How to Avoid Spending Anxiety

Money Guy Show

Brian Preston, CPA, CFP®, PFS and Bo Hanson, CFA, CFP® | Fee-Only Fiduciary Advisors

Education, Retirement, Moneyadvice, Investing, Savingmoney, Personalfinance, Business

4.6 • 2.8K Ratings

🗓️ 11 December 2024

⏱️ 22 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

"Wife and I are both 27. We are at about $100k liquid net worth. We started 6 years ago but are both becoming misers! We get terrible spending anxiety. How do we overcome this and give ourselves some slack?"

We'll walk you through that question and more in today's Q&A episode!

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Transcript

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0:00.0	All right, let's do this next question.
0:11.0	This is from Hayden.
0:14.0	Hayden says, hey money guys.
0:16.0	Hey, Hayden.
0:17.0	Can you talk about how to prepare to do a backdoor IRA conversion?
0:21.3	My girlfriend is nearing the limit and has a small rollover IRA I'm trying to get her to close.
0:27.7	Ooh, there's a lot in here, Brian.
0:28.8	I just think giving an education on what the backdoor IRA is and when it makes sense and how you execute it would be incredibly valuable. Yeah, Hayden, first of all, tread carefully because we get you all excited.
0:41.3	I've even, I had a really close friend.
0:44.3	I remember last year he sent me a text, he goes, hot dog, I'm so glad I listened to your show, and I did that back door, and I was like, whoa, whoa, I'm trying not to say his name.
0:53.3	I was like, whoa, you, whoa, I'm trying not to say his name. I was like, whoa, you, I, did you get rid of that huge rollover IRA that you previous
1:00.5	saying is, no, I still have that.
1:02.0	And I was like, well, you've really, I was like, you've gotten yourself in a pickle here
1:05.4	because I was like you, you can't, you're going to have to pro-rate the basis. I mean, you've got to pro-rate this, and you've got to pay taxes on that conversion now.
1:12.6	And he's like, what are you talking about?
1:13.6	And I was like, no, there's a checklist when you're going to do a backdoor Roth conversion.
1:18.4	Realize the backdoor name, I've just gone ahead and just given up and said,
1:22.8	okay, we'll go with it since that's what everybody in the industry calls it. But really, it's a conversion strategy. It's back in 2010, they ripped off the income limit on doing Roth conversions, where
1:34.6	there used to be a cap of around $100,000 to do Roth conversions. They took it away in 2010.
1:40.3	So now it doesn't matter what you make an income, you can convert Roth at all times.
1:44.7	But the problem with this is, is that if you have an IRA rollover or a SEP IRA that you set up because you have some side hustle income or your employer doesn't have a 401K, they have a simple IRA.
1:58.6	Those IRA accounts all count as IRA assets that if you did a conversion
	...

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