Blind Spots Could Shatter This Financial Fairy Tale | Making a Millionaire

Derek & McKenna have a fairytale romance. But is their sense of security merely a myth? We uncover BIG blind spots that could turn their dream life into a nightmare. Jump start your journey with our FREE financial resources Reach your goals faster with our products Take the relationship to the next level: become a client Subscribe on YouTube for early access and go beyond the podcast Connect with us on social media for more content Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 0:28Speaker 01

  It's getting chilly outside. But you know what that means?

• 0:34Speaker 01

  It's time to cozy up with Panera Bread. Let's get toasty, cheesy. Oh, hello, broccoli cheddar soup in a bread bowl. How about melty? Okay, Chipotle chicken ovo melt. It's dipping bread and soupy goodness season. Oh yeah, we are so back. It's Panera season. Order now.

• 0:57Speaker 02

  Derek and McKenna have a fairy tale romance.

• 1:00Speaker 03

  The first day of class, right? And I told my roommate, I was like, there was just one cute guy in my class. He was wearing a hat, like, I don't know his name, but he was wearing a hat.

• 1:06Speaker 04

  Walked in, figured this is my opportunity to find a cute girl.

• 1:09Speaker 02

  Yeah.

• 1:10Speaker 04

  Sat next to her and that was it.

• 1:12Speaker 02

  They have a six-figure household income and an investable net worth of over $380,000. But is their sense of security merely a myth? Have you guys had the conversation around? Who's going to take care of our kids?

• 1:23Speaker 03

  Yeah, we have a little bit.

• 1:25Speaker 04

  Have we?

• 1:25Speaker 03

  Yeah, I saw you just recently.

• 1:27Speaker 02

  We uncover big blind spots that could turn their dream life into a nightmare. Would it be too presumptuous for me to say that, hey, if something happened to Derek, that creates a financial problem, right? Like you hop in a car, get hit by a car.

• 1:39Speaker 03

  Oh, my gosh.

• 1:39Speaker 02

  That's the end of it.

• 1:40Speaker 03

  No, no, no.

• 1:46Brian Preston?

  Welcome to Making a Millionaire. This is where we help financial mutants build their great, big, beautiful tomorrow. I'm your host, Brian Preston, joined by Mr. Beau Hanson.

• 1:56Speaker 02

  Brian, I am so excited because here at Making a Millionaire, we get to do the exact thing that we love doing, and that is helping people make better financial decisions. So today, I'm so excited, Brian. We are sitting down with some good friends of ours, Derek and McKenna. Hey, guys, how are y'all doing?

• 2:11Speaker 04

  Doing good.

• 2:12Speaker 02

  Ah, thank you all so much for hanging out with us. And let us dive into your financial journey a little bit and learn a little bit about who you are, where you came from, and how we can be a resource to help you do money better.

• 2:24Speaker 04

  Go ahead.

• 2:27Speaker 03

  Well, I'm from here, born and raised in Nashville.

• 2:30Speaker 02

  A native, that's super unique, right?

• 2:31Speaker 03

  Yes, went out to Utah for college.

• 2:34Speaker 02

  Okay.

• 2:35Speaker 03

  That's where Derek's from. Met Derek in college.

• 2:37Speaker 02

  Love it.

• 2:38Speaker 03

  Got married and said, I want to move back home. So, there was no, no option. We were going home. So, back here, um, yeah, we have two little kids. We have a little girl who's four and a little boy who's one.

• 2:52Speaker 02

  Oh, love it.

• 2:53Speaker 04

  I'm originally from Utah.

• 2:55Brian Preston?

  Okay.

• 2:55Speaker 04

  All my friends, family, born there, raised there, stayed there. So, I always wanted to get out.

• 2:59Brian Preston?

  Okay.

• 3:00Speaker 04

  When she said she wanted to move back home, I was, I was all right with that. Came out here, started a job, um, started working there. After about two years, changed jobs to a, to a completely different industry. Working healthcare now.

• 3:12Speaker 02

  Nice.

• 3:13Speaker 04

  Um, McKenna was working when we first moved out here for probably about three-ish years.

• 3:18Speaker 03

  Yeah.

• 3:19Speaker 04

  Um, as a photographer.

• 3:20Brian Preston?

  Okay.

• 3:21Speaker 04

  And then had our first child and she stopped working. And I've kept going ever since.

• 3:27Speaker 02

  Now, I gotta be honest, my wife, she tells me that that is not the truth. That's not the way it works. I did not have a child and stop working. I had a child and my job got way harder. I started working way more.

• 3:39Speaker 03

  Yes.

• 3:39Speaker 02

  So, I imagine the same was true for you, right? It just is a different type of work.

• 3:43Speaker 03

  Yes.

• 3:44Speaker 02

  That's grossly underpaid, right? That's the way that that works. So, we're gonna dive into your finances. We're gonna talk about what you guys have going on and we're gonna look at that. But tell us about, uh, growing up. What was your relationship? Like, what kind of like financial households did you grow up in? And what did you know about money as a child that you like brought into adulthood?

• 4:02Speaker 04

  Yeah, my dad is a financial advisor himself.

• 4:05Speaker 02

  Oh, wow.

• 4:05Speaker 04

  So, I, I grew up around it.

• 4:07Speaker 02

  All right, we gotta tighten up a little bit. Oh, boy. Oh, boy.

• 4:11Speaker 04

  Um, so, so I grew up kind of, you know, hearing from him, him teaching me a lot of the principles and just the value of money, you know, hard work for money, things like that.

• 4:20Speaker 02

  So, you never had like some crazy story where like, oh, I went off to college and I got in all this debt and I just wrecked myself because I didn't know what money was? That's not your experience, it doesn't sound like.

• 4:28Speaker 04

  No, no, the complete opposite.

• 4:29Brian Preston?

  But I am curious though, because now, I mean, because Bo and I resemble this. What age did you actually get interested or? Let's say, what age did you actually start investing?

• 4:39Speaker 04

  I would say I first got into money, though, probably in college.

• 4:42Brian Preston?

  Okay.

• 4:42Speaker 04

  Started when Robin Hood came out, right? It was the whole, the whole game.

• 4:46Speaker 02

  Open up an account, get a free 20 bucks or something.

• 4:49Speaker 04

  I started, I started trading, actually was trading oil and gold.

• 4:51Speaker 02

  Oh, wow.

• 4:52Speaker 04

  Triple leverage fund.

• 4:53Speaker 02

  Why would you do anything else? Obviously, that's the way that we should.

• 4:57Speaker 04

  I was dumb in college. I, I, I made a quick, you know, 10% over a couple of weeks and thought, man, I'm, I'm a genius.

• 5:02Speaker 02

  It's the worst thing you can do is to be successful at the very beginning.

• 5:05Speaker 04

  Exactly, so was doing that with some buddies, um, you know, having fun with it. But that's, that's what first got me going with it.

• 5:11Speaker 03

  So my dad's a physician.

• 5:12Speaker 02

  Okay.

• 5:13Speaker 03

  Um, I don't know much about the finance world. Sorry.

• 5:18Speaker 02

  No, but that's, that's okay. Don't know much now or didn't know much then or both?

• 5:23Speaker 03

  Um, both, okay, confession. So in high school, we had to take a half a credit of personal finance. And I like school, like I tried hard, I got good grades, I studied. And personal finance was just not my thing. Like I, my teacher, I would drive him nuts and he's like, why aren't you trying? And I'm like, I just, it's not clicking for me and I'll marry someone in finance someday. Like I literally like.

• 5:43Speaker 02

  She called her, she went baby, called her shot, you know what I mean? How, how do y'all communicate? Do you talk about like financial goals together and are you on the same page? Or are you like, hey, no, Derek, it's your deal. You got it. I'll just follow your lead.

• 5:54Speaker 03

  Both, probably.

• 5:55Speaker 04

  Yeah, I think high level goals, aspirations of our future, we talk about it. But as far as the maintaining a day to day in the, in the weeds, that's all me.

• 6:03Speaker 02

  I want you to know, you're not uncommon and a lot of spouses, there's one spouse who like does the majority of the financial stuff and the other spouse who just kind of follows and trusts. But if you can use that as a tool to have those conversations, it's amazing how robust those conversations can be without like putting you to sleep. Making it like a personal finance class, actually making it about, hey, what are our goals? What are we trying to achieve? What are the things that matter to us? Okay, great, because we are aligned there, the decisions we make will then align with that. So it's a great tool to allow you guys to be able to do that.

• 6:32Speaker 03

  Should we explain how he did things?

• 6:35Speaker 04

  Yeah.

• 6:35Speaker 02

  Yeah.

• 6:37Speaker 04

  I don't know what you're gonna explain, so go for it.

• 6:39Speaker 03

  I do have my money that has always been like my money that he doesn't like touch or really even know about.

• 6:46Brian Preston?

  And is that like an investment account, a checking account? What is your money?

• 6:49Speaker 03

  Checking, right? Just a checking account. I like, it's been my account since I was like 12.

• 6:54Brian Preston?

  Okay.

• 6:55Speaker 03

  It's my little, I had a few thousand dollars going into college. And when we got married, that was my like, if I wanted to go shopping, if I like, wanted to spend like unnecessary money, like I just used my own little money that I had. And I was pretty dang frugal with it. Like that lasted me a while. And then when I graduated college and I got a job, I did have like my job money go to that account as well. So he, I've just always had my own little money.

• 7:20Speaker 02

  So even now still, are y'all still like, you kind of have separate?

• 7:23Speaker 03

  Yeah.

• 7:23Speaker 02

  Okay, so walk us through, how do you, as a household, how do y'all do? Like, joint accounts, separate accounts?

• 7:28Speaker 03

  Well, and I do want to preface with, I think the, like, the main reason why I wanted to do things that way is I always knew I just wanted to be a mom.

• 7:35Speaker 02

  Okay.

• 7:36Speaker 03

  Number one goal was to be a mom. And so I really wanted, like, when I got my job after college, I was like, I want him to be able to have a job and be able to financially take care of us and not be dependent on my job because someday I'm going to stop working and I'm going to be a mom.

• 7:49Speaker 02

  You still have your money now, even now, today.

• 7:52Speaker 03

  Yeah, it's still lasting me. Someday it's going to run out and then we're going to have to reevaluate how we do things.

• 8:00Speaker 04

  I will say, one, one conversation when you asked that question that I remembered is, we were actually in a Walmart parking lot. That's how well I remember it. And I remember saying, I don't, I don't know why we were talking about it or how it got brought up, but I thought, you know, I could live in an incredible life off of a hundred thousand dollars.

• 8:14Speaker 02

  Sure.

• 8:15Speaker 04

  And McKenna goes, no, we can't. You need to set, you need to set your sights higher. And I think you can.

• 8:21Speaker 02

  Right.

• 8:22Speaker 04

  Right? But, but for us, for the lifestyle we want to live, for the lifestyle we have, I always want to make more, want to make more than I have now.

• 8:28Speaker 02

  Sure.

• 8:28Speaker 03

  Yeah, I think that's.

• 8:29Speaker 04

  It's always been my, my goal.

• 8:30Speaker 03

  That is one thing that I, we do talk about quite a bit is I don't ever want there to be kind of a cap. I don't ever want there to be like a, oh, this is our end goal of the money that he makes. And then we're settled. Like, always set another goal. Always like, you know, just kind of keep reaching. Higher and higher, I don't know.

• 8:47Speaker 02

  So let's talk about those goals, right? So you guys clearly have some financial goal. What are the goals that you are working towards? Like when you talk as a couple, here's what we want money to do for us. Whether it be today, five, 10, or 30 years from now. What are your goals as a couple? And what are those things that you want to be working towards together?

• 9:05Speaker 04

  So I would say probably, I don't know, probably more shorter, well, I don't know, 10, 15 years down the road. Definitely want to pay for our kids' college.

• 9:13Speaker 02

  Okay.

• 9:14Speaker 04

  That's a goal of ours, or help them out, I would say.

• 9:18Speaker 02

  Okay.

• 9:19Speaker 04

  I think help them out with, with paying for a car.

• 9:22Speaker 02

  Okay.

• 9:22Speaker 04

  When they turn 16.

• 9:24Brian Preston?

  Do y'all think that will be a conflict point down the road? Or do you think it will be okay to do the used car where the child even has to put some money up on, on it? Or is that gonna be a fight?

• 9:36Speaker 04

  It'll be a fight, but I'll win.

• 9:38Speaker 02

  Let's make it, let's make it. So you said, you said your, your oldest child is

• 9:42Speaker 03

  She's four.

• 9:42Speaker 02

  A little girl, she's four.

• 9:43Speaker 03

  Yeah, so like we have, yeah, we have some time to figure this out.

• 9:46Speaker 02

  But she turns 16 and it's time for her to have her very first car. McKenna, what kind of car are we getting her? What are we gonna get her?

• 9:51Speaker 03

  I'm totally fine with getting her a used car, few years old, but I want it to be safe and reliable.

• 9:57Speaker 02

  Okay.

• 9:57Speaker 03

  Doesn't need to be fancy at all. But I just am like a little 16 year old, like being told like, nope, you gotta buy your own car 12 years from now. That's gonna be expensive, like there's no way that's like.

• 10:09Speaker 02

  So you probably get her a, a used car, couple of years old, reasonable, but you're gonna pay for it. And you're gonna say, hey, here's your car.

• 10:14Speaker 03

  Yeah, yeah, and I don't know how, like my parents, we bought, they bought a car and it was passed down from sibling to sibling. So I don't know if we'll do it that way and have the, all of the kids use it. Or if we just buy it for one kid and then buy another car and then be like, this is your car. Like now we're not gonna help you. Like next time you need, you need a car, it's on you, you know?

• 10:32Speaker 04

  We've got an account that's already tagged as the car.

• 10:34Brian Preston?

  Oh, I've seen it. I saw it. I mean, it's in there. I was, we're gonna talk more about that. Yeah, we'll, we'll hit the pause button on that, because I did have some questions on that account.

• 10:45Speaker 04

  My dad really educated me, again, like I said, on the value of money, right? I had to work for it, so I truly recognized the value of a dollar.

• 10:53Brian Preston?

  Sure.

• 10:54Speaker 04

  Right, what is it gonna? Take to get there and then it made it harder to just go and spend it.

• 10:58Brian Preston?

  Right.

• 10:58Speaker 04

  On anything. That's my biggest goal is is educating my kids, helping them understand and hey, here's, here's, you know, what you can do with this money. Here's how it can really set you up for, for your future. So that's my biggest goal, but at the same time, I want to help them out as much as I can.

• 11:14Brian Preston?

  Sure.

• 11:14Speaker 04

  Help give them a leg up so that they can start, you know,

• 11:17Brian Preston?

  Yeah.

• 11:17Speaker 04

  Five steps ahead of where I even was, um, you know, today or when I was in college.

• 11:21Brian Preston?

  With the knowledge to know how to do that well.

• 11:24Speaker 04

  Yes, yes.

• 11:24Brian Preston?

  Yeah.

• 11:25Speaker 02

  I want to go back to these goals. He said, okay, 10 to 15 years, I'll pay for the kids' college. Uh, it sounds like in 12 years or so, I want to pay for the kids' cars. I have a third, I want to educate my kids about money. It sounds like a lot of your financial goals are centered around the kids. Yeah, for sure. Yeah. So you guys want to work forever till you're like a hundred, never stop working. Like, oh, because their top priority seems like the kids' stuff. Is that, is that true? It's like when you think about the financial decisions you're making, is the top priority you're working towards to make sure the kids are taken care of? And then you'll kind of figure out your stuff later or is it different?

• 11:55Speaker 04

  I, I, I may not be all the way at 25% and may have skipped ahead to saving for college and, and future expenses and things like that.

• 12:01Brian Preston?

  I think you can tell we're going to pick on them a little bit. You know where, you know where the warts are and we're coming for it at some point.

• 12:07Speaker 04

  I knew what I was getting into when I walked in this morning. But no, I, I, you know, definitely want to save for, for our retirement. Want to retire one day, want to be able to travel, you know, go to wherever the kids are, spend time with them, you know, just, just be free. Not have something that's holding me down.

• 12:23Speaker 02

  I like that.

• 12:24Speaker 04

  I do love to work.

• 12:25Brian Preston?

  Yeah.

• 12:26Speaker 04

  So even, you know, and this may change when I'm, you know, 60, 65, my mentality may shift. But even when I retire, I would still love to do something.

• 12:35Speaker 02

  Okay.

• 12:36Speaker 04

  Keep me busy, right? The exact day of retirement, whatever, you know, haven't got there yet, but I know that I want to retire someday.

• 12:41Speaker 02

  What I'm not hearing is, oh, I'm just ready to exit the workforce as quickly as possible. Uh, by the time I'm 40, I want to be done working and be able to travel the world. That's not what I'm hearing.

• 12:50Speaker 04

  No.

• 12:51Speaker 02

  Like, I like working. I like the job that I do. I like the vocation that I'm in.

• 12:54Speaker 04

  Yeah.

• 12:54Speaker 02

  And I want to do it for a reasonable amount of time. And then one day, if I'm hearing you correctly.

• 12:58Speaker 04

  Yeah.

• 12:58Speaker 02

  I want to be able to do work because I want to, not because I have to.

• 13:02Speaker 04

  Yeah.

• 13:02Speaker 02

  I want to reach that. I'm not there yet, but that's the point I want to get.

• 13:05Speaker 04

  Exactly.

• 13:05Speaker 02

  That's awesome.

• 13:06Speaker 04

  I feel super accomplished. I, I, again, always want more and want to get to that next step. Not that, you know, I, I want to prove to everybody else, but just for me, myself, right? Want to keep doing better, being better and making more money because that's just, I'm a competitive person.

• 13:21Speaker 02

  Okay.

• 13:21Speaker 04

  So I want to compete with myself and continue, you know, climbing the ladder and, and reaching that, those goals that I have. But yeah, I'm, I'm, I'm super happy with where we're at, super, you know, blessed with where we're at.

• 13:33Speaker 02

  Yeah.

• 13:34Speaker 04

  You know, but want to continue climbing.

• 13:36Speaker 03

  Yeah, we're really comfortable where we are right now. Um, I would say just for me, like we have two little kids and we want more. And so I, we're comfortable with our lifestyle right now and I just want to make sure that as we have more kids, we still have this comfortable lifestyle. Cause kids are expensive.

• 13:50Speaker 02

  So obviously content, happy, life is feeling good. When you think about your like finances, what are some of the questions you have? Like what are some of the things like, man, this is the thing. When I think about the thing, maybe I don't have perfectly figured out. Or the stuff that gives us apprehension or nervousness or anxiety around finance. What are those topics for you? What are the things that you would say are maybe not financial concerns? But like, oh, things that stay top of your financial mind.

• 14:16Speaker 04

  My financial situation, I would say is really just starting to probably get more complex. You know, than just a basic knowledge and understanding can, can manage and maintain. Questioning how tax strategy, am I doing the right things? Am I, am I, you know, making the right steps? You know, are there, are there things that I can tweak and take advantage of, um, you know, to improve my tax situation? Are there, you know, with my investments I've, I've, as I'm sure we'll talk about and we'll get there. You know, just, just stayed very, very aggressive, right? And I think that that's the stage of life that I'm in, but you know, over the next 10, 15 years, that may change. And so that's something that I need to think through.

• 14:56Speaker 02

  Sure.

• 14:57Speaker 04

  I'll say one area that I know you guys are gonna, you guys are gonna pound me on is, uh, my insurance planning and my estate planning.

• 15:03Speaker 02

  Well, we're gonna talk about insurance. Oh, that's interesting.

• 15:10Speaker 04

  Those two, I, they're in there. I know I need to get it done and for some reason. And I just keep procrastinating and don't do it.

• 15:17Brian Preston?

  But it kind of comes back to that question of how it feels a little because I'm trying to figure out the margin. You guys feel in everyday life like because I your income, by the way, you have a good base salary, but you also have some bonuses. You have some, you know, restricted stock option, I mean restricted stock units and other things that pay out from your company. So that stuff comes in in lump sums, whereas you're on a base salary. I'm trying to figure out when I pick on you about savings rates and other things, how much margin do you guys feel like you have? Every month or is it because it y'all based upon your answers you just get. Things are good, like at the end of the month, money's left over and things are building up in the background.

• 15:58Speaker 04

  Yeah.

• 15:59Brian Preston?

  Okay, I like that. That's a great answer because that means buckle up. Y'all know, well, you know, I'm all about the automation of making your wealth journey inevitable.

• 16:08Speaker 04

  Yeah.

• 16:08Brian Preston?

  And you have all the tools, all the resources. Now it's just a matter of can we optimize it? To set this stuff up to have a forced scarcity, a cash management plan. So it doesn't necessarily squeeze your lifestyle. I'll still want you all to be just as happy as you are now. But it's one of those things every year when y'all have that conversation of doing the net worth statement, you're like. Holy cow, I can't believe these small little incremental decisions resulted in these. Big life changes over the long term.

• 16:35Speaker 04

  Yeah.

• 16:35Brian Preston?

  And that's going to be the part that makes your father smile too, as he watches this as the financial advisor too.

• 16:40Speaker 02

  What is it right now that allows you to feel so comfortable about your current financial situation?

• 16:46Speaker 03

  I know that we're putting money away every month. Like I know that it's not, we're not living paycheck to paycheck. And so that makes me really comfortable.

• 16:53Speaker 02

  It sounds like from a marital standpoint, you have a lot of confidence because Derek's here, right? Like Derek's here and he's able to kind of like shepherd and shield that financial burden from you. Would it be too presumptuous for me to say that, hey, if something happened to Derek, that creates a financial problem, right? Like there's something that exists there.

• 17:11Speaker 03

  Yes.

• 17:12Speaker 02

  But now all of a sudden, okay, you had all this comfort and all this security. What happens in that event, right? And maybe that's one of the things that we ought to talk about.

• 17:20Speaker 03

  Yeah.

• 17:20Speaker 02

  Because it seems as an object of third party, that seems like maybe one of the risks that exists for you guys.

• 17:25Speaker 03

  Yeah.

• 17:25Speaker 02

  So long as he's here rocking and rolling, things are great, family unit is nice and it's working. But if there were something that happened there, then it probably does become a little more problematic. Is that a fair to say?

• 17:35Speaker 03

  Yeah, for sure.

• 17:36Brian Preston?

  I did notice in our notes when we were prepping for today's recording, y'all don't have a will yet.

• 17:41Speaker 04

  Yeah.

• 17:43Brian Preston?

  What's the apprehension? Why hasn't that happened? Because it's not like this is the first child.

• 17:48Speaker 03

  It's scary to talk about.

• 17:49Brian Preston?

  But what makes it scary? What makes it scary for you guys?

• 17:52Speaker 03

  I don't want to think about dying and leaving them.

• 17:54Brian Preston?

  Yeah.

• 17:54Speaker 03

  That's scary.

• 17:55Brian Preston?

  But it's so much easier to have it in your twenties, though, for that discussion? Yeah, in thirties? I mean, versus you get my age and you're like, holy cow, my might be already over halfway point.

• 18:04Speaker 02

  Do you guys, let's, you hop in a car, get hit by a car.

• 18:07Speaker 03

  Oh, my gosh.

• 18:09Speaker 02

  Let me ask you a question. Have you guys had the conversation around who's going to take care of our kids?

• 18:14Speaker 03

  Yeah. We have a little bit, yeah. Yeah, I saw you just recently did. Well, my parents would definitely be, right? And it gets tricky, too, with like age and stuff. I'm the oldest, so my parents are younger. His parents are a little bit older, plus they live out of state. It makes definitely the most sense for my parents to take the kids. They live 30 minutes down the street from us. They're younger. But then, obviously, that'll change as they get older, you know?

• 18:38Speaker 04

  Yeah, I think having the conversation, once we get past the fear and the anxiety of, you know, I don't want to think about that.

• 18:45Speaker 02

  Right.

• 18:46Speaker 04

  I think we'd be on the same page and it would be a very easy conversation.

• 18:49Speaker 02

  But I think what's interesting is you guys, just even right there in that interaction that you had. You said, oh, yeah, yeah, it's clear. And he goes, who?

• 18:56Speaker 03

  Yeah.

• 18:59Speaker 04

  Just wanted to make sure.

• 19:00Speaker 02

  As difficult as it is for even you guys to have that conversation and for you guys to even make sure that you're on the same page, you have to imagine for a moment, how much more difficult would that be? If something happened, you guys? And then, not only do your parents become part of the conversation, but then so too do your parents.

• 19:17Brian Preston?

  And the state.

• 19:18Speaker 02

  Your siblings. And then the state has something to say about it. As hard as that decision is to have while you guys are still on this earth, it becomes exponentially more difficult to have if you're not here to speak on behalf of what your wishes are. Because then you leave the family guessing, well, I think my parents are. Are gonna be, well, my parents are older and then your sibling says, well, no, no, it should be us. Cause the cousin, and from a risk management standpoint, I gotta believe above the finances and financial independence and above everything else in your life going on, your kids are probably your top priorities.

• 19:48Brian Preston?

  Obviously, we, we heard it on the list. It really was.

• 19:52Speaker 02

  When you think about the thing that you want to protect and the thing you want to make sure is covered, it's probably that. And while you guys are here, you feel confident we can provide and take care of our kids, but part of the responsibility we have as parents is if we're not here, who's gonna be that person? And who's, is the same person who's gonna take care of the kids also gonna be the person who's gonna take care of the money? To make sure that the kids are taken care of and provided, those are really, really hard conversations to have. But dare I say, for young parents who are square in the messy middle, which is exactly where you guys are, they're probably the most important questions, conversations to have.

• 20:29Speaker 02

  Even more so than like savings rate and investment structure and like those are the ones that matter because those are the most unknown unknowns. You hope that it never happens and it's never something you have to deal with and it's a non-issue. But if ever were an issue, you'd want to make sure you solve that and realistically there are, it's a difficult conversation, but an easy problem to solve. You sit down and you meet with an estate attorney or you guys work together to figure, okay, this is who we want to take care of the kids and this is how we want the money and this is what we want. This is our vision for their life. I think in terms of like prioritizing stuff that you ought to walk away from here with, that's a big one. Do we have wills and estate documents in place to explain what our wishes are?

• 21:12Brian Preston?

  And, and look, the reality is, is you guys are so far away from this actually being the real concern. It's more of just a risk mitigation.

• 21:20Speaker 02

  That's right.

• 21:20Brian Preston?

  It's more of a thought exercise at this age, but I'll tell you, doing it early and, and kind of the peace of mind that comes from that. And then also you're going to get, one day you'll wake up and you'll be my age and you are at that point where you'll still know this exercise was valuable. Because there's a plan that's already got the intention, it lets your emotions, lets your desires be recorded versus your loved ones, cause I think y'all. Would be struggle with the abundance of too many loved ones, too many cooks in the kitchen. Trying to figure out how they love on this situation and it creates chaos. But we're gonna talk about life insurance and here's the good news.

• 21:57Speaker 02

  Let's talk about it right now. This is a great time to talk about that.

• 21:59Brian Preston?

  We don't sell life insurance. You know, we're, we're fee only fiduciary advisors, but it is one of those things. Cause I imagine, because you, you've already said it, Derek. You said, I know you guys are gonna pick on me. Tell everybody how much life insurance you have currently and then tell us what, what's the apprehension on where it's at. Because you've heard, I loved hearing McKenna share how comfortable and confident she is in you. But then to hear kind of the life insurance part, there's a little bit of a disconnect.

• 22:27Speaker 04

  Yeah, yeah, no, definitely. Right now I have, I think through my work, I get for free like two times my salary. Okay. I will say before I did increase that, I think to maybe a million dollars. But probably two years ago or so, our company got bought out, you know, changed the whole plan and everything. And ever since then, I didn't, I didn't carry it over, didn't renew it, didn't do any of that. So honestly, I would say probably the apprehension or the reason I haven't done it is just, you know, lack of doing it.

• 22:58Brian Preston?

  Is there fear of expense? Is there fear of health or any of that stuff? No, it's just, okay.

• 23:03Speaker 04

  It's just, yeah, it's just procrastinating, yeah, busy not doing it.

• 23:07Speaker 02

  It's an important financial thing that fell in the back burner. It was easy for it to fall in the back burner.

• 23:12Speaker 02

  So again, I want to make this real and I hate to make it so real, but I'll make it real. Something happens to you, you walk out, you get hit by a bus and all of a sudden you have whatever you guys have saved up right now. Plus two times his annual salary. How long will that allow you and the kids to continue to live the lifestyle that you would like to live?

• 23:30Speaker 03

  Not very long, probably.

• 23:31Speaker 02

  I mean, probably about two, about two years, right before you. So when, when we assess your situation, we say, man, there's a, there's a big need there. And there's a current solution and the solution, the need, there's a big chasm between the two. It is probably worth filling. Now, the great news for young people is that is a very easy problem to solve.

• 23:52Brian Preston?

  It's pretty cheap for what you're getting.

• 23:53Speaker 02

  At a very low cost. But that would also be another like big risk that you guys have. If something were to happen, is it gonna be enough to provide for your family if you're gone? And then do you have life insurance currently? Is she covered with insurance? So again, stepping it now, maybe the bus doesn't hit you, it swirled, it swerves, misses you and hits you. Tomorrow, you know, she says that she stays home, takes care of the kids. Tomorrow, you gotta go to work. Who's watching the kids?

• 24:19Speaker 04

  Yeah, it's tough.

• 24:19Brian Preston?

  It's not just for the kids. It's for if you can't go to work. Because I mean, without a doubt, a loss of that type would derail your ability to probably economically be able to provide for yourself. The way we're going to talk about with you guys, saving and building assets. You'll be able to self-insure this risk when you get to be my age. But while you're young and in this messy middle where you have young kids, growing family, you're trying to find traction and continue to build traction in the career. Let's buy that risk out away by buying cheap term life insurance that covers us for the length of time that we have this risk. And when you see how cheap this is, I mean, where do you want to roll that part up?

• 24:59Speaker 02

  I was gonna say, one of the things that's unique about getting to sit here with you guys is rather than just explaining to you academically, here's an idea. We actually did the work for you guys. So if you're okay, we want to share with you an insurance analysis that we did for you guys. Walking through what your insurable need is, and then what we think a reasonable solution would be. And we went ahead and priced it out for you. Again, our job here, it's like Burger King, we want you to have it your way. We're trying to make it as easy as possible. So we know that right now you have two times your current salary. And you do not have currently any life insurance coverage. And we know if something were to happen to you, the insurance needs to replace income, right? It needs to replace income that you were bringing in for the household.

• 25:41Speaker 02

  There's obviously a mortgage out there, and there's some desire that I imagine one of the goals you guys have collectively is want to pay for some portion of college. If something were to happen to you, then even funding college now becomes a void that for two children would need to be solved. So what we did is we did an analysis showing, Derek, your estimated insurance need. Now, the way this is laid out is we have your current portfolio down here, where you are currently. Because obviously, if something were to happen to you, you have the resources you've built so far, and then you have your current insurance. So we have your current portfolio and your current insurance. We mathematically calculated, I'm gonna use a bunch of big words here, then we'll explain what it means. We calculated the present value of your future earning potential, and then we took the present value of how much college would cost, when the kids get there,

• 26:25Speaker 02

  and then we took the value of your mortgage today. Instead, if we put all that together, how much would need to be in place if you were to die tomorrow for you to be able to still do all those things? Still be able to live financially independent, still be able to send the kids to college, pay off the mortgage if so chose. And what we determined is that your insurable need, Derek, is probably somewhere close to $5 million or so.

• 26:47Brian Preston?

  Doesn't that number sound huge, though?

• 26:49Speaker 02

  It sounds big, right? It sounds really big. But again, you've laid out the goals that you guys have, and so that's realistic. And right now, you're covered at two times salary, and you have your current portfolio, which the sum of those two is not quite at $5 million yet. So there's a void, right? There's a chasm, there's a fill. Well, one of the things we said is that, okay, well, what are some things they could do? And we love low-cost term life insurance. And what we recognize, too, is that some of the stuff will decrease over time, like your mortgage will decrease over time. Once the kids are out of school, you don't have to pay for school anymore. And as your portfolio grows, it replaces more of that. So your insurable need decreases through time. So what we determined is there are really two options that you could satisfy this void for where Derek is.

• 27:31Speaker 02

  Option number one, we could look at a $2 million, 20-year term policy. We went and priced that out at the second highest health rating, assuming that everything's normal, which it seems you guys are young, that's gonna happen. For you to get a $2 million policy for 20 years is only gonna be somewhere around $900 a year. Not a month, a year. You're sleeping better at night, knowing that if something were to happen to Derek, having that money in place to be able to provide for you and the kids, is that worth $900 a year? Yes. Obviously, right? So we could look at a $2 million policy for 20 years, and we could look at another $2 million for 25 years, because we think that the void is probably somewhere close to $4 million that you're underinsured. For a 25-year, $2 million term policy, you're looking at about $1,350.

• 28:14Speaker 02

  So you could have $4 million of insurance for right around $2,000 a year. That's just not crazy.

• 28:20Brian Preston?

  Yeah.

• 28:21Speaker 02

  That's not wild. Or if you wanted to, you could go get a 25-year term policy for all 4 million. It's going to be a little bit more expensive, somewhere between 26 and 2800. But then you know that you're covered all the way out for 25 more years. And we're going to talk about what's retirement look like, what savings look like. Odds are that 25 years from now, you're going to be self-insured. You won't need it anymore. But right now, while you're at this stage in life and super young, it's going to be there to cover for you.

• 28:46Brian Preston?

  Yeah. I like the idea of laddering the coverages because then it lets you have multiple policies. They drop off at different, as the need goes down. Now, it does create additional complexity because you have to make sure you pay the premium on the multiple policies. But it is a nice way to cut costs, but also to just give you some diversification as well as match you with the timing of your assets growing in the background. And that's what a lot of people will treat insurance as an investment. We treat it as a risk mitigator. Is that because I want you, and that's what I love about the cost being so low. This isn't going to derail you from all the investment and other goals that we're going to be talking about. This is just protecting y'all as a family so we can move on to some of these bigger goals.

• 29:28Brian Preston?

  Because this is the most necessary thing, but the least loved thing. Nobody gets excited. And McKenna, as you shared, nobody gets excited about it. But this is one of the biggest things I feel like we can help clients with. And we'll even hook you up with a checklist. So when you get your wills made, you can go with this completed. So you can have a lot of these discussions. Because it'll save you money too, because attorneys are not cheap. So if we can give you the homework to actually have this conversation, healthy conversation, you won't be caught off guard when you're meeting with the attorney. And you'll save money since they bill you by the hour. So we'll hook you up with those tools as well.

• 30:05Speaker 02

  But it's not just you that has an insurable need. We also said, McKenna, you have an insurable need. So we did a capital needs analysis for you as well. And essentially what we have is we have the portfolio that we have in place. But odds are something were to happen, McKenna. You don't want to start burning through your portfolio assets. So there probably is some insurable need. The good news is, is mortality-wise, ladies are expected to live longer. So the premiums for you are actually even cheaper. Then they are for male counterparts. And so what you can see is for a 20-year term policy for a million dollars, you can get that place for somewhere between 500 and 550 dollars a year. It is just incredibly inexpensive. So what we just laid out is that putting some term policies in place for both of you can likely be done for around 2,500 dollars a year.

• 30:49Speaker 02

  And you can literally check that box and not have to worry about that one anymore. So if I'm giving you more homework homework items, one of the things I would think about is, hey, should we, and this is not specific recommendation, this is just general advice for you to think about, should we go look at getting some term policies in place, maybe 4 million for Derek, maybe 1 million for McKenna, and then we can say, hey, we have checked our life insurance need, our kids are going to be provided for, now we can focus on the fun stuff. Now we can get to talking about what kind of car are we going to buy this 16-year-old little girl when she gets there?

• 31:18Brian Preston?

  That is not where I wanted you to go with it. That might be where they want to go with it. That's not where I wanted to go with it.

• 31:24Speaker 02

  Awesome. All right, Brian, so we've talked about some of the risk management, we've talked about some of that. Let's talk now about the fun stuff, because we don't, insurance is something that people spend money on, they never want to use. Hopefully, you never actually get to utilize your life insurance. That means you wasted that money for 25 years. Good. It means you didn't die. That's a win, in our opinion. Now, let's talk about the fun stuff, saving. When you guys think about saving, when you think about building, when you think about growing your assets, walk us through what y'all do. Where do you save? Where do you put your money? Where does it go? How do you decide how much? What's that look like?

• 31:53Speaker 04

  So, the automated portion of it, the easy stuff, right, is 401K.

• 31:57Speaker 02

  Okay.

• 31:58Speaker 04

  6% goes to 401K, get the maximum match from the company.

• 32:01Brian Preston?

  Is that what's required to get that match, is 6%?

• 32:04Speaker 04

  Yep. It's a 6% and then a 4.5% match.

• 32:07Speaker 02

  Oh, that's great.

• 32:08Speaker 04

  And then, I put, I think today, about 6,000 dollars away into an HSA.

• 32:14Speaker 02

  Okay.

• 32:15Speaker 04

  Which, I'm getting better at using it the mutant way.

• 32:19Speaker 02

  Uh huh.

• 32:20Speaker 04

  Versus is just a transactional account. I put 200 dollars away for each of the kids 529s.

• 32:25Speaker 02

  Okay.

• 32:26Speaker 04

  So 400 bucks total. And then I think the only other one that may be automated is my Acorns account, which is the kid's car fund.

• 32:34Speaker 02

  Oh, there we go, okay.

• 32:36Speaker 04

  Which I put, I think, 100 bucks a month into that, and then...

• 32:39Brian Preston?

  25 dollars a week, real financial mutant stuff.

• 32:41Speaker 04

  25 bucks a week.

• 32:43Brian Preston?

  Can I tell you what I think is going on subliminally? Because I did the exact same thing. When my daughters were born, I set up a few hundred dollars. It started off as a hundred dollars a month. It turned into two hundred dollars a month into custodial accounts. All because I had this big fear that my wife was going to want big weddings. And I'm such a tightwad on things at the time. I've gotten, I had to trade in my tightwad card. But at the time, I was so stressed out about it. I was like, I'm going to go ahead and front and load the funding on this. So this is not an argument down the road. I couldn't help but when I saw this Acorn account. And then, I know it's supposed to be rounding up. But then I see that you're putting in twenty-five dollars a week. So it's a little more intentional than just a rounding up. Is this because you were trying to cut a future discussion point?

• 33:26Speaker 04

  Yeah, a hundred percent.

• 33:28Speaker 02

  I said cars, it's for the cars.

• 33:29Brian Preston?

  That's why, that's why. It just cracked me up because I could see myself in this situation.

• 33:33Speaker 04

  If it grows big enough, we can use it for other things. But that's, that's the car fund.

• 33:36Brian Preston?

  It's kind of romantic in some ways. And he's going ahead and trying to make sure that he cuts the corner off. So y'all don't have a fight in fourteen to fifteen years.

• 33:44Speaker 02

  So whenever I hear this stuff, I'm thinking through, okay, financial order of operations. I'm hearing parts and pieces of where you are in the nine step tried and true process. And so, based on the way you're saving, I'm going to assume that means you got a fully funded emergency fund. Like when you guys talk about your, how much, how much money do you have sitting in cash right now? True blue emergency fund sitting there?

• 34:02Speaker 04

  That I would say is truly tagged as an emergency fund, we have about twenty-five grand.

• 34:06Speaker 02

  Okay, twenty-five grand. So as a single income household earner with young kids, who's a high income earner. I know that the rule of thumb for you guys is going to be about six months of expenses inside of emergency fund. So when I take twenty-five thousand dollars sitting in an emergency fund and I divide it by six. That means that you guys only spend about forty-one hundred dollars a month. That didn't even cover. Is that right?

• 34:32Speaker 04

  No.

• 34:32Speaker 02

  Oh, that's not, wait, that's not, that's not right. Uh-oh. Uh-oh. Okay, so walk us through twenty-five thousand. But you know that's probably not enough to cover the emergency fund. Where's the thought process there?

• 34:46Speaker 04

  So twenty-five thousand's in a high yield savings account.

• 34:48Speaker 02

  Okay.

• 34:49Speaker 04

  And again, that's why I say that that's tagged one hundred percent as emergency fund. But I've got a brokerage account. I've got additional cash sitting in that brokerage account as well.

• 34:58Speaker 02

  Okay.

• 34:58Speaker 04

  You know, money invested that, that I know that I can get to.

• 35:02Speaker 02

  You said additional cash sitting there, money invested, which one is it?

• 35:04Speaker 04

  I've got both.

• 35:05Speaker 02

  Okay.

• 35:05Speaker 04

  I've got both. I've probably got another twenty-five sitting in cash in that account.

• 35:08Speaker 02

  Oh, okay.

• 35:09Brian Preston?

  But what's, what's it for?

• 35:10Speaker 04

  It's. If the market goes down and there's a good opportunity, I can, I can invest. If I need to, you know, take it out for an emergency, it's there as well.

• 35:18Speaker 02

  Okay, so Derek, this poses a problem. Let me, let me take you through a real life scenario. I want to rewind. It's 2008 and the Great Recession hits. You know what happened to stocks? They just started cratering. So a financial mutant like yourself says, holy cow, I gotta take advantage of this. I gotta jump in. There's low stocks. I'm gonna go in here and buy. Well, 2008 fell a long way. So you just figured this out about halfway through the year, you bought, market kept going down. Well, then all of a sudden, the economy gets really painful. It hits the skids. And now there's a shift in the healthcare sector. And all of a sudden, there's a huge reduction in force.

• 35:50Brian Preston?

  Rains and pours.

• 35:51Speaker 02

  Where they say, hey, market's going bad. Stock prices getting hammered. We're gonna have to lay some people off. And unfortunately, your number is one of the ones they call. And now you're out of work. So now that money that was sitting there, that was gonna be opportunistic when stocks fell, you used it for that purpose. And then the worst case scenario happens, an emergency happens. You don't have any income coming in.

• 36:14Speaker 04

  Yeah.

• 36:14Speaker 02

  You got a problem.

• 36:16Brian Preston?

  Well, and I think-

• 36:17Speaker 02

  You got a problem.

• 36:17Brian Preston?

  By the way, this is a financial mutant risk that I see all the, I fell into this. I've detailed it a lot when we've done content, is that financial mutants can't stand cash. It's because you feel like everything should be working for you. But the reality is, and I got humbled on this, and anybody's heard my story. I got so humbled on it that I was literally praying, get me through this and I'll never do it again. And I've tried to pay it forward by telling everybody, don't fall into the access to cash trap that I fell into, is that Bo is exactly right. That when it rains, it pours. I know in the Great Recession, he was probably thinking of me as he was sharing that. It's because I had a home equity line with over a hundred thousand dollars of access,

• 36:59Brian Preston?

  literally a debit card, a checkbook and everything that they gave me. I did not keep my cash as high as it was. And for me, it was, my revenue at the firm went down 40%. When I say revenue at the firm, that means my pay went down too. Because I'm the one, it's all feeding down to my family. But I don't get to give pay cuts to employees or anybody else. My real- Real estate, the bank Wells Fargo, I'll never forget it was on May the 4th. You know, if you're a Star Wars nerd, you know, that's always an important day. I got a letter from Wells Fargo saying that home equity line that you're counting on for access to cash is completely gone. And then it was just, it was like everything and anything had gotten crushed because the stock market was also getting beaten up.

• 37:41Brian Preston?

  And by the way, this is not something that everybody thinks the Great Recession was just 2008. It was bad on the real estate side for 2009, 2010, 2011. It really, really didn't start seeing things go back up until 2012 on real estate and some of those other things that I was counting on. I would encourage you to put a moat around your emergency reserves. It's almost something that is so valuable. There's a reason that when we talk about the financial order of operations, it gets two steps in the nine steps. It's because it is cash that will protect you from the desperate decisions. And I think that you have built, y'all's relationship is so beautiful in the fact that there's a lot of comfort, a lot of trust. And that builds something that's really special.

• 38:26Brian Preston?

  This is going to be the stuff that I see as being the pothole that really can derail that. As if it's on, built on a house of cards versus being truly having the foundation. And you're so successful with opportunity that you don't have to fake it. You don't have to kind of build this thing on a house of cards. You can actually do it the right way, get the fully funded six months and you'll be much better. Because even if Bo does the exercise of 50,000 divided by six, it's still, I know enough about where your mortgage is.

• 38:59Speaker 04

  Yeah.

• 38:59Brian Preston?

  And other things, that's not even where you likely should be. We should beef that up even more.

• 39:05Speaker 04

  It's just so hard to put 50, 60 grand into cash.

• 39:07Speaker 02

  Well, tell me this, inside your brokerage account, that 25,000 you have sitting there right now, what's it earning?

• 39:13Speaker 04

  Nothing.

• 39:13Brian Preston?

  Oh, so you know it's worse than. You're a financial mutant that doesn't even earn money on the cash. That's.

• 39:20Speaker 02

  Uh, so let's do that. Let's do the exercise. If we take 25,000 plus another 25,000, that's going to be $50,000. We divide that by six. Now we're at $8,300 a month. Could you guys live off of 83? Like, does that kind of match more closely to what your living expenses are?

• 39:34Speaker 04

  Yeah.

• 39:34Speaker 02

  So if that were the case, then the argument that we would make is that all of that should probably be in a high-yield savings account. Well, the great news is that right now, high-yield savings accounts are paying like 4.75%. So while it's not super fun, and while it doesn't get you super excited, if you just take $50,000 and you can make 4.7% on that right now, that's another $2,350. So one of the things I would think through, again, if I'm thinking through homework items, is we probably ought to, if we're really going to follow the food, really going to do risk management, we're so successful that we don't have to get cute with it, I would think about chiseling that money off actually as your true blue emergency fund, somewhere around $50,000 in a high-yield account. And then you know what? Once you've done that, you don't have to think about cash anymore.

• 40:19Brian Preston?

  I would.

• 40:20Speaker 02

  You don't have to enter your likes of.

• 40:20Brian Preston?

  I like 50 as the minimum, but because I already see you wired as this financial mutant, I think it's 50 to 60, because that's going to let you not only have the moat of lifestyle and expenses covered, but it's also going to let you scratch that itch of having some, some capital down the road. And by the way, 50 needs to be your first number to reach, but then after we, we true up some of these other steps of the financial order of operations, that's going to be where you come back as part of step eight is probably to get that up to 60. That's my thoughts.

• 40:49Speaker 02

  I love it. Alright, so we have, so we're gonna, you know, fix that problem, right? So we're gonna do that, and now we're thinking about our savings. So we've got 6% going into our 401K. Then we have another 6,000 going into our HSA. And then we have 529s. I'm going to argue that's not part of a 25%, that's part of a prepaid future expense. We have Acorns. I'm going to argue that's not part of the 25, it's part of prepaid future. So if I take 6% 401K and then 6,000 HSA.

• 41:20Speaker 02

  I'm not quite at 25% yet, so walk me through, walk me through the mindset.

• 41:24Speaker 04

  I put probably an additional, on top of that, it's again not automated, I would say somewhere, conservatively, I would say maybe a thousand bucks a month into brokerage.

• 41:33Brian Preston?

  And give me a clarification, because you, and as I shared this earlier, you have a base salary, but then you do have bonuses and RSUs that hit at different points.

• 41:42Speaker 04

  Yeah.

• 41:43Brian Preston?

  Walk us through kind of how your cash flow works, because I don't want to put pressure. This is something I always tell my clients who are highly compensated employees, but they have bonuses. Don't build your monthly savings off of the total comp, because you'll drive yourself crazy, because those bonuses are probably going to be a big catch up for you. Walk us through how you're saving, because really, I'm seeing 10 and a half percent, but it's not even 10 and a half, because you guys are dangerously close to being high enough income that I don't even want you counting the employer match.

• 42:14Speaker 02

  No, no, no, he don't get to count it. You don't get to count it.

• 42:16Brian Preston?

  You know what I mean? You're successful, and that means more of this weight falls on your shoulders long term. You're at 6%. Is that, how much, because you said you're catching it up somewhere with the bonus.

• 42:27Speaker 02

  He's at about a thousand a month, he's going to the brokerage account.

• 42:29Brian Preston?

  So 12 grand of the bonuses and stuff is coming to you?

• 42:31Speaker 04

  12 grand goes into brokerage, put about 7,000 into my own Roth IRA.

• 42:36Brian Preston?

  Okay.

• 42:36Speaker 04

  And that's another step I need to do.

• 42:39Speaker 02

  Now McKenna, why was he so specific in saying his own Roth IRA?

• 42:44Speaker 03

  Yeah, where's mine?

• 42:45Speaker 02

  Where's your Roth IRA, right? Because one of the beautiful things is even for spouses that stay at home, even though they don't have earned income, so long as the working spouse earns enough that not only can he do an IRA contribution, we can also do spousal Roth, or IRA contributions, oftentimes Roth. We're not doing that?

• 43:04Speaker 04

  Last year was actually the first year that I even funded my own Roth IRA.

• 43:08Speaker 02

  Okay.

• 43:08Speaker 04

  And this goes back to the very early days, when you asked about my, you know, my investment experience, my base, my background. To me, it's always been the stock market, right? That's where it's fun, my brokerage account, I can get to it if I need it, right? So that's where, you know, I know you always tell the story on your, on your show, that, you know, you missed so many years of investing, right, early on. I did as well into my Roth.

• 43:31Brian Preston?

  Right.

• 43:32Speaker 04

  But I did put it in my brokerage account. So I've got a good, a good buildup there. But it's probably not in the best places or best funds that it can be by doing the Roth first.

• 43:42Speaker 02

  So you have, you have a large brokerage, how much, you have like a large brokerage asset, after-tax asset bucket sitting there?

• 43:47Speaker 04

  Yep.

• 43:48Speaker 02

  Okay. Well, give me, give me an idea of what large is. Like, what's that mean?

• 43:51Speaker 04

  I think it's a hundred and seventy.

• 43:52Speaker 02

  A hundred, oh, that's big. A hundred and seventy. Okay. So here's, here's what's interesting.

• 43:59Brian Preston?

  But can I pick on him a little bit about some? The government, they restrict how much you can put in your Roth. They can restrict who gets to put the money in the Roth. The only reason they do that is because it's so good that they don't want to give you, because y'all know, y'all are also young enough. You know, I share it all the time. For a 20-year-old, that $1 can become $88. For the 30-year-old, that $1 can become $23. You guys, I mean, that is, you start thinking about $7,000 growing completely tax-free. It's good that you have this large brokerage account, but you're also going to feel the, the headwind of taxes.

• 44:36Speaker 04

  Yeah.

• 44:36Brian Preston?

  On that. I mean, especially, because here's the thing, more money, more problems in a lot of ways is that your, your tax rates will continue to go up. And as your taxable account generates income for you, you're going to feel it more and more. Whereas your one ray of sunshine is going to be those Roth accounts. And that's what I, you're, you're exactly right. In, in Millionaire Mission, I talked about the fact that if you added it up, I missed some Roth contributions between 1998, when these things became available, and now. And I look at that with such regret.

• 45:08Speaker 04

  Yeah.

• 45:08Brian Preston?

  Because, and I think you even have the opportunity to load up McKenna's account too. And that's not only going to serve building up these tax-free assets, but I can tell you as a person who's getting, been married close to 30 years, I think there's some ancillary benefits long-term because my experience here is, is that as you get older, unfortunately in this world, you're going to see friends, relatives, where their marriages don't stay as stable as yours. But that, that still creates a risk where insecurities and I think it's going to feel good both financially and emotionally. That there are assets building up in the background. You already saw with McKenna, she talked about, it's kind of like Linus and his blanket on Charlie Brown. You said because you came into the marriage with this account

• 45:50Brian Preston?

  and you have a sense of security with that. I would love to lean into that and nurture that a little bit more so you continue to build this confidence and feel like it's a feature that how good Derek is doing, but also as a team, you guys are building something pretty special.

• 46:07Speaker 02

  Yeah. So, all right, we're gonna give you some grace. You haven't done this before. That's where the grace ends because here's what I just learned. You got 170,000 in a brokerage. We're gonna immediately just take 25 out of that to put in that emergency fund. You already said that. So I'm assuming we gotta go 170 minus 25. I don't do public math. What's that equal? Like 145?

• 46:22Brian Preston?

  Unfortunately, this is, you know, prehistoric calculator here.

• 46:25Speaker 02

  So if I've got 145,000 sitting in a brokerage and I just take $7,000 out of it and I put it in a Roth, or I take 14,000, I put it in two Roths, I still have a huge brokerage account. It still exists there. So I'm gonna argue, even if you can't fund it out of cash flow, which we're gonna talk about in a second, I think you can, realistically, you should never have an excuse ever again for not funding your Roth. Now, because you have the brokerage account, you got the bank sitting there and you can just move money over if you need to, if you can't save. And at 30, early 30s, late 20s, right at that age, every dollar that you can save is gonna be insane in terms of what it comes into. You know what's the only thing better than little dollars turning into insane big dollars?

• 47:09Speaker 02

  Little dollars turning to insane, tax-free, big dollars. Because that's what the Roth can do for you.

• 47:14Brian Preston?

  Sometimes it's better to be lucky than good. And I'm gonna tell you, you're falling in the camp. I think you fall in the lucky camp in the fact that your income is getting dangerously close to where you might make too much money to do the Roth as a couple.

• 47:27Speaker 02

  Yeah.

• 47:27Brian Preston?

  So that opens up, because you just answered that question so well with Bo, that you don't have rollover IRAs, you don't have SEP IRAs. You're going to qualify for when you do a backdoor Roth, which is basically conversions of traditional IRA contributions into Roth IRAs. So I think it's okay that you're building up in the brokerage account, or we'll talk about how we're going to build that up, and then funding. Those backdoor Roth accounts for both of you, it's going to, it's actually going to lend itself to work off the structure you've already created. So it's, like I said, it's better to be lucky than good, and I think that that's going to work out very well for you guys. And we'll put that on the homework list, too.

• 48:04Speaker 02

  I don't know if you've noticed that we've been kind of accidentally, it's not an accident, we're professionals here, going through the financial order of operations. We talked about emergency fund, we talked about step four, now we're in step five, we're talking about Roth IRAs. I do want to just pause for a moment. You know the only account that I think, my opinion, hot take, is better than a Roth IRA? Health savings account. And the only reason is, is because it works like a Roth IRA, except for you also get a tax benefit on the front end. You said that you're putting $6,000 a year into your HSA, starting this year. That's not the family max. Family max is something over like 8,300, right?

• 48:41Brian Preston?

  But the employer is putting in two grand? One thousand. Oh, a thousand, okay.

• 48:45Speaker 02

  So that means you're at 6,000, you could be doing 7,300, because you got to include the employer match. That's another $1,300 that could be going in, that not only could you get a tax deduction on the front end. So you guys are probably, what did we decide? They're in the 22%?

• 48:59Brian Preston?

  I thought it was around the 24%.

• 49:02Speaker 02

  24% tax bracket. So if you guys are in the 24% tax bracket, every dollar that you put in your HSA is going to save you 24 cents in taxes. And not only that, it can grow tax-free, just like a Roth IRA, if you let those dollars be invested and let them grow. So I'm going to argue, you know, you said, like my taxable brokerage, I'm putting money there. You've got a lot of stops that you should be hitting before you get there. Max out your Roth, max out spousal Roth, and then max out the HSA, and then we can start, kind of like, keep moving. So now, again, we're just kind of going through the financial order. We get to step six, we talk about the retirement plan, we talk about the 401K. You said you're doing 6% in there.

• 49:44Speaker 02

  You're doing Roth, you're doing pre-tax, how'd you go about thinking through that?

• 49:48Brian Preston?

  Roth.

• 49:49Speaker 02

  Roth, okay, awesome. All Roth. You know what? I don't hate that. What state do you guys live in?

• 49:54Speaker 04

  Tennessee.

• 49:55Speaker 02

  Tennessee. What's the state income tax in the state that you guys live in?

• 49:58Speaker 04

  Zero.

• 49:58Speaker 02

  Zero. So, we don't have to think about marginal state tax rates. We've just got to think about marginal federal rates. Well, when we look at your situation and we go look at your marginal tax bracket, it seems likely you guys are going to fall into the 24% marginal tax bracket. Our rule of thumb is, is that if you look at your marginal bracket and you're below 25% and you're young, Roth becomes incredibly compelling because odds are, your portfolio is going to get big and later in life, you'll be in a higher tax bracket. And so, tax-free dollars will be super, super valuable. If you're in a higher tax bracket, 30% and above, then pre-tax becomes very, very valuable because of the current year tax benefit. So, I love the idea that you're doing 6% into the 401K into Roth.

• 50:43Speaker 02

  Because what's beautiful is now, we have 6% going into Roth there. We have both of our Roth IRAs growing. We have our HSA growing. We have got tons of tax-free dollars growing for the future.

• 50:54Brian Preston?

  But if you love 6%, I have to ask because this is the question I have is because we know that for a 401K, you can actually, I'm assuming, and this is my question, you are highly compensated. Are they restricting how much you can put in there or can you do the full $23,500?

• 51:11Speaker 02

  You can go full $23,000 this year.

• 51:13Brian Preston?

  Okay, $23,000. Why not?

• 51:17Speaker 04

  I think just to, again, fund the other accounts.

• 51:20Brian Preston?

  Going to get to the kids.

• 51:21Speaker 04

  And to keep money, yeah, fund the other investments.

• 51:25Brian Preston?

  And by the way, I love taking care of the kids and you guys have enough. I think we're going to be able to do it. But it's just, there's a time and a place and I'm just trying to make sure. And you, like I said, you guys are doing great stuff. It's just a matter of fine-tuning this. I would love if you would take your compensation, your contribution rate from 6% up to 10%. I know that's squeezing you a little bit, but it would get you really close to actually maxing out. Because I think with all your bonuses and everything else, and by the way, if you want to, because it's a cash flow issue, a lot of employers will allow you to put your bonus compensation as a higher contribution rate than your base. Base salary, so you could, you could keep your base salary 6%, 8%, maybe 10% if you want to

• 52:06Brian Preston?

  stretch yourself, but then you can make your bonus compensation 12, 15%, so that way it's not squeezing y'all's monthly cash flow, but I'd love to kind of challenge you to create that automated inevitable wealth building journey, because you are, you're the dangerous point of your, you shouldn't be able to count your employer's match. You're so successful, I want you to build some separation and start that, that process of letting the money pile on top of itself.

• 52:32Speaker 02

  When we are telling you, hey, you gotta be, ought to be, saving more money, how's that make you feel? Does that make you nervous, uncomfortable? Do you feel like, oh, how are we gonna do this? How are we gonna squeeze this balloon?

• 52:43Speaker 04

  No, well, let me ask you this, is it, is it saving more money or saving it better?

• 52:48Speaker 02

  The answer actually is both, and I just did the math for you.

• 52:51Brian Preston?

  I was actually, I'm glad you did the math, because that's the part I was trying to figure out, because y'all have not, you're not giving us enough emotional feedback to know how much pain this is causing, because most people, when I say, hey, I need you to increase your savings rate 10%, they, they will give me an emotional reaction to where I know I've hit the bone.

• 53:10Speaker 04

  Yeah.

• 53:10Brian Preston?

  You know, we've cut so deep. You guys, I'm still trying to figure out where your pain point is, or if y'all just have that much kind of rolling, that we could fix this and this is gonna be happy days with no, no stress.

• 53:23Speaker 04

  No, I, I think, I think stretching, you know, everything that we're talking about piling on, right, is, is definitely painful. It's, it's, oh crap.

• 53:32Brian Preston?

  Yeah, you're supposed to be in the messy middle. I mean, this is supposed to not feel super easy.

• 53:36Speaker 04

  How can I hit all of these things? And, you know, like you said, I know you're going there, right, following the, the order of operations, is that kids, that's, that's, you know, there's some of these goals to us that have been such a big, you know, important goal, that, you know, we have skipped over some of, you know, completely checking the box on 1, 2, 3, 4, 5, right, getting all the way up. So I, I would say it's, it's definitely painful. I'll say as well, I came in here thinking, I'm doing really good, I'm really smart.

• 54:03Brian Preston?

  You're a little bit different.

• 54:05Speaker 02

  And don't, don't, you are doing really good, you are really smart, smart. Those are objectively true. Those are true statements. Could you be doing more? And could you be doing better? Yes. I went ahead and did the math because we're sitting here. Why not do the math? To give you some context, you're about $20,000 short in your savings. Right? So if you're thinking about how painful does it need to be? The answer is about 20,000. I figured out what I estimate you're currently saving based on the numbers I know versus what we think you ought to be saving. So that in your mind should be, okay, that's where our shortfall is. So then when I think about the financial order of operations, how should I be attacking this? What I want you guys to think through, and maybe you even jot these numbers down.

• 54:48Speaker 02

  Okay, going through step five, 7,000 to my Roth, 7,000 to my spouse's Roth, 7,300? Into my HSA, my employer's also going to put 1,000 on top of that. Then I'm going to max out my 401K. I'm going to do another 23,000 into my 401K. What's great is even above and beyond that, at the income level that you're at, you're still going to be able to save money into your taxable account. You're still going to be able to have, and you could stay around that 1,000 bucks a month going into the taxable account. And if you can do all of those things, you're going to be able to check that 25% mark. You're going to be able to hit that. Right now, you're not exactly doing that. You're doing about 12,000 into the taxable.

• 55:30Speaker 02

  You're doing, you know, somewhere around that number into your 401K. You're only doing a single Roth and you're almost putting them on the HSA. So it's about a $20,000 shortfall to be able to be doing 25%. So I'm just thinking about if I were sitting in their situation, why does it, why am I doing, like, why? Why should, we're doing great. We feel comfortable. Life feels awesome. Again, we had the ability to do this. We wanted to take it a step further. And we think that when it comes to like really setting financial goals, but making financial goals feel real, we wanted to begin with the end in mind. What are we working towards? Like, why, you know, why are we doing this? You guys kind of told us what you thought retirement might look like in terms of your spending. If we could just maintain the standard of living that we have right now,

• 56:15Speaker 02

  what would that look like? How do we know we're doing the stuff that we should be doing? And you told us, hey, based on where we are now, This is what we would like to have to be able to live the life that we want to live on our terms. And so again, using our fancy dancy financial math, we figured out what the need would be for you guys to be able to retire right now. And we did a retirement analysis for you. And what we know is that right now, if you were to retire today to live the life that you want to live and be able to fund all the things that you want to be able to do, you guys need about $5 million today. You're not there yet. No. But we know that that present value of that is $5 million. Okay, what does the equivalent of that look like at age 65? Like a normal retirement date?

• 57:00Speaker 02

  What is your number? Spoiler, we used our tool to do this. You've heard us talk about the Know Your Number course. This is exactly what it does. We know that the number you guys are working towards is about $8.1 million. So you think about where you are today. The number that you need to get to, your number that we've defined based on the information you've given us, is about $8 million bucks. So we said, okay, great. We know where we are. We've got plenty of time. Surely, we're going to be on track to hit that. Here's what we uncovered. Even though you guys are comfortable, even though you guys are doing great things and doing the things that you're supposed to be doing, when we look at what we project out and we make a reasonable rate of return assumption and we make reasonable inflation assumptions here,

• 57:42Speaker 02

  you guys are on track by 65 to hit about $6.5 million. We determined that you need 8.1 and you're on track for 6.4. Give me some feedback.

• 57:56Speaker 03

  Uh-oh.

• 57:56Speaker 02

  Uh-oh, right? But it's not really an uh-oh. It should be like a aha.

• 58:01Speaker 03

  Yeah.

• 58:02Speaker 02

  Like, uh-oh, if you guys were 61 years old and we were having this conversation, it's much harder. It's much... Right now, at your ages, it shouldn't be uh-oh. It should be oh.

• 58:13Brian Preston?

  It's that one degree shift of change versus, oh my gosh, we have to do apple cart turnover. That's what I love because there's so much time here. It's so much time that even 6.4 million, it's hard to even put your mind around what that means from purchasing power because of inflation and everything else. But I can tell you the spread between 8.1 and 6.4 is really... Really is small incremental changes. That's a, that's an awesome thing, you know, that's why. I know it seems like we're throwing a ton at you in this time that we get together. But this is, this is a success story waiting to happen. It really is. And that's what gets me excited is because these are small decisions. That I think you guys, and that's the part I look forward to, and I love when we get to work with clients.

• 58:53Brian Preston?

  Is that every year we get to have those update meetings, I get to see the after. It's like a home improvement show. You know, we get to see the chaos that you have, and then we get to see 12 months later, what did we check the box on? What was fixed? What are the new projects we're going to do? I think everything I see here from my own experiences, this is a success story waiting to be refined and maximized. It just needs a few extra steps to, to make it there.

• 59:18Speaker 02

  And what I love is this was the, oh, let me show you the ah, right? Because what we said is what if, what if we begin saving 25%? How does that change? Right? And remember, this is all based on, you need $5 million today. At 65, if you would have worked that time, it would need to be about 8.1 million dollars. Well, realistically, that number shifts with time. What we recognized is that if you can start saving 25% today. Rather than having to work all the way until 65 to be able to hit your number, to 25% savings rate. By the time that you get to 60, you will have reached your financial independence point.

• 1:00:02Speaker 02

  So what, saving 25%, not only does it close that $2 million gap that existed for you. It actually accelerates the timeline. It moves you faster through time to be able to get to your financial goals. So then at 60, you can decide, do I want to keep working? Maybe I do. Do I want to travel the world? Do we want to go move closer to grandkids? If you can start that behavior now, it allows you later in life to be in the driver's seat. And not you to say, oh, man, we did everything almost great, and we did everything pretty good, but ah. We still can't quite live the life that we want to live. We're going to live the best we can with what we've been able to do. You guys are still at the point where you can change that. Shift it and it does not take a ton of hard work to be able to do that.

• 1:00:47Speaker 02

  Give some thoughts and feedback.

• 1:00:48Brian Preston?

  So what I heard is sooner, bigger. I mean, this, this sounds like this is almost turning into a Kanye song. It sounds like stronger, faster, you know, I can't remember the rest of it because I'm horrible with lyrics.

• 1:01:00Speaker 02

  No, you nailed it.

• 1:01:00Brian Preston?

  But if it is, this is, what it, give us some feedback on that.

• 1:01:04Speaker 04

  I think, I mean, even, even the last page, when you showed us that, I mean, six, six and a half million. I think initially that's, that's super exciting.

• 1:01:11Speaker 02

  Yeah.

• 1:01:11Speaker 04

  That's a lot of money. And I think again, just congratulating where we're at.

• 1:01:14Speaker 02

  Absolutely.

• 1:01:15Speaker 04

  Understanding the big opportunity of making a shift and, and, and jumping ahead five years and, and millions more.

• 1:01:23Speaker 02

  I would be, and we were pretty conservative in our assumptions here. Obviously the markets could do better. You could have bigger pay raises. You could have bigger bonuses. Our issues could, we try to be pretty conservative here. There's a really good chance that the picture could even look better than this. But we'd rather plan conservatively and things turn out better than we thought than plan really, really aggressively. And all of a sudden we get there and we're like, oh, it, it didn't quite pan out.

• 1:01:46Brian Preston?

  Yeah. Under promise, over deliver because maybe your success point is 55. And then owning your time that much sooner.

• 1:01:53Speaker 04

  Yeah.

• 1:01:53Brian Preston?

  I, I, I tell you, cause I, I think you've probably heard me share the story, Derek, is that I started saving very, you know, heavily in my twenties, because I thought I was going to retire at 50. But now here I am in my 50s and I couldn't imagine retiring, but I'm still so thankful of those sacrifices and that discipline back in those days. Because now I own my time and get to do things on my term. And that's what we talk about independence. I think most people aspire to do what they want, when they want and how they want. But they don't actually take the steps, the small decisions to actually create it. You guys, this is supposed to be the aha moment that it lets you see you get to do it all. And, and by the way, what I love is because just staying on the, the, the concept of the financial order of operations, the kids. I mean, we kept hearing the kids.

• 1:02:36Speaker 02

  That's it.

• 1:02:36Brian Preston?

  Front and center, whether it was college, whether it was car, we didn't even get into weddings and all the other stuff. What I love is everything we just shared with you. I, I think you have the opportunity, you don't even have to shut off your two, your, your $200 a month for the kids. Because what you already have coming in. Just needs to be restructured. You kind of asked that question earlier. So you can keep the dream going for the kids. It's just that it won't be faking it until you make it. You'll actually be checking all the boxes.

• 1:03:04Speaker 04

  Yeah, I don't think it's an easy answer, right? I mean, we definitely have to stretch to get there. It's really gonna take, you know, looking at everything, looking at all the buckets, looking at all the, you know, the expenses and everything and, you know, probably pull back on some things and just be smarter and tighter. And we are, which is probably not what you want to hear. No. But I think, again, at the same time, and the reason I'm probably not reacting in, ooh, ah, you know, fear is, I think, A, again, I know we can do it. And I know what's at the end of the tunnel there when we get there.

• 1:03:35Speaker 02

  Yep.

• 1:03:36Speaker 04

  You know, knowing and having that financial mindset and, you know, understanding where this can take us. It's, it's super exciting. But at the same time, I will say, you know, and this is maybe where I'm skipping some of these steps is, I want to make sure that we're enjoying the journey along the way. I want to make sure that, you know, we're not so tight. You know, again, looking at, you know, other people, my dad in particular is one, right? So tight, such a big saver, which has been incredible for me to set that foundation. But then I want to take it even one step further. And I think he would say the same thing, right? Use me as a base and stand on my shoulders.

• 1:04:12Speaker 02

  That's right.

• 1:04:12Speaker 04

  Take it one step further and enjoy the journey along the way. And so that's where, again, I get into that, oh crap, you know, how do I, how do I do all of these things? Enjoy the journey, not be so tight, be, you know, open and willing, you know, turn in that, that

• 1:04:27Speaker 02

  That tightwad card.

• 1:04:28Speaker 04

  That tightwad card. I gotta pull it back out.

• 1:04:31Speaker 02

  Yeah, but here's, here's, here's the great news. What we just showed you was like, it was the goal, right? Realistically, and this is what we want to equip you guys with, when you leave here, when you go back home, when you have dinner tonight and have the conversation, you get to say, okay, what parts of this can we realistically implement? And I do not want to diminish the fact that you guys are in the messy middle. And you've already told us that you want to be a growing family. Like you have kids now, you want more kids. There's a chance the middle maybe get even messier, right? You add Kids in that bunch and it just gets harder and that's okay. We showed you what 25% can do for you. It does not mean that you have to do 25%. It doesn't mean that it has to be now.

• 1:05:13Speaker 02

  I do think that the answer is probably somewhere between what you're doing now. And what we just laid out and you guys have to define what that looks like because we do want you to. Be able to enjoy this season and this station of life and be able. To use your money as a tool, not just for the future, but also for the present.

• 1:05:32Speaker 04

  Yeah.

• 1:05:32Speaker 02

  You just have to make sure that when you're using it for the present, you're not sacrificing the thing that you ultimately do want. To be able to do in the future, like be near your kids or be near your grandkids or have independence. I think the word you used when we first started talking was freedom. We want to position you with the highest likelihood to have freedom as early as possible for as long as possible. You guys have to figure out how inside of your family ecosystem that works right now and it may be. Hey, right now, we can't do 25%, but man, we can, we can do 20, we can do 21, we can do, you know, whatever the thing may be. And you'll figure out where that balance is. The earlier you can hit the number, the earlier you're going to allow yourself to have options in the future.

• 1:06:15Speaker 02

  We've done tons of talking. We've like just thrown a ton at you. What questions do you have that we've not answered? What things are you curious about that we can speak to to be super valuable for you guys?

• 1:06:25Speaker 04

  Again, I knew. A lot of, well, some of where this was going to go when I, when, you know, when we started. I knew that there were very, you know, alarming holes in our financial plan and our, you know, our financial situation. Insurance, estate planning, you know, things like that. It's, it's been incredibly eye opening for me to just see, you know. Yeah, truly. The steps and, and checking the box completely.

• 1:06:52Speaker 02

  Yeah.

• 1:06:53Speaker 04

  Within the financial order of operations as opposed to, you know, I think I'm doing a good job here. I've got a goal here. Let me take a step, you know, two steps ahead and go here. Um, again, that's a goal and I don't think that it will change. But I think just being smarter and more.

• 1:07:15Speaker 04

  Intentional, I would say is probably the right word about those first few steps and really maximizing the opportunity.

• 1:07:22Brian Preston?

  How about your feeling? Do you feel optimistic? Do you feel overwhelmed? I mean, give us, give us a feel for, for how you feel on some of these things we shared with, with you guys.

• 1:07:31Speaker 04

  Probably, I mean, for me, more optimistic, but a little bit of both. Again, I came in here thinking, you know, I've, I've got this down. I'm doing really good, but knowing that there was opportunity, I didn't think I was the smartest guy in the room, right? I knew that coming in, but, but just seeing, you know, how much more opportunity there is. And like you've said, we've got the means or pretty close to the means to be able to do it. You know, sure, it's going to take some stretching and maybe some reprioritizing and everything, but extremely optimistic to know that, you know, A, we're, we're doing really good. We're on a really good track today, but we could be better and truly so much better.

• 1:08:12Speaker 04

  By just, by just again, being more intentional with those, those first few steps. I still, 100% will do it. I don't like the fact of having 50,000, 60,000 in cash. I will do it. I, I, I hate the idea of having that.

• 1:08:27Brian Preston?

  I wish, I wish I could take a portion of my dread and regret from living that and give you just an ounce of it is, because I think that, and it also would challenge you. This is just the experience share. I think about the things that cause me stress as a financial mutant, and I think about the hassle factor and the materiality of it. And I realized that my concern about what I was losing on that cash, because maybe if you really boil it down to how much, because you, you agree that you need 25 to 40,000 easily. It's probably that extra 20 that's giving you the pause. If you look at the opportunity cost on that 20, it does not, what it could grow to does not overcome the risk that is.

• 1:09:11Brian Preston?

  And that's the part I, I, I would, I would love to share, but I think, I get it. I, I've walked those shoes. I've experienced it. It's just the, the trust my wisdom of the failure I've made so you don't have to fall into that same trap.

• 1:09:24Speaker 04

  Said I hundred percent trust you. I understand it. It's the mindset shift.

• 1:09:28Brian Preston?

  I know, I get it.

• 1:09:29Speaker 04

  What this could earn in the market.

• 1:09:30Brian Preston?

  I get it.

• 1:09:31Speaker 04

  Versus just in a, in a high yield savings.

• 1:09:33Speaker 02

  Hopefully, if you do all the things that you're supposed to do, the way you're supposed to do it, that will become a rounding air in the future. That 50,000 that sat over there and you had the opportunity cost loss of it, won't even matter. Certainly in the context of 8.1 or 7.6 million, that 50,000 will not have changed your trajectory. Whereas if you had an emergency, it very well could have.

• 1:09:55Speaker 04

  Yeah.

• 1:09:56Speaker 02

  Any big ahas for you or takeaways? How are you feeling, McKenna?

• 1:10:00Speaker 03

  I'm feeling good.

• 1:10:01Brian Preston?

  I would encourage, I think this is going to be, and this has been a great communication tool for my wife and I is, as y'all are doing those annual net worth statements, as, and by the way, it can turn into romantic stuff. And I've shared this on other content is that I like down the road after you've checked all the boxes and things are starting to line up, you can start putting together a five year travel goal schedule or other things that y'all want to do as a family and as a couple. That stuff does get romantic because that's kind of fulfilling to know that you're, you're doing these things together. You're accomplishing goals. And by the way, this was just the tip of the iceberg. You had asked us pre-planning, you'd sent some emails and stuff. We didn't even get to talk to you about tax location. We didn't get to talk to you about asset allocation. It is one of those things, Derek, where I think that I'm not, it's not worth us covering that necessarily today.

• 1:10:47Brian Preston?

  Because as long as you get those emergency reserves where they're, even though you are very aggressive on the index funds and even some of the individual stocks, the, the counterbalance of those emergency reserves that you're kind of dreading will allow you to be okay, that you might be a little more aggressive. And over time, that will get adjusted as you're, you're building up these assets too.

• 1:11:07Speaker 02

  Got it. So guys, you are financial mutants. Congratulations. But even financial mutants have areas to improve upon. What I've been doing this whole time is I've just been putting together some homework items. I'm going to list them out to you. We'll make sure you have a copy of this. So that when you guys go home, you have some stuff that you can talk about and work on. Here they were. Uh, one, work on a net worth statement together and have a conversation so that way you're both on the same page. You have to get wills done. You have to get your estate documents done. You have to get that in place. You need to revisit your life insurance to determine, do we have enough? Your cash reserves could use some work. Our recommendation is somewhere around $50,000 to $60,000 truly chiseled off as a cash reserve. You should consider funding both of your Roth IRAs every single year, whether it comes

• 1:11:51Speaker 02

  from cash flow or you shift money from your taxable account. HSA, you're leaving tax dollars on the table by not maxing that out at the full family max. We would love to see you max out your Roth 401K. Instead of just doing the 6%, consider going all the way up to the $23,000. You guys should have a realistic conversation around goal priority. Hey, when we came in here, it was kids, kids, kids, kids, kids. That's okay. Should it be us, kids, kids, kids, kids, kids? And how are we going to navigate that together? And then you can use that money that you give back to schedule this date night to go have all these wonderful marital conversations.

• 1:12:28Speaker 03

  Awesome.

• 1:12:29Brian Preston?

  Derek McKenna, thank you, thank you, thank you for sharing your financial life so we can all be better. And I would thank you, the audience, thank you for tuning in to Making a Millionaire.

• 1:12:40Speaker 02

  Make sure you like this video and subscribe. And if you want to be a guest on Making a Millionaire, go to moneyguy.com/apply. And while you're there, check out moneyguy.com/resources to start building your more beautiful tomorrow.

• 1:12:55Brian Preston?

  And what I love is that we get to share that there's a better way to do money. I'm your host, Brian Preston. Mr. Bo Hanson, Money Guy team, out.

• 1:13:05Speaker 02

  Making a Millionaire is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners at Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities laws and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through Making a Millionaire. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss. The guests featured on Making a Millionaire are not clients of Abound Wealth Management at the time of recording. Their participation should not be considered a testimonial or endorsement of Abound Wealth Management.

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