan Tait: away. So there are people who subscribe to his philosophies and as Mike said, a lot of it is like anti debt and most of the time in, in a good way, like paying down credit card debt, attacking high interest debt or whatever, [00:03:00] but there’s, you know.

Pay let’s accelerate our mortgage payments, even though we have a two and a half percent mortgage. It’s like there’s not a lot of I’ll say he’s very black and white. I guess maybe a good way to put it

Jeff Mastronardo: So in this in this clip, he basically tells his co host that He’s averaging most years and and averages most years he gets 13 percent per year on his investments and Averages about 12 to 13 percent per year because it’s not hard To beat the S& P 500 because the S& P 500 is just an average

Mike Traynor: of the market.

Which it’s not, but that’s what he

Meghan Tait: said it was. That’s what he said. That was the clip that he said. Yes.

Jeff Mastronardo: So yeah, explain. I was, I was a little scratch in my head when he said the S& P is an average of the market. What did he mean by that?

Mike Traynor: We don’t know. Okay. Okay. So, he’s wrong. I highly doubt he’s averaging 12

Jeff Mastronardo: or 13 percent. Unless his average is [00:04:00] over like a, maybe a one or two year period. And he’s also wrong because it is not easy to beat the S& P 500. I mean, I think Vanguard did the research and found that like 80 percent of professional money managers don’t beat the market consistently over time. Isn’t that true?

Mike Traynor: Yes. And the more time goes by, the worse it is, the worse the record

Jeff Mastronardo: people. So how can he make that statement like that information is there?

Mike Traynor: Yeah, well, that’s the thing. I mean, right. He does it. So I pulled up another clip just out of curiosity because I don’t He’s not on my, he doesn’t come across my feed.

Good for you. And in one of them he was railing against people who have expensive car payments. They bought cars that are out of their range. What’s it, what they should be driving. Let’s say he was yelling about people that have a thousand dollar monthly car payments and sell that car, get rid of it, invest that into stocks.

And in [00:05:00] 20 years you’ll have over a million dollars. That’s simple. Like that’s, that’s how he’s talking in this, um, radio show or whatever. And then when you, if you actually look at what he’s claiming, it would require returns that are outrageous for that to turn into a million or more dollars in 20 years, because you’re investing.

240, 000, I guess that’s what it is. Right. Um, and then the market returns would compound that into, not a million, it’s way less than that. It’s still decent. Sure. It’s still directionally the right advice, like don’t spend, don’t blow your money on a ridiculous car payment when you could be investing it.

That is correct. But to make the claim that you’re going to be a, you know, millionaire or a multi millionaire if you just do this is ridiculous. So what we’re

Jeff Mastronardo: trying to like prove or establish in this coach’s corner is what?

Meghan Tait: [00:06:00] Is that beating the market, one, is not easy, shouldn’t be considered easy, and that candidly, like, the goal or attempt to do so is probably unnecessary for most people.

If most people build, a financial plan that’s reflective of their means, their income, their lifestyle, and their goals, getting market returns, getting what the market will give you, is probably enough.

Jeff Mastronardo: It’s most definitely enough.

Meghan Tait: Again, I mean, there’s exceptions where people need to bet it all to get it all back, but like, that’s not

Jeff Mastronardo: a plan.

That’s not a strategy. Like if you live within your means, build a solid financial plan and just get market returns, that’s the best you can do. without just getting flat out lucky. Yeah. So this, this, the fact that this guy makes a statement, it’s what’s wrong with this industry. Because people listen to him and they’re like, Oh, [00:07:00] well, like he’s, if it’s easy, how come my people aren’t doing it?

How come I’m not doing it? Let me hire him. Let me hire that person that says they can beat the market consistently.

Mike Traynor: Yeah. And just another thing that’s so irritating about him and his style and his whole MO is that he. The way that he talks to people, he, you know, he’s this guy from, I don’t know, Kentucky or somewhere, and he’s, he’s just, you know, good old boy who just is talking about how simple and easy it is, and this is what I did, and this is how I’m a multi millionaire.

This is why I read menus from left to right. Up and down the price list. It’s one of his little, which is so cringy, right? And, um, but if you peel back the onion and you look at him and his enterprise that he’s built, which is to make money, the guy apparently makes 30 or 40 million a year from this platform.

He’s currently in the middle of being sued for 150 million by some, [00:08:00] uh, a group of. Listeners, I’ll say, who, um, got completely hosed by one of his sponsors, which was one of these timeshare exit companies. And if you know anything about exiting a timeshare, it’s, it’s impossible. And companies that try to sell you hire us and we’ll get you out of it.

They’re scams and they’re frauds and they’re stealing your money and these are the kind of people that pay him to be on his Program as a sponsor because guess who the audience is it’s millions of people who are buying the shit that he’s selling Yeah, so

Jeff Mastronardo: wow. Yeah, I know that that’s pretty miserable. I did a little research.

Yeah. Thank you for that Yeah, I just think just get the market and stay within your means do the right thing You’ll you’ll that’s that’s the best you can do and unfortunately you start engaging with these people people like this and it’s just I think it leads to poor. Poor expectations and poor

Meghan Tait: results.

And when we say getting the market that’s acknowledging that there’s [00:09:00] gonna be shitty years in the market. Yeah, right. We’re not we’re not saying get the market and avoid 2022 like the suggestion is not that you can time the experience or it’s It’s that you have to, again, build a plan with contingencies.

So if bad markets happen, you have plan B or plan C or something. But like when we say get the market, it’s, we’re being very specific in that. Like that includes the down years. It includes the investments that are down and includes the asset classes that are down for maybe periods of time that make you uncomfortable.

Jeff Mastronardo: You can’t get the market without getting 2022. Right. You can’t. Because if you try to, you’re going to miss part of the upswing. Yeah. You have to just stay in it. There is no ins and outs because ins and outs typically leads to underperformance. You got it. Unless of course you’re Dave Ramsey.

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Untucked Episode 88

Click here to listen to us discuss what having $5M in retirement looks like

Click here to listen to the full Untucked Episode 88. You can also listen on Apple, Spotify or Google podcasts.

Untucked Episode 88 $5M in retirement

Meghan Tait: [00:00:00] Uh, so for Coach’s Corner, we’re gonna talk about an article from the Wall Street Journal called, Here’s What a 5 Million Retirement Looks Like in America. This was shared, uh, by a client of ours. Um, it’s a profile of four couples or, or people, individual people in different parts of the country with roughly 5 million in retirement savings each, and it just, their income expenses and gives us a sense of their retirement lifestyles.

Was there anything about any of these people specifically or the article more generally that stood out to you guys? I think the

Jeff Mastronardo: majority of people that we meet that are millionaires or multi millionaires, it’s like across the board, all of them are like, I never could have imagined I would have amassed this much wealth.

Yes. Like all of them say that. And then they have trouble spending that wealth because they’ve just saved and saved and saved. Um, [00:01:00] if you can accumulate 5 million bucks, And I’m thinking of like a normal suburbia lifestyle, I think you are, you, you’re well set. Like I don’t think you have much to worry.

Assuming it’s like, you have a house, maybe a small condo at the beach, Um, you can probably live a very, very comfortable lifestyle. Assuming that. Your lifestyle is fairly normal. You don’t have these high aspirations of like leaving each kid 3 million bucks or anything like that. Just taking care of you and your partner for the rest of your lives.

I think 5 million is absolutely

Meghan Tait: plenty. And you’re saying that for like Someone retiring today,

Jeff Mastronardo: right? Someone retiring today, right? They want to drive BMWs. They want to go to the beach. They want to travel. They want to just live an unbudgeted lifestyle. I don’t see how 5 million can’t do that for them.

Mike Traynor: I don’t know if I agree.

I think a couple things. 5 million is very different if it’s in your 401k and IRA accounts. [00:02:00] And 0 outside of that, or if the 5, 000, 000 is really all in after tax money because let’s say you sold a business or you just saved it, it’s a very, very different number because of the tax piece of it. But also 5, 000, 000 can, can safely, roughly generate 200, 000 a year in cash flow without having to worry too much about running out of money.

So even if that was give

Jeff Mastronardo: or take, even if that was all IRA, you net one 50 at the low end.

Mike Traynor: Yeah. So if you’re taking like expensive vacations, driving BMWs and like in the current world, the cost of life has skyrocketed. I would worry that maybe it’s not enough. It’s enough for, for someone who’s lived a frugal life and is going to continue to do that for the most part and maybe not be called upon to help a kid or something in a big way financially.

I, I don’t, [00:03:00] five million isn’t what it used to be for sure. Like, and I think it’s, the answer is it just depends. It just depends.

Jeff Mastronardo: I mean, I feel like 80, 90% of the people that have that, that are the people that you and I are describing, I don’t think it depends. 4% gives you 200, 000, net 150, 000 if it’s all IRA plus probably another 30, 000 to 50, 000 of social security is 200, 000 a year.

Easily. No mortgage. Yeah, cars, going out to eat, travel, but you don’t have to keep that 5, 000, 000 until you’re

Mike Traynor: 90. Yeah, yeah, yeah. But you’re saying no mortgage and you’re saying, you know, lots of… Previous expenses are off the books now. That’s the huge difference. Yeah, I

Jeff Mastronardo: mean, well, obviously every person every couple every individuals Circumstances completely different.

I’m just talking about like the average retired client that we see live on about 150 to 250 a [00:04:00] year Depending. Most of their homes are paid off. They want to drive nice cars. They want to travel. Like a 20, 000 to 40, 000 travel budget per year. Dude, I think, like, unless they wanted to leave the 5 million to their kids.

You take your 4% and you spend it down over the next 30, 40 years. And yeah, you can live a pretty rockstar lifestyle. Even if you had a mortgage, I think like I’m accounting was spending down the 5 million, which by the way, none of them would want to do. Right. Right. None of them will be comfortable with it.

Right. But in reality you’re either going to do that or you’re 5 million bucks. Who the hell wants that?

Meghan Tait: Yeah. And I think the purpose of this article. Um, and it’s probably a combination of what you’re both saying, is that like because they have five million, their lifestyle has not dramatically changed than what it was to accumulate five million, so they haven’t like gone, okay, now I have this amount [00:05:00] of money.

I’m going to take the. Super expensive vacation. I’m gonna buy the newest nicest cars. I’m gonna buy the second home, right? They’ve maintained Most of what at least based on the article that you know the information they shared most of the lifestyle decisions and choices that got them to this point, but they’re also like I mean, some of them have pensions, right?

Some of, like, there’s social security. One of these people is still working. So there’s other factors beyond the retirement that’s like, is five million enough for these people? Probably, right? Assuming nothing big or different than what we shared, but I think it was more a look into like, And you said this yesterday, Jeff, it used to kind of be like the million bucks, right?

it felt like a million bucks was a mark in which if you got there you were set you were set and We know that that’s not the case and is five million the new bogey Maybe maybe not for these [00:06:00] people it’s sufficient. But again, there’s pieces of their plans pensions specifically that Aren’t going to exist for retirees beyond this day

Mike Traynor: and age.

Yeah. And I think that’s, yeah, I’m glad you brought that up because that’s rare. Um, most people have to figure whatever I save plus social security is it. There’s no other source of income because the value of a pension is enormous. We see it with our clients that have it. So maybe that’s where I’m kind of leaning towards.

It needs to be ratcheted higher. And five seems like your points, right? Jeff, like for those, so for those who lived reasonably frugally their entire lives while they saved, invested and accumulated the five, they’re likely not going to change their spending habits very dramatically. Because that’s just who they are.

You don’t turn, you don’t go from a frugal saver to a buying three vacation homes and traveling, you know, six months out of the year and [00:07:00] ripping through five million bucks in no time. That just doesn’t happen. If

Jeff Mastronardo: you bust your ass with a savings platform. To accumulate five million dollars, you’re not gonna have any idea how to spend five million dollars.

Yeah, I agree Yeah I mean it’s just because when you think about like I think about my personal life and what we make and then where it all goes And I’m like, Oh my God, what’s going to have, what’s going to happen when I don’t really care to accumulate non IRA money. I don’t have to put money in a 401k.

I don’t have to fund 529 plans. I don’t have to pay for life insurance. There’s a lot of categories of savings that happen. And you get accustomed to like, okay, well I make 150. But you really, you really don’t, you’re putting 20 to 401k, you’re sending kids to college, like when that all gets behind you, 150 goes a lot further when you’re retired.

Mike Traynor: Yeah, that’s, that’s a good point. Um, most definitely.

Meghan Tait: I, I mean, I thought it was interesting, but you know, the different parts of the country, like The [00:08:00] couple living in Bozeman, Montana, or the couple, which is, I know it’s Montana, but it’s a very popular kind of, I’ll say, touristy destination, so cost of living there is going to be more expensive.

Irvine, California, the cost of living there is going to be more expensive, but then you have a couple in Cary, North Carolina. We spend 130 grand a year, right? Like there’s influences beyond even just our intentional spending or savings habits that impact this too, right? A lot of our clients who live and work in the kind of Philadelphia or surrounding areas.

You know who decide to move typically move to lower cost of living areas Not every not all of them, but but most of them and that changes things Obviously, there’s health like there’s a lot of variables that aren’t detailed in this In these profiles, but it it was interesting I think if someone’s looking for like a do I fit this mold or am I similar to this person?

it maybe [00:09:00] gives them like a persona to attach to

Jeff Mastronardo: that cost of living thing really hits home when you’re watching like HGTV and are like Johnny and Sally are buying a house in Danbury, North Carolina. They put it on the screen. You’re like, oh my god It’s like a five million dollar mansion. Like it’s a hundred Yeah

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Untucked Episode 87

Click here to learn what Microspending is and what we think about it.

Click here to listen to the full Untucked Episode 87. You can also listen on Apple, Spotify or Google podcasts.

Untucked Episode 87 Microspending

Meghan Tait: [00:00:00] Today we’re going to talk about an article called The Avocado Toast Effect of Spending is Totally Overblown. This was in Men’s Health and written by Chris Browning. We’ve discussed this topic a bit before but wanted to revisit it. There are many talking heads who believe your Starbucks habit will prohibit you from being able to save for larger expenses, be it your first home, retirement, etc.

And that you should in fact avoid all of those costs. Chris, however, takes a different angle by actually advocating for what he describes as small, intentional purchases that are good for us on multiple levels. Social example, social interaction or breaking up our routines, um, or just treating ourselves, for example.


Jeff Mastronardo: I kind of struggle with kind of where I shake out on this. Like obviously if you’re making 25, 30 grand a year and you’re spending 8 a day on a Starbucks coffee. Like the numbers [00:01:00] don’t make sense, like you’re just, that’s, that’s a part of your budget that probably shouldn’t be there. But if someone, if you can afford a Starbucks coffee and you’re saving a few bucks each year into your IRA, like, I agree.

Yeah, go get yourself a Starbucks. And these people that want you to analyze your spending and just do absolutely everything correct to help you amass the most amount of wealth by the time you’re this arbitrary age of 65, I think is stupid. Like there has to be it’s like we talk about all the time like Where’s the balance, right?

I’ve said for years, and I have no idea if I’m on track for it, like, I’d rather have, like, accumulate 3 million dollars by the time I’m 65 and have lived a lifestyle than accumulate 6 million dollars by the time I’m 65 or 5 million dollars or 4 million dollars and have, like, really just watched every single

Mike Traynor: penny.

Yeah, again, I feel like we’ve talked about [00:02:00] this before, but I’m annoyed by these articles because they seem to… Overemphasize these little decisions that are nowhere near as important as making the right big decisions when it comes to like Overspending on your first house, for example, or we’re buying a car.

That’s 15, 000 too expensive that compared to what you should or what stuff like that like this is just trivial and you know, Dave Ramsey’s and people like that and Susie Orman’s out there that Talk ad nauseam about this issue and it’s just not on the of the top ten like financial decisions It’s not one of them in my opinion

Jeff Mastronardo: throughout.

It’s a pretty interesting take. Yeah, I agree a hundred percent with that

Meghan Tait: Yeah, the the decisions that matter are not Those your lunch with your girlfriends once in the right Or, like, and, and, and Chris’s point is, there’s other positive [00:03:00] impacts that those types of things have that matter too. And, when you’re talking to, when the Dave Ramseys and Susie Ormans of the world are talking to the masses, they’re not specifically understanding anybody’s individual circumstance.

So it’s like, yeah, you shouldn’t spend any extra dollar. Like, If the lunch or the latte or, you know, like is important for your general happiness, like, yeah, do it. I mean, again, I think in the context of like, it’s not the most expensive or consequential decision of your life.

Jeff Mastronardo: But what about those tiny decisions that over a month add up to a big, you know, a kind of.

A balance sheet moving decision.

Meghan Tait: I think that’s when yeah, then the ship has to be righted, but I guess I’m maybe specifically talking about like singular or like two or three decisions right [00:04:00] not Not decisions that end up moving the needle right because it feels like those are the things that people stress about I mean we talk with people a lot about their cash flow and it’s like where do you think?

You can pick up a couple of bucks and the first place everybody assumes is like going out to eat or take out. It’s like, okay, there are certain people. Yeah, who like you can look at their DoorDash history and it’s like whoa They spend 350 a month on takeout like that is a place where we could start but then for the for the couple or the person who you know enjoys dinner out with friends twice a month to the tune of 200 bucks like I just don’t know if that, if the impact of that financially is going to outweigh the emotional impact of not doing it.

Does that make sense?

Mike Traynor: Yeah, and I have two things to say, two more things. One, in the article they use the example of four Starbucks a week would [00:05:00] cost you a thousand dollars a year, let’s say. And then after twenty years that would be, that would grow to forty four thousand dollars. So, wow, that’s like, it’s money, but it’s not.

Life changing money. I hate when they do that. And by the way 44, 000 20 years from now is probably the equivalent of 15, 000 today because we’re talking about Inflation so that’s always a misleading thing when they say it’s the X amount of hundreds of thousands of dollars and you know 30 30 years from now It’s like stop like you’re missing That that number seems way bigger than it really is because of the future value of the money is always gonna be much higher So that’s that’s the thing that’s annoying about that example I will say though, back to your point Meg, you’re getting, this person is presumably enjoying their coffee, or whatever it is, and they get some sort of personal enjoyment from it.

I would say if somebody’s spending, um, [00:06:00] ten bucks a day on lottery tickets, I would have a different take on that.

Jeff Mastronardo: What if they won?

Mike Traynor: They will not win. Um, or if somebody is, you know, got a, uh, Online gambling habit, Jeff, like, like you. Guilty. Um, now, you get enjoyment from that, so maybe you could argue that, Hey, I know I’m net spending money on this, but I, I like it.

I’m in the green.

Jeff Mastronardo: Yeah, you’re in the green. Is it green or black? Oh, I don’t know. Let’s go with green. No, when you’re in the red, you’re, you’re not making money. I, I hate those calculations where they tell you what it could have, like how much you’re. What that money could have grown to like we use software where you have someone’s cash flow and they say like, Hey, can I should I buy a new car now?

And if you enter that transaction in like what if scenario like what [00:07:00] if you spend 30, 000 for this car, how that impacts you over the next 30 years and like that that 30, 000 purchase is going to cost you like 250 grand over your lifetime. I hate, like, you would never buy anything, right? Should I get this 50 shirt?

Well, if you buy that 50 shirt, 30 years from now, it’s going to cost you 17, 000. Like, okay, but like, I need a shirt.

Meghan Tait: But, but that’s what you were saying, right? It’s the balance that we have to strike. We just strive to create, like, it’s for who, for what, right? Like sacrificing these lottery tickets, lattes, whatever it is.

For what? Like, is your goal to have X amount of dollars when you’re 50 so you can stop working early? Is your goal to be able to put your kid through college? Is your goal, like, to me, all of this is too general and too high level to matter to anybody. Like, anybody reading this article [00:08:00] and being like, oh, I should or shouldn’t do anything, it’s not in the context of their situation, so it’s like, it’s far too general for us to even, Be mad about yeah, and mad isn’t the right word, but I’m like basically taking back everything I said, because I’m like, this is just annoying.

Mike Traynor: Yeah, well, I, I was listening to somebody on another podcast complaining about. Today’s, I’ll say today, too many of today’s people, um, don’t, will not accept delayed gratification and it’s immediate gratification. Um, and I think there’s a point to that, um, but to your point, Meg, 100% delayed gratification isn’t, is no good either.

Right. Um, and you have to figure the balance between the two, so, um, we could do a whole nother Subject on the immediate gratification crowd, but yeah, that’s not this. No,

Jeff Mastronardo: I think if these articles can spark people to be [00:09:00] more conscious of their spending and be more thoughtful with it, whereas you’re taking and hearing what we’re talking about, which is don’t sweat the little things, do the little things right.

But also be more conscious on the bigger decisions like. , you’re looking for a new car and they have like an R three model and R five and an R six. Like do you really need the 320 horsepower car R six or is the R three with 220 horsepower? Good. Like that one’s gonna cost you 10 grand more like just get, get the car that you like.

But it doesn’t have to be like the top of the line model. You’re looking for a new house. Yeah. It doesn’t have to have like absolutely everything. Like if it doesn’t have AC now, But it’s cheaper. Maybe you get it. Maybe you add a C later. Like I think if they can help people make Better small decisions and then hopefully they’re making better bigger financial decisions, too.


Meghan Tait: Yeah, I think that’s a

Jeff Mastronardo: good takeaway.

Mike Traynor: Cool. We’re good. Yeah