[Music] Awesome! We've got a question from Hie that to kick us off. It says, We want to buy our Dreamhouse but we'll have to get past 25% of our gross income to do it. Are we allowed to break the money guy housing rule if we're saving well over 25% for retirement? We want to treat this house as our abundance goal like step eight of the Foo and feel like we have the room and the budget for it. So how would you think about this? Well, I think Hie, at the onset, you said something I love. You are saving 25%, and so you're already doing the thing that you know you're supposed to be doing. And so then the question is, for the dream home, can we break the rule? And I'm assuming the rule that we're going to break is the 25% of total housing costs or 25% housing cost is greater than 25% of gross income. And I think there are a few things you have to Define first. First:

you have to Define dream home. Like when you say dream home, are you talking about the dream home for our situation right now, like the house that makes sense? Or when you say dream home, are you talking about like that home that when you were at the very beginning of your life, you dreamt about, like the mansion with the six-car garage and the indoor basketball court and the swimming pool and that sort of thing? 'Cause those are two different things for two different stages of life. I'm going to assume for the purpose of this question, you're talking about hey, the house that makes a ton of sense for where we are right now, not the house that we really want to be in right now long term. Well, then I think the second part of the question you have to answer is what does our current Financial path and our current Financial trajectory look like, meaning are we in vocations where it seems likely that our income will continue to rise, our expenses will continue to decrease to where we can reasonably afford this home and it will become more affordable.

through time. So if I'm at 30% or 35%, do I see a scenario where it will drop to where it is below that 25%? That is a different situation than someone saying, Hey, I'm, you know, I'm going to use a school teacher as an example. I'm a school teacher, or we're school teachers with fixed salaries. They're not going to deviate a ton. And if we buy this house, we are going to essentially perpetually be well above that rule. We're going to be in that 35 to 40%. That starts to make me really, really nervous, 'cause what you're doing is you are establishing a foundation where your entire financial picture is always at risk of something going bad or something going negative. The reason we give you the 25% is so that should circumstances change or should life get tight, there's enough margin in the system to where you don't risk losing the home, you don't risk not being able to sustain the family. Brian, what say you?

first of all, I love that Haley had so many references to the financial order of operations. You too can get your copy money.com resources completely free. She said that she's at step eight, prepaid future expenses, or what I like to say abundance goals. And you know, it seems crazy if I'm going to tell somebody, hey, when you get to step eight, not only can you fund the kids' college, not only can you start being an entrepreneur in real estate and other things, maybe this is also the time if you're going to expand into nicer cars, why couldn't you expand into a nicer home? And there's a few things that made me feel really good about this situation. She shared that they are saving greater than 25%. Now, yes, this housing might exceed 25% of their gross income, but if they're checking the boxes, the big why on that 25% is because I want to make sure that you're not house or life poor, meaning you're foregoing saving and investing for the

future and usually is a pretty good indicator that your expenses imp now will also impact what your expenses are when you're in retirement, and that's how much of a draw you are on the assets and how much you need to save so that those assets can support you when you're no longer working with your back, your brain, or your hands. So I love the fact that you look like you're checking a lot of those boxes. So let's talk about a few of these things. First of all, what are your ongoing costs going to be? Bo was alluding to this with two things he said. You know what is your income going to do now, what where is it at now, but where is it also going? If you're in a static situation, that's a little scarier because your expenses could be a bigger portion of your total take-home, which is ongoing, could be a problem. However, I've talked to people where you know that your life is going to be completely different in 5 years now

don't want you to pull a Clark Griswald, where you are going ahead and counting money that's not in the bank, or you're being a little false with your assumptions, and you get yourself when you get the Jelly of the month versus getting that big promotion that you think is in your future. It blows up your entire financial life. Don't do that. However, if you know you're on a career path and you see some goals ahead that are greater than 80% likelihood to occur, I think it's especially with you already being in Step eight of the financial order of operations. I'm not going to poke you too hard on that because I think that it's one of those things where you're making a lot of the right decisions, and I look at some of my life decisions where I had stretch goals, whether it was buying um that second house, meaning my upgraded house. I didn't have two homes. I was upgrading from my first house to the second home because we were

a growing family, and we needed a little more space. My income, if I would have made all decisions off of my income, then I would have missed out on, uh, you know, some great memories and a great house for, for the, for the family. Um, so just be honest with yourself, don't be too rosy with, with those assumptions. Nothing wrong with putting on the 3D glasses, remember that's where you actually run the scenarios, where you have your dream of, man, this is, you get all the promotions, everything works out, you get the perfect house. There's also the Down to Earth, what you think will happen, and then there's of course the duo plan, like maybe you lose your job, or maybe things aren't as rosy as you think. Make sure you're putting on your 3D glasses with all those assumptions. I want to make sure I understand, so you're saying, yes, it's okay to break the rules. Now, are you suggesting it's okay to break the rules, so long, long is over time, it comes back inside the rules, or are you saying if

you have a small enough footprint on the expense side, it's okay to stretch that. Think about, I mean, if you were in Step eight, and I mean how, how you spend your money past step eight is kind of on you. This is why I let people prepay their mortgages, even if they're under 45. This is when you can go buy the Tesla if you want the Tesla. I mean, you're living your best life. That's the only cloud that sits over the top of this that you need to be aware of, is if your expenses get too big when you actually retire. That's going to be harder for you because your assets have to be able to carry that. And also, make sure this isn't based off of a one-off year. You know, for I see a lot of entrepreneurs, they start making good money, and they're like, Oh, I have all this free money coming in. What they don't think about is that their tax liabilities will also be increasing.

the background. So just make sure you're taking into account all expenses, not just your household expenses, but also what are your taxes going to be, what are your property taxes going to be. Make sure you're putting the whole ball of wax into your assumptions.

We Want to Buy Our Dream House! Can We Break the 25% Rule?

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