What Washington Just Passed (and What It Means for Your Wallet)

I spent most of my time.

Viewing.

What I want from the outside I comb it over like it's the scene of cry the only guilty I find Staring back at me in the mirror at night Stuck in place just waiting for a green light But I can lie for someone else to say I can live my life the only comfort I found Is blending in with another crowd when things go wrong well past the blame around Cause I can lie.

Awake.

For someone else to say I can live my life My life.

But.

I keep asking for permission no, I keep asking for permission oh, I keep asking for permission why do I keep asking for someone else to say? Backing in my life?

Chat with you, answer your questions, help you out, give you an idea of some thoughts. I don't sell investments. I don't sell insurance. I just want to make sure that you're on your path to your dreams. Anything that I can do to light that path, then I'm here for it all. And this is kind of where I am and what I'm doing. So I've got some time to do this this morning. Then I head straight to the airport because I am starting about a 30 day road trip. There's a couple breaks in between here and there. You'll hear from me throughout that road trip. So stay. If you're not, if you're not subscribed to the channel or following me on the socials and all that stuff, stay with me and we'll make it. We'll make it. Rock and roll. So, all right. Alex says you're the best. When you speak, you don't, you don't lie, sell anything. No, I don't. You're just, just honest and want to see people be financially stable and humble. You know what I appreciate, I really appreciate that, Alex. It is true. What? That, that's really what I'm trying to do, you know. You know, I have my book. I don't really have a ton of stuff that I sell. And that's not what this show is for. That's not what these live streams are for. These live streams are for to serve my show. Building. Built. Build your building. Your money machine is to serve. And, and that's. That's what we'll be doing. So how these shows go and is. I usually will talk about something at the very beginning and then I'll open up for questions. I have some questions that have come in through DMs and other things that I can answer. And if you have questions, what you can do is type them in and let me Know that you have what the question is, and we'll try to make sure that we get it all answered and keep you moving forward. And, and so this morning, I, you know, I thought I would have a conversation around. Yeah, around this big, beautiful bill that has gotten a lot of press of late, and it just passed, you know, it just got signed into, into law. There's still some things that, that need to, to get dialed in that they'll have to figure out logistically how they implement it, how they execute on it and, and everything. But I wanted to go through what, what is it? Okay, because if you listen to, depending what stations you're listening to, you get all of this kind of back and forth, back and forth. And, you know, they're, they're taking this away, they're taking that away. So first things first. I'm not. There is no politics involved here. They passed a law. What's the law? Okay, what's the law? What is it? How does it impact our pocketbook? How does it impact the things that we do? Doesn't change anything. And what does it mean for us, forgetting what side of the aisle you're on? It doesn't matter. It's law now. So now we need to deal with it. It's the pool we're swimming in, like it or not. And so when we talk about finances and money, one of the things to think about is that we control the controllables and we plan and prepare for the uncontrollables.

That's it. Okay?

I can't control what they passed. I can't control the market, I can't control the economy, but I can control the things I do. But we need to understand the rules. So let's just talk about what happened. The biggest thing that happened with this big, beautiful bills, if you think about it, back in 2017, when in Trump's first tenure, he passed the Tax Cuts and Jobs act, and there was a bunch of cuts in there, tax cuts that reduced tax rates and increased standard deductions and all those things. All of those, the majority of them were due to expire at the end of this year. So they needed to get something in place to either change it, extend it, or let it expire. They had to, they had to figure out are they going to let it sunset or not. The majority of this bill is to extend it, to make those cuts permanent in their eyes. Okay, so that means that we were staring down the barrel of an increase in taxes or increase in tax rates, reduction in deductions, standard deduction. And all those things at the end of 2025, we're no longer staring down that barrel. We can safely say that those tax rates are going to stay consistent now, at least for the next, call it, you know, three and a half years.

Okay.

And along with that, they did some other adjustments to the taxes that, that will help taxpayers honestly is that the standard deduction, which is the deduction you get if you don't itemize, is going up by $1,000 for a single person. So you get a deduction of $16,750 instead of $15,750. And for a married filing joint, it goes from $31,500 to 33,005. What does that mean? It means that most people, if you don't have big mortgages, you don't have big taxes and everything, you get a big deduction. That means that if you're married, the first $33,500 that you make is not taxed at all. Okay, that's a good thing.

All right.

Lower taxes is a good thing for our pocketbook. We'll talk about the economy and all that stuff in a moment. They are going to adjust those for inflation. So as inflation adjusts, those will continue to go up. And so it will apply for this year and beyond. So they've made it retroactive unless they change it. The other thing that they did is, is they increase the child tax credit from $2,000 to $2,200 per child and they'll index that for inflation. Now, this is one of those that it phases out. So if you have 200,000 as a single or 400,000 as a married filing joint, there's a phase out. You don't get the child tax credit. This is really meant to help lower income, mid income families with children get additional tax deductions at lower incomes. So this is a good thing to lower taxes. Then they added in a provision for seniors, they call it the senior bonus deduction for those that are 65 and older. For those that are 65 and older, they get an additional, if they're single, $6,000 deduction on top of it. Married filing joint, they get $12,000.

Okay.

But both spouses must qualify. Again, this is meant to help seniors that are in mid to lower income. So there is a phase out once your income goes up above a certain level. Okay, it starts to phase out, but the intent here is to try and help seniors and help people that have lower income. Now, here's some of the things in this tax act they passed it. They said there's all kinds of criticism and then there's all kinds of cheering. It depends on where you're at on it. A lot of the provisions they put in it are actually only going to stay in place until 2028. So we have it for three years, four years, and they will sunset unless they get extended. So a lot of the tax cuts and a lot of the administrations will do this because they can't keep it permanent because of the cost of it. We'll talk about the cost in a moment. But know that some of these, we're going to get some benefits for the next couple of years. Take, take advantage of the benefits. There is nothing illegal about using the tax code for what it was meant to do and making sure that it's happening.

Okay.

They also added in a new deduction that allow workers to deduct up to $25,000 in tip income.

Okay.

And up to $12,500 in overtime pay. Now, I don't know how exactly that's going to logistically work, but bottom line is service workers that are getting tip income have the ability to exclude that tip income or take a deduction against it so they don't pay tax on it. Again, trying to help mid level income, lower income service workers in there. Again, this one expires in 2028. So but it's in place now. Let's make sure we take care of it, take advantage of it. Again, there's a phase out here and that phase out for married is $150,000 or $75,000 for single. So it's meant to help people in incomes that are lower than that. It's not meant to help someone like me if I go wait on tables. Lord knows you don't want me waiting on tables. I won't get any tips, so I won't get a deduction.

Okay.

So then they added in the ability to take a deduction for interest on car loans.

Okay.

This is something that, that we, they eliminated. We could not deduct any kind of interest except investment interest and mortgage interest. But in an effort to encourage people to buy American made cars, you can, you can take the interest on a US manufactured vehicle up to $10,000 a year.

Okay.

So it's, it's only for loans on new cars purchased after the bill was enacted, which was effectively July 4th.

Okay.

And so, so it's only for USA made vehicles and it's not for the life of the loan because the deduction's only available until 2028 again, unless it's extended. Okay, so just know that. But if you have a car loan and we can talk about how to do car loans, then you have an opportunity to take the interest on that car loan as a deduction that you once did not have. Okay, that comes back up to 10,000. Then another big one that they added is there's a, they limited. In the last act, they limited the amount of deduction you get for state and local taxes and, and real estate taxes. It's called the SALT deduction cap. That was limited to $10,000 a year. That got increased to $40,000 a year in this act. So now you could take a higher deduction for real estate taxes, state taxes on tax returns, but it's only for filers that have income under half a million dollars. So you're. Again, I mean that's still a lot of income, but it's not for mega wealthy.

Okay.

And so that's there. And it is there through 2030. This is extended through 2030. After that it goes back to the 10,000 if we're not careful.

Okay.

Then when it comes to businesses, the 20% qualified QBI deduction is kept in place. And so you have that QBI deduction available. And if you have at least $1,000 in QBI, you get at least $400 as a deduction, even if the 20% would be less. That's something new that they added in here. Bottom line is you're going to want to make sure that you have a conversation with your accountants, your tax strategist to know are you taking advantage of some of these things? Now personally, there's some things in here around education and health Savings accounts. So 529 plans. 529 plans are educational savings. Savings accounts historically were only for higher education and then they, they brought it down to lower grades. Now they're going to cover K through 12, tutoring, online classes, homeschool supplies and everything. So it was used to be mostly college and secondary education. They've broadened the application of 529 plans, which now gives you a good vehicle, a potentially good vehicle depending on age, stage and circumstance, to be able to save for education in a tax deductible plan, potentially depending what state you're on. But allow that to grow over time. Now, mind you, 529 is meant to be used for qualified education expenses only if you take it out for something other than that, there will be, there will be a tax and penalty to pay.

Okay.

HSAs, they increase the contribution limits These are high deductible savings accounts and I have a question on that later that I'll answer and everything. Here's where there's some of the controversy. They added in for food assistance and Medicaid assistance, medical and food assistance. They added in some provisions for qualifications. They basically say if you're an able bodied person, you need to be working, volunteering or trying to work and you need to prove that it's no different than unemployment. If you have unemployment, you have to show that you are searching for work to qualify for the unemployment. So what they did is they, they made, they made the qualifications tighter so you, so they're just not handing out free money. People can still get it. They just have to follow the qualifications. And if they're able bodied they're going to need to do some work and everything. Some people are up in arms about it. But the bottom line is that this is what they did. They didn't take it away. They just added some filtering, some, some eligibility requirements in there. Now mind you, listen, I, I ain't gonna lie. When you start to put in paperwork with the government, Lord knows it can be a pain, it can be frustrating. And so there, there could be people that fall through the cracks, there could be people that don't understand the paperwork. And that's something we're going to have to navigate to make sure that the people that deserve the support, that need the support, actually get the support. And so I can see that there'll be programs to assist and things like that. But these are the things that really have come into this act. Not a tremendous amount of differences. They added in a higher salt deduction. They added in the TIPS and the overtime. Elimination of tax, a portion on that. A lot of this stuff expires in 2028 or 20, 20, 30. They've put, put some qualifiers in for Medicaid and, and SNAP nutrition programs to make sure that they're just not handing money out. You got a deduction for interest on, on vehicles up to 10,000, but they have to be manufactured here in the U.S. so that's the tax Act. I know that there. Now here's my challenge with it. Do I like it? Do I, Do I not like it? Look, anything to me that reduces taxes is good for the consumer, okay? However, the one thing they did not answer with this is how it gets paid for. And there's all these estimates and I'm not, not going. Here's what I know. There has not been a president since Clinton that has balanced the budget, okay? Clinton was the only president in the recent history. So it's not Dems and Republicans, it's all of them. They, they've made a habit of spending, borrowing, spending, borrowing, spending, borrowing. And we have a deficit in our country. That is a huge problem.

Okay?

That is a huge problem. It is an economic problem. Why is Trump pushing to get the interest rate reduced? Because if they reduce the interest rate, the amount of interest they have to pay on the outstanding debt goes down. And it helps the economic situation. This is projected to add to the deficit. What I don't like about it is the fact that they didn't make it revenue neutral. They didn't show how that this could get paid. So what it's going to do is we potentially, now they say the tariffs are going to help and all this stuff, that remains to be seen. Maybe that's the case. I don't know.

Okay?

But what I do know is coming into this, we had a deficit, right? Now this may add to the deficit. Tariffs will offset doge. What's going to happen? Who knows? Okay? But the deficit is huge. And at some point that bill will come due and it becomes, it comes due on our backs, on the backs of our children, the backs of our grandchildren. And if there was an argument to be made to our politicians, to Washington, no matter what side of the aisle is, is the argument is to get a plan to get this, get us out of debt, get a plan to stop the borrowing. I y', all, this is going to be a hot take. But if I had anything to do with the politics, I don't want anything to do with politics. Brian Tracy once told me, I asked him if he would ever go into politics. He says a tick is a blood sucking parasite. Poly means there's a lot of them.

Okay?

And so, so what happens is that if I had anything to do with it. First things first, term limits for everyone. There are no career politicians anymore. Eliminate that.

Okay?

And second, if they don't do their job, in other words, balance the budget, get things passed, do things, they don't leave or they don't get paid, okay? We couldn't do that. If we don't do our job, we get fired. What are we doing?

Okay?

Third, whatever they decide to give to the citizens of this country, they eat their own cook and they get it too.

All right?

So, so those are the things I would do. But I'm not in Washington. They won't listen to me. And I got no, I got no poll. But that's just, that was just me Kind of venting. All right, so that's it for the plan. Let's just talk about some questions and some questions coming in. Some, some questions that have come in and I'll, and we'll make sure that we, we get some of these answered. Answered for you. So, but I wanted to lay, lay it out for you. Hopefully it helps. Hopefully it gives you some thoughts. The key for you is this, if this is a time to maybe make a call to your accountant, to your cpa, to your tax advisor and say, hey, are there things in this new act that I can take advantage of and should I change anything I'm doing to make sure that I take advantage of it? See, many of us have accountants that spend their time waiting for you to come to them and say, here's what I did. And then they go inscribe the tax return and they file it in as it happened in the past, looking over their, their shoulder. What we need is our accountants. Okay, this is my plea to my compadres, my, my colleagues who are fellow CPAs, to start looking out the wind, windshield, start looking forward. The accountant's job isn't just to do a tax return and file it. The accountant's job is to help you be more successful, to help you be more financially literate, to help you navigate the tax code so you use it properly for your benefit. So they need to look out forward and say, what are you doing in your world personally, business wise, how can we use the tax code to put more into your pocket? And if they're not doing it, frankly, they're just a glorified data entry clerk and they should be paid that way. If that's the case, the value in their profession is helping you navigate this so you don't have to memorize it and that you take advantage of it.

All right?

I am sure that my CPA friends out there are going to come after me for that one, but what the hell? I am sure that my CPA friends out there are going to come after me for that one, but what the heck? All right, so let's see what you got in here. I'm going to go to the chat and see. I've got some questions that have come in and let's answer a few questions. Marco, what's up? 22 years old, currently doing 100% VU. Listen, so, 100% VU, and you're 22 years old. First things first, okay? For those of you who don't know what Marco's investing in is a Vanguard S&P 500 fund, which means that he's investing in, in a basically the s and P500, the largest 500 companies in the US stock market. Okay, now here's the thing. Marco also is 22 years old. At 20 years old, every dollar you put in at an 8% return or so is going to turn into $88 by the time you're 65. First things first, Marco, I'm going to celebrate you because it's a big win on your side that at 22 years old, you're putting money away and putting it to work for you. Because what's going to happen is the time is going to do the work for you. Now, should you be all in Vue, I have no problem with you necessarily being all in Vue right now at 22. Maybe though, you might want to look at, does it make sense to do a two fund portfolio where maybe I bring in a little international exposure? Because like right now, this year, international funds have done better than the S&P 500. But you want to look at maybe a two fund, maybe three fund portfolio as you get older to start to diversify and get exposure to some of these other things. But I love that you're doing this. I love that you're doing it at 22. And you're going to be dialed in crazy good.

Okay?

My son, he started his business 16, he's 35 years old and him and his wife with two kids, they have multiple homes and a multi million dollar net worth. You're doing it right, Marco. Stay in the game. Ah, so good. So good. I work for the government with a pension and I want to get a job with tips. Alex, be careful what you wish for. My sister works, she works in law enforcement, so she's getting a pension too. And at some point she'll retire, she'll have that pension and she'll decide what she wants to do at that point. My fund, my friend. Jason, what is going on? Does deduction for auto loan interest apply to commercial vehicles or heavy equipment? It is only manufactured autos in, in the U.S. now, if it is commercial, meaning it's business use, then you always had the ability to deduct interest. This is just on the personal returns. So if it's heavy equipment, commercial vehicles used in a business, you'll get deductions for it either way. Okay, and, and everything. Now, now, minivans, I, I don't see that they've, they've categorized anything and said, well, it doesn't apply to minivans. They didn't put any Weight classes in or anything. The job, the, the only qualification that I've seen so far is US manufactured.

Okay.

And let's face it, most of these cars are, may have come from US companies, but some of the parts may not be from the US So I don't know how they're going to decide is this US manufacturer or not. I think that needs to be kind of vetted and worked out. A lot of times when they create these things, they pass these, these tax codes and it sounds good coming out of the politician's mouth as they discuss it around coffee and figure out what they're doing and their filibusters and all that stuff. And then when it comes down to execution, implementation, that's where it starts to fall apart. So. But I don't know this one right now. I don't know the limitations on it. So.

Okay.

Karen's asking for whom. Who are the tax cut in favor of? Are they in proportion to your income? Right now the percentage of my tax is higher than those that make a lot more money than me. Karen, it just depends on your tax structure.

Okay.

A lot of the things that are in here get taken away as income goes up.

Okay.

They phase them out. So they're meant to apply to people in the middle to low income. Are there things that are going to apply to higher income? Yes, there are. For instance, the increase in the SALT deduction cap going from 10,000 to 40,000. You know, in order to have $40,000 in real estate taxes and state taxes and all that stuff, you got to be able to buy a substantial property or make a substantial income. Who does that benefit? That does benefit people of higher income. But at the same time, you, you cannot. The other thing that, that is challenging is you cannot compare your, your tax situation to someone else's tax situation unless you're exactly the same. Because if someone is a business owner getting paid a W2 and things passing through on a K1 versus someone is a wage earner, they get vastly different tax pictures. And when you take into consideration the income tax, the Social Security tax on the wage earner, you have to take in consideration the income tax, the self employment tax, and the investment tax and all that stuff on the higher earners to figure that out. Is it possible that someone has a lower percentage than you? Yeah, it's possible. But depending on who it is and where it is, I can tell you that I pay a lot in taxes and as a percentage it's well into the 30s, close to 40%. And we live in California Okay. So someone wants to try and say, well, you get away with less taxes. No, I don't.

Okay.

I pay a lot in taxes. When you add it all up, it's substantial as a percentage and as a dollar amount. And I'm okay with it. Do I use the tax code to my advantage? Absolutely.

Okay.

That doesn't mean that I don't pay taxes.

Okay. So.

Ah, hundredth monkey effect says all the benefits are marginal. The question is the government's money real or not in their budgets? Yeah, well, let's, let's not go that. Yeah. The deficit is crazy. It's going to be enormous if we don't, if we don't change it.

Okay.

Yeah, yeah. You're getting, they've changed some depreciation. You're going to get accelerated depreciation coming in and everything on equipment. I didn't look at the depreciation. I didn't spend the time looking at the things that impact businesses as much as I looked at the things that impacted individuals. I'll look at that and maybe bring it into another one of our lives.

Okay.

Tell me more, Alex. I'm not sure what, what you want me to focus on here.

Okay.

In the meantime, let me answer a question that came in. Hey, Mel, thanks for all your help. I have $12,000 in credit card debt and I have $35,000 in low interest student loans. 4.2%. But I also want to be saving for a house and making sure that I have money put away for retirement and my Future. I am 47 years old. I don't have that much saved at this point. I may want to switch careers or maybe even start a business. I'm not sure. But I hate having debt. What do I need to do and what should I start with? All right, so who's this from? This is from Susan. Okay, Susan, all right, here's the deal. I need you to prioritize the credit card debt first. That is that. That is priority number one.

Okay.

Your student loan debt is 4.2. But I hate having debt. What do I need to do and what should I start with? Percentage. But the credit card debt is probably, if I'm guessing it's in the 20s to close to 30%.

Okay.

So I want you to get on a debt payment plan. If you do not know or you do not have a way to get on a debt payment plan, you're not sure how, I want you to go and get my debt breakthrough calculator. It's free. It's a free training. You can Grab it here@melabraham.com no debt. Grab it. Get your credit cards put in there, get yourself on a debt payment plan. Stay on that debt payment plan.

Okay?

What? The other thing that I do is I want people to follow the wealth priority ladder, which I wrote about in my book building your money machine, and I teach it in my courses because there is a hierarchy and a way to stabilize your foundation and optimize your wealth creation.

Okay.

If you do not have, if you do not have an emergency fund or a peace of mind fund, as I call it, okay, it's also time for you to start building that before you start to do a whole lot of investing. I want to make sure that you're on the path to getting rid of that credit card debt and you're on the path to getting an emergency fund in place. So if something rattles the cage, you don't. You don't. You don't fall into the ditch.

Okay?

Great question, though. All right, let's see. I think some other things came in. Yeah, California definitely has high taxes and cost of living. You're right. You're. You're right, Suzette.

So do you think.

Pabal, he says, bell, politicians talk, build freedom. Do you think people are more afraid of running out of time or never using it?

Well.

There are studies out there that actually show that there is one of the top fears, top five fears is running out of money. Now, part of the reason for that, I think, is a lot of people don't know how much they need.

Okay.

If they don't know how much they need. And I did this early on in my, in, in my financial journey. I didn't know how much I needed, but everyone told me, go earn, earn, earn. Go make money. Go make money. So I just kept running, running, running, making money. I kept moving the target, changing the number, growing the. And building and building and building. But I. I didn't know what the destination was. I didn't know how much was enough. And if we don't know how much is enough, then we'll keep running the race. I sat with, with a good friend of mine recently at the end of last year, who was approaching 60 and had nothing planned for retirement, but he had stuff for retirement. And I said, do you know what you need? Do you know what you want? He says, no, I haven't even thought about it. I don't even know where to start.

Okay.

And I said, really? And I said, doesn't it stress you out? And he said, absolutely. It stresses me out. But I don't know where to start. So I sat him down and I. I actually walked him through the process of what I. What we do for our clients called a money machine master plan, where we build it out. And we build it out in a way that we take into consideration your income, your expenses, your desires, your goals. You know, am I going to do home improvements every five years? Buy a car every five years? All the things. What do you have? Where's it going? The investment portfolio, all of it. And we run the plan. And he sat there, and I could literally see the stress come off his face, because all of a sudden he said, I'm not as far off as I thought I was. The challenge is most people don't have a plan. And without a plan, it's like sitting back saying, I'm going to take a road trip. And you don't have a map or a gps. You just drive and you continue driving till you run out of gas or.

Money.

And you don't find the enjoyment on the way. Everyone here, even if it's a rudimentary plan, we need to start to plan so we understand, at least with the race we're running, is it a marathon? Is it a sprint? What do we have? What's coming? We can't predict everything, but without a plan, I can certainly predict that you'll never know when you get there. And that's. I think that's the bigger issue is, is that people are scared of running out of money. And part of it is that they don't know how much they need. And so we got to fix that. Now. The other side of it is, is why I do what I do. Most people don't know how to use their money or put their money to work for them. We need to get our money to work harder for us than we did for it. That's the bottom line. And that means that we need to have the discipline to take a portion of it and start putting it to work. Does it mean that there's risk? Absolutely. Every investment has risk. But if you do it properly and you do it in a proper structure, the risk. In fact, I was just talking to someone yesterday. I said they might be a loss. The objective is to make sure that anything that happens, it might leave a bruise, but it doesn't leave a scar, y'.

All.

I lost one third of everything I owned in a Ponzi scheme. Me and two other friends, over four and a half million bucks now recovered and well beyond it. That left a scar. A lot of the Things I talk about, a lot of things I teach are because of that scar. I don't want any of you to get hit with a scar. But it does mean that we have to do things differently. It does mean that if you're sitting back saying, hey, I feel like I need to make more money, then that's the thing that we need to focus on. How do I increase my value to my employer, to my company, to my clients, to my customers so I can get paid more, so I becoming valuable to them because if I get a bigger shovel of income, I can then solve my financial problems a little easier. And so these are things that I think are choices and decisions we have to make as individuals and we are actually in control of them. We have the ability to learn, we have the ability to grow. We have the ability to take that on and, and, and do things. The question is, will you? The question is the choice. The question is the decision. I think that's the thing that we need to, to look at.

Okay.

Yeah, I, I get it, Karen. I get it. They're working and they're struggling, but you can't look at just one side of the equation. What's their spending patterns, what's their income? What are the things that they're doing? When you look at the average car payment right now is over $700.

If.

They, if they have brand new cars. There's a gal that I saw, literally she's in her 20s and she has two Jaguars. Two. And she's struggling to pay bills. Why do you think that is? Not because she's not making enough, because she's making over $9,000 a month. It's because she's not managing. She's not putting it to work for her. So we can't just look at it from one side of the equation. We have to look at their whole picture to understand it, because that's where we can then start to make the moves to solve it. But I'm with you. I have watched people that work really, really hard and they're doing the right things, but they're still, still struggling to get, get ahead. And those people are the ones that I want to try and help. But you've got two inputs in the equation. The money in, the money out. And those are the two things that we have to fix.

Okay.

Yeah. This is something that's going to come back. Jason saying that as of last month, 12% of credit cards are 90 days plus delinquent. And these are things that we need to think about. Oh, Suzette. Wants to know what my shirt says.

Okay.

Successfully unemployed. That's what my shirt says. All right, I'll let it. I'll let that go down. Here it is. Successfully unemployed. My. My wife. My wife is like, really? You're wearing that? Yes, I'm going to the airport. Why not wear that to the airport? So I got. Okay, so I got another question that came in here. What are the best tax advantaged accounts to use in 2025? Now this question came in. So not all. So here's the thing. Not all accounts are created equal.

Okay?

Not all accounts are created equal. And the question is the tax advantage account. So let's just talk about the different accounts you have. And that is you have just your regular bank accounts and investment brokerage accounts.

Okay?

Those are not tax advantaged. However, your investments, as long as they're held over one year, greater than a one year period, you get advantage tax rates called long term capital gains. But then you have accounts that are tax deferred. That's your typical IRA, your typical 401k, your defined benefit or cash balance plan. And what ends up happening is that, is that you put money in, you take a deduction for it today and it grows tax deferred. And then down the road you take it out and you have to pay tax on it. Then, okay, that's your traditional kind of retirement. Then you have your Roth type of accounts. These are tax free. That means you put money in today, it grows tax free. You don't get a tax deduction today and you don't pay taxes in the future. Love these accounts. All right, so which ones are the best? It depends on your tax situation, your current situation. Okay? Because we want to look at your current tax versus the tax later.

Okay?

I believe tax rates are going to go up. I just do. Because I look at the deficit, I look at things and I said the only way to patch this boat is tax rates will have to go up somewhere somehow, because I don't see any other way. Your biggest cost to the government is defenseless. Medicare, Social Security, all of that. They can't cut those. I mean, they can. It'd be a disaster. And then the interest, the interest on the debt, so what do they do? The only way to do it is going to be to raise taxes at some point down in the future. I love the idea of Roth accounts. The problem with the Roth is if you make too much income, you can't put money in it directly. Okay, but imagine putting money away. Like Marco, for instance. Marco is investing in Voo. Voo, which is the S&P 500. If Marco was putting Voo into a Roth IRA, and he's investing $7,000 a year into a Roth IRA, and that grew, he gets no tax deduction for it today, but it grows and it grows, and he ends up with a million dollars in that account because of the growth, when he takes it out down the road, he never pays a diamond tax on it. Never pays a diamond tax on it.

Okay?

So I love the Roth. I love the HSA accounts, which is a high health savings account. The reason I like the health savings account, if you qualify, and there's a couple things. One, you have to have a high deductible health plan, okay? And it has to be an HSA qualified plan. So what this means is that I can put money away into an account for health reasons, and I can put, you know, thousands of dollars away. Now, I don't. I don't have to take the money out, but if I take the money out to pay for qualified medical expenses, which they expanded the. The definition of that, then I pay no tax on it. So imagine you put money away into an hsa. You get a tax deduction for it. You invest the money in the HSA, just like you invest in IRA or any other account, and it grows. And when you want to pay yourself and reimburse the medical expenses, you take it out tax free.

Okay?

Here's the magic with the hsa. My clients, I tell them, if they can cash flow it, you put the money in the hsa. We invest the money in the hsa. You keep all your receipts for all your medical bills and supplies and all that stuff in a digital folder, in a virtual folder on a Google Drive or Dropbox or whatever, and you pay for all your expenses from your ongoing cash flow. And you don't ever use the hsa, at least not for a while. And now we invest it. So you're putting $3,000 a year, $4,000 a year away. And it's investing, it's growing, it's growing. And now you have, say, $100,000 in an HSA account, and you have all these receipts that you haven't paid yourself for, okay? Now what happens is that you need some money, and it could be for a remodel of the kitchen, but you have, let's say you need $10,000, remodel the kitchen, and you have $10,000 worth of medical bills that go back a decade. You take those medical bills, you reimburse yourself the 10,000 out of the 100,000 and it's completely tax free. And you still have all the growth on the HSA account that you can keep using down the road.

Okay.

Love the account 401s. I love these accounts, especially if there's an employer match. I want you to make sure that you get the match. And two, one of the things that a lot of the 401ks are doing is they're allowing you to contribute in a Roth element. So remember I said that the Roth IRA had an income limit. A Roth 401k does not. So you can bypass the income limit and do it from that perspective. Okay, so those are the kinds of the things that I would do with these tax accounts to make it happen. But I think that, that that's the way I would look at it. Alex is asking, what about 457 after dollars? I don't know what you mean after dollars. 457 is a different kind of plan. You actually, it's a cool plan because it doesn't offset against the 401 and the 415 limits. And you don't have to wait till 59 and a half, but it's like a 401k. All right, this question comes in. How do I figure out if I'm on track to retire by 60 now? I don't see. I don't see it. This person's age. I don't even see a name. So. But all right, this goes back. This, this go back goes back to what I talked about earlier. Retirement first is not an age, okay? It isn't. It's a transition in life, and it's a math problem. That's it. I am effectively retired. I have been for a decade. I transitioned to do some things that I want to do the way I want to do it and do it by choice.

Okay?

But I had to solve the math problem of can I make it happen? So how do you solve the math problem? That means that you have to do a plan. You have to start to look at what's my life going to cost at 60. Now, I have a lifestyle cost calculator that you can get access to. In fact, I'll drop it in here so you can get it from here if you want that you can start to put some numbers in and start to play around with and everything to understand that the challenge is this, is that what we need to do is ask ourselves first, what do I want my life to look like at 60 or 65 or whenever I'm going to retire? Because that's what we're planning to we're not planning to an income stream, not planning to today, we're planning to a vision for a life, and then we have to do the math problem. What do we believe as the best of our ability, it's going to cost? Now, if you're 58 trying to get ready by 60 today, we're planning to a vision for a life, and then we have to do the math problem, what do we believe as the best of our ability, it's going to cost? Now, if you're 58 trying to get ready by 60, then you'll probably have a better idea of what it might cost. But if you're 28 trying to plan, then you'll probably have a better idea of what it might cost. But if you're 28 trying to plan for 60, we're making estimates, we're like putting the thumb in the air and trying to figure it out. That's going to take a bit and we're going to adjust for 60, we're making estimates, we're like putting the thumb in the air and trying to figure it out. That's going to take a bit and we're going to adjust. Along the way, I've been doing plans for myself for decades, and every step of the way, just like a pilot adjusts their trajectory and their direction, we just along the way, I've been doing plans for myself for decades, and every step of the way, just like a pilot adjusts their trajectory and their direction, we just keep adjusting as it grows, as it changes, as things change. When my son got married, when I got married, when our first granddaughter was keep adjusting as it grows, as it changes, as things change. When my son got married, when I got married, when our first granddaughter was born, when our first granddaughter was born, I was walking on the beach with my wife and she says, you know, it feels like you're not here. What are you thinking about? I said was born. When our first granddaughter was born, I was walking on the beach with my wife. It just dawned on me that Emily is born now, which tells me that now we have at least another 80 years of Abraham's on this earth that I have to think about that. I want to think about that. I want to figure out how to, how to take care of, how to nurture, how to, how to do that. And she says, you don't. You feel. It feels like you're not here. What are you thinking about? I said, it just dawned on me that Emily is born now, which Tells me that now we have at least another 80 years of Abraham. So when life changes, when a cancer hit all that stuff, your plan will change. It needs to be dynamic. It needs to be flexible, but it needs to start somewhere. The plan will remove the fear. It will add clarity. But the plan isn't really hams on this earth that I have to think about that I want to think about that I want to do why we do the plan. We don't need the plan. We need the plan because the plan lights the path. And now we can map the path to make the plan a reality. Okay, so, so I think here, what I would do is spend some time trying to understand what your lifestyle cost, Figure out how to, how to take care of, how to nurture, how to, how to do that. So when life changes, when a cancer hit all that stuff, your plan will change. It needs to be dynamic, it needs to be flexible, but it needs to start somewhere. The plan will understand what you already have in place, figure out what that gap is, and then we have to create a plan to close the gap and then constantly stress test the plan and adjust it on an annual basis to make sure you're on track. That's, that's, that's the game you're playing. As a plane is coming in to move the fear. It will add clarity. But the plan isn't really why we do the plan. We don't need the plan. We need the plan because the plan is constantly adjusting. It's, it's passed so it lands properly in the center of that, of that Runway. Okay, that's what we're doing with your retirement. Okay, so such a great, great question. And lights the path. And now we can map the path to make the plan a reality.

Okay.

So said. How do we take money in an HSA and invest it? How do you prove it's from the. Okay, so. Versus the bank account. So here's the deal. What happens is. This is a great question, Suzette. So what happens is you will open up an HSA account and then the account itself. Where. So I think here what I would do is spend some time trying to understand what your lifestyle cost is, understand what you already have in place, figure out what that gap is, and then we have to create a plan to close the gap. And then the money's being contributed would be at like a Schwab or a Fidelity. And it would be, it would be noted as that account is an HSA account. So they. You will open up that type of account at the brokerage house. So you're going to put cash in there. At first. You, let's say you fund it with 3,000, constantly stress test the plan and adjust it on an annual basis to make sure you're on track. That's the game you're playing as a plane is coming into dollars, just like you fund an ira, then you have to do a second step. And that second step is to make the investment. So now you sit back and say, okay, I'm going to cash flow my medical expenses. So I'm going to invest the money in the HSA account. So you basically open it up at a Schwab, a Vanguard or a.

Land.

It's constantly adjusting its path so it lands or Fidelity or one of those that have that. You then tell, you know, Fidelity, I want to invest it in these three index funds. And you make the investments just like any other account, but it's under the umbrella of an HSA account. So now that properly in the center of that Runway, okay, that's what we're doing with your retirement grows on its own. They account for it on its own. When you go to take the money out, let's say you, you need some money, you'll take the, the, the receipts in the amount you need and you'll use those to pull money from that HSA account. Now they'll send you a 1099 that it was a distribution for HSA, but you have the receipts to offset it. And then it. So such a great, great question said, how do we take money in an HSA and invest it? How do you prove it's from the. Oh, it comes through tax free. So that, that's how I would look at it.

Okay, cool.

Alex. I will be in Miami twice this year and once next week and then again in October.

So.

Okay, so versus the bank account. So here's the deal. What happens is. This is a great question, Suzette. So what happens is you will open up an HSA account and then the account itself, where the money's being contributed would be at like a Schwab or a Fidelity. And it would be noted as that account is an HSA account. So you will open up that type of account at the brokerage house. So you're going to put cash in there at first. Let's say you fund it with $3,000 just like you fund an IRA. Then you have to do a second step. And that second step is to make the investment. So now you sit back and say, okay, I'm going to cash flow my medical expenses. So I'm going to invest the money in the HSA account. So you basically open it up at a Schwab, a Vanguard or Fidelity or one of those that have that. You then tell, you know, fidelity, I want to invest it in these three index funds. And you make the investments just like any other account, but it's under the umbrella of an HSA account. So now that grows on its own. They account for it on its own. When you go to take the money out, let's say you. You need some money, you'll take the receipts in the amount you need, and you'll use those to pull money from that HSA account. Now, they'll send you a 1099 that it was a distribution for HSA, but you have the receipts to offset it, and then it comes through tax free. So that's how I would look at it.

Okay, cool.

Alex. I will be in Miami twice this year and once next week and then again in October.

So.

Cool. All right, any other last questions before we. We close this one out so I can go to the airport? Y', all. Y' all have been great. I just, you know, and everything. It's been. It's been. It's been great, you know, so, Suzette. Yeah. You might have done it. Now, I don't have an HSA account because I don't want the high deductible plan, given the kind of medical expenses, you know, cancer and all that stuff that I have. So we. We're still working off of her. Her Cadillac planet. My wife's Cadillac planet at her work. Now, next year is going to be an interesting year because next year I'm going to be forced to go to Medicare. And so we'll see what. What this all looks like. Stay tuned because I'm going to live through it, and you'll live through it with me. So, so cool. All right, y', all, you guys have been amazing. So glad you're here. And like I said, I'm going to be traveling a bit here and there throughout this whole month. I'm going to try to make sure that we do it. I may not be doing it directly from my studio here. It may be in a hotel room, but we'll try to make it happen. All right, I appreciate you, Marco. Love you back, man. Keep grocking, keep doing it. Remember this, okay? Our journey to wealth is that it's a journey. We're not going to make it overnight. We're going to make it over time. And that it's not siloed. It's not isolated. You get a chance to do it with people in a community, and hopefully we're building that community, this money machine collective, if you will, that we get a chance to support each other on that journey.

All right. All right.

Until I get a chance to see you in your road, on your path to your financial freedom, you know, always, always strive to live a life that outlives you.

All right.

See you in the next one. Cheers. See?

Yes.