Super-Savers Can't Forgive Their Money Mistakes | Making a Millionaire

Welcome to Making a Millionaire. Megan & Patrick thought that they were living the American Dream. But then, disaster struck. Can we help them build a better relationship with money? 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

  We got married, we thought about having a kid, we thought we need a house. There was this new neighborhood under construction, so we bought in early, getting on the ground floor before the prices keep going up and up.

• 0:08Speaker 01

  Meghan and Patrick thought they were living the American dream, but then disaster struck.

• 0:13Speaker 00

  We had been homeowners at the time and our property had lost about 85% of its value.

• 0:18Speaker 01

  Oh, wow.

• 0:19Speaker 00

  We went from $285 and ended up selling for around $69.

• 0:22Speaker 01

  Oh, wow. Can we help them build a better relationship with money?

• 0:27Brian Preston?

  This $200,000 loss has just got this hangover effect. It's this cloud that's hanging over you. Welcome to Making a Millionaire. This is where we help our guests build their great, big, beautiful tomorrow. I'm Brian Preston, joined by Mr. Bo Hanson.

• 0:49Speaker 01

  That's right, Brian. I am so excited. This is a show for millionaires and millionaires in the making, and we are so excited that today we get to sit down with Patrick and Meghan. Guys, how are y'all doing this morning?

• 1:00Speaker 00

  Doing great.

• 1:01Speaker 01

  Awesome. Well, thank y'all so much for coming and letting us be a part of your financial journey. For the folks out there, though, that don't know who you guys are, give us a quick rundown. Who are you? Where are you from? What's your backstory? And then, how did we get here to where we are today?

• 1:17Speaker 00

  Sure. I'm Meghan. I'm 45 years old. My husband, Patrick, we've been married for 20 years. We have lived all over the place. We started out in Florida, prior to that was Georgia. We've been to New York, now we're back in Georgia, so we bounced around a lot. We've gotten through, I think, the worst of the messy middle, and now we're hoping to kind of figure out the coasting plan to get us to the finish line.

• 1:40Speaker 01

  Messy middle, meaning you got some kids in there?

• 1:41Speaker 00

  Yeah, we got a couple of kids, a daughter 16 and a son 14.

• 1:45Speaker 01

  Oh, nice.

• 1:46Speaker 00

  Yeah, they're doing great.

• 1:47Speaker 01

  Teenage years are awesome, right? That's like a super easy thing as a parent.

• 1:50Speaker 00

  Honestly, compared to the toddler years, I'm liking it.

• 1:52Speaker 01

  I like the sound of it. That sounds awesome. Awesome. All right, so two kids, 16, 14. What do you guys do professionally? What are your vocations? I'm a civil engineer, work for municipality.

• 2:05Speaker 00

  And I'm a pharmacist.

• 2:06Speaker 01

  Awesome. And have you done those jobs for your whole career?

• 2:10Speaker 03

  No, I started, I graduated civil engineering, worked land development in Florida, then 2008 that fell apart a little bit. So did a complete career change and worked for a railroad as a locomotive engineer.

• 2:23Speaker 01

  Oh, wow.

• 2:23Speaker 03

  In upstate New York and then came back down south. So now I'm back to being a civil engineer.

• 2:29Speaker 01

  Now you say it fell apart. Is that because of like the Great Recession?

• 2:31Speaker 03

  The Great Recession time thing? Yes, land development in South Florida fell apart.

• 2:35Speaker 01

  It was a hard, hard time to do that.

• 2:38Speaker 00

  Yeah, that hit us hard in a lot of ways, actually, but we had been homeowners at the time and our property had lost about 85% of its value.

• 2:45Speaker 01

  Oh, wow.

• 2:46Speaker 00

  Yeah, we went from 285 and ended up at selling for, I was 69.

• 2:50Speaker 01

  Oh, wow. Okay, so let's rewind a little bit, but before we get to 2008 and, because it sounds like that had a big impact on you guys, right? Tell me about your financial backstories. Like, growing up, what was, what was money in your life growing up? Did you, what kind of upbringing did you have? What kind of familiarity, education? How'd you guys learn about money for the first time?

• 3:14Speaker 03

  So I grew up in Peachtree City, which is a suburb of Atlanta, nice middle-class, well, at my time, it was a nice middle-class neighborhood.

• 3:21Brian Preston?

  I married a Fayette County girl, so I'm very familiar with that area.

• 3:25Speaker 03

  It was a great area to grow up in. Single-family mom, worked for Delta, like, half of the, half of the folks down there.

• 3:33Speaker 01

  That's right.

• 3:35Speaker 03

  You know, we had a modest lifestyle, but we lived within a fairly narrow budget, but I never really felt in want of anything.

• 3:46Speaker 01

  Did you understand money and how it worked? And were you part of that process when you were in the household? Or when'd you, when'd you figure out money for yourself?

• 3:53Speaker 03

  We learned to live within budgets. Like, here is your allowance, this is what you will have, this is all you will get, and you must make your decisions accordingly. You can ask, please and thank you, but this is the budget that you were allotted. Do your best with it. And that's, that's how I learned to budget and save for what I wanted. And, you know, it worked well, and that was how the whole family worked. We have a certain allocation and you stay within it. A lot of us, like I said, were Delta kids. And we had certain things in common like, hey, let's go to spring break in Honolulu because we can-

• 4:28Speaker 01

  We can fly for free.

• 4:29Speaker 03

  Yes.

• 4:30Speaker 01

  Yeah, that's awesome.

• 4:31Speaker 03

  And so that didn't cost us money, but it certainly felt good.

• 4:35Speaker 01

  Yeah. I never did spring break in Honolulu. I never got to do that. What about your background with money? What about your upbringing? What was your relationship with money like early on?

• 4:43Speaker 00

  I grew up moving all over the place. We started out in Southern Illinois, went to Seattle, and did some Georgia, all around in Georgia.

• 4:52Speaker 01

  Military? Or what was moving you guys around?

• 4:54Speaker 00

  My dad's job was some of it. My mom's love of home remodeling was a lot of it. She was a flipper before that was a thing.

• 4:59Speaker 01

  Got it. That's awesome.

• 5:01Speaker 00

  And so that was a lot of it. But my earliest memories, like, they've always been thrifty. My mom was, I mean, you don't shop on that first three racks in the store. You're going to the back of the store. You're finding the clearance racks. You're looking for the deals. So there was always a strong emphasis on value for what you paid. And then we landed for high school and middle school years in Marietta, Georgia, just in northern Atlanta suburb. And my dad was in his 40s. He got laid off. A similar story to your father, I believe. And that definitely shaped us. I was going into college at the time, and the big emphasis with my parents was like, you have to get something that's going to be a dependable job, that you can count on, that there's a high demand. None of these rainbow and unicorn dreams for you, like, get serious. Luckily, I was a pretty practical kid. It really wasn't a huge hardship.

• 5:45Speaker 00

  But it definitely steered me into pharmacy.

• 5:48Speaker 01

  Pharmacy, you like, because always going to need a pharmacist, right?

• 5:50Speaker 00

  Yes, exactly.

• 5:51Brian Preston?

  And everywhere.

• 5:52Speaker 00

  Yeah, and it's been a great career for that. And the other thing I really wanted is I knew when I had kids, I wanted to work part-time and not full. Pharmacy would allow me that. So that instilled a decent income.

• 6:00Speaker 01

  I just love that. Beginning with the end in mind. Think about the life you want to have and then pursue a vocation that does that. I wish more young people would figure that out today.

• 6:08Speaker 00

  And we were fortunate enough to do it in Georgia. Both of us got our degrees on the Hope Scholarship, which was a beautiful thing. So we graduated without any college debt.

• 6:15Speaker 01

  Amazing.

• 6:16Speaker 00

  So that was a big, big help.

• 6:18Brian Preston?

  Any regrets? Because we'll have younger people watch this too. You know, it sounds like you were told, be practical with your college degree. Get something, in your own words, not the unicorns and rainbows. Was there something you left behind to pursue the more conventional path of pharmacy?

• 6:35Speaker 00

  Yeah, there was.

• 6:36Brian Preston?

  What was it?

• 6:37Speaker 00

  When I was at UCA, I took an honors astronomy class, and that lit a fire. And then they offered to take me down to the SETI lab over the summer to be an intern. And I was a pharmacy intern instead, you know, so it, but.

• 6:49Brian Preston?

  Now, can I, can I, can I pick on you a little bit? I took astronomy at Georgia.

• 6:54Speaker 00

  Did you?

• 6:54Brian Preston?

  Because I thought it was going to teach me where the stars were and how to go outside at night. And I was like, this was going to impress the ladies.

• 7:04Brian Preston?

  But here's the reality, this is why I'm picking on you. Astronomy at Georgia is actually a very math-based course. Now, fortunately, I was very math-minded, so I did good at it. But it was not, it was not the rainbows and unicorns that I thought I was signing up for. So it was, so you, even your rainbows and unicorn, unicorn choice is very math-minded. So you just have a very analytical brain, it sounds like.

• 7:27Speaker 00

  Yeah, and I will say, it was somewhat a rainbow unicorn class because the woman who introduced the two of us, I met her in that class.

• 7:32Speaker 01

  Oh, well, look, that's all you were.

• 7:34Speaker 00

  It was in the stars, if you will.

• 7:36Brian Preston?

  That's awesome.

• 7:37Speaker 01

  All right, so we're, okay, so fast forward now, you guys make it through childhood, you make it through University of Georgia, it sounds like, greatest university.

• 7:43Speaker 00

  Georgia Tech, but I'm.

• 7:46Speaker 01

  We're gonna need a moment, that's wonderful, we love Georgia Tech, too. So you guys make it through college and you get married. Tell us a little bit about, how did you navigate finances early on in your marriage? You said you've been married for 20 years, I think. What was money like early on? And then tell, tell us the story of how we got from where you were then until where you are now.

• 8:07Speaker 03

  Well, after graduation, I moved to Florida. And after about a year living down there, working as a civil engineer, I bought my town home. And then we went to our mutual friend's wedding in Jamaica and hit it off. Megan was working in North Georgia at the time, and she had her own home, and so.

• 8:26Speaker 01

  Both of you homeowners, super early ages, as single individuals.

• 8:30Speaker 03

  Right.

• 8:30Speaker 01

  That's great.

• 8:31Speaker 03

  And so that was a big tip off to each of us that the other was responsible and.

• 8:39Speaker 00

  I remember, well, I remember one of the financial gurus back in the 90s, one of the things that she had said was that out of all the decisions you're gonna make in your life, one of the most important financial decisions, other than your career path, is who you're gonna marry.

• 8:52Speaker 03

  Yeah.

• 8:52Speaker 00

  And so, yeah, I will say that, Steve, we met freshman year of college and I wasn't interested because I didn't know where this boy was going.

• 8:59Speaker 03

  And I was a tech.

• 9:00Speaker 00

  But it was a tech, but a lot of people fail out of tech. Anyway, six years later.

• 9:04Speaker 03

  I didn't know I'd fail out of tech.

• 9:07Speaker 00

  Six years later, when we met and got, became reacquainted at that point, yes, he had a career, he had a home. I'm like, it put a slightly different light on things, so there was some tequila. Anyway, it was lovely.

• 9:17Speaker 03

  Sure, yeah.

• 9:18Speaker 01

  That's good weddings, yeah.

• 9:19Speaker 03

  And I was quick to move into a house because it was one of the subdivisions our firm had designed, so I was kind of entry level into that. So that was my big push. And the prices of everything were just going through the roof, so I wanted to get my foot in the door. And that's why I was pushed to get a townhome early on.

• 9:36Speaker 00

  Yeah, and so then we started dating and I ended up moving down to Florida to join him, found a job down there. He proposed in November and we eloped two weeks later to get in on the tax year.

• 9:48Speaker 03

  Financial mutants.

• 9:49Speaker 00

  A little bit, a little bit. So, yeah, we had an actual wedding later, but you know, we got the paperwork done.

• 9:55Brian Preston?

  Did the family know that y'all did this?

• 9:56Speaker 03

  Eventually.

• 9:57Speaker 00

  Mine knew in advance, but yes, others found out a little later, but.

• 10:02Brian Preston?

  I don't know, I don't know, because you know, now that I've gotten older and I have a daughter who's in her 20s, I don't know how I'd feel about that, even being a financial mutant, but I think you have to respect the game. I mean, that is, that's pretty impressive.

• 10:15Speaker 00

  Well, and you have to market it to your audience. My grandmother didn't like that we were living together and weren't married, so for her.

• 10:20Brian Preston?

  But I'm talking about the tax, getting married and, you know, I get that there's other things with relatives, but I really do believe, at least I'm gonna take you at your word, that you probably were thinking, hey, we could go ahead and get a tax deduction. That was on the pro column.

• 10:32Speaker 00

  We were both pretty high income earners for our age and getting married did help, so, yeah.

• 10:37Speaker 01

  So you get married and you guys immediately start saving money, building for the future? Obviously, you're in real estate. Did you start investing in real estate? Like, how did you go about building towards the future?

• 10:49Speaker 00

  Well, we were both already saving into our retirement plans at work. We both started doing that, not maxing out, I don't remember the exact percentages, but we both graduated knowing that time was money and to get in early. And so then we got married, we did quickly decide that it was an all in one pot family's lifestyle and that I would be stirring that pot. Um, and so we've, we didn't really start investing in real estate on purpose, but what happened is we were in the town home and as I actually sold my house in Georgia, we threw that money into the town home to pay it down because again, the common belief then was to pay off.

• 11:26Speaker 01

  Get out of debt.

• 11:27Speaker 00

  Get out of debt and I knew that we wanted to have kids and I was going to go part-time then. And so I thought, well, we pay off the mortgage, then that gives the room and the bike shift for me to go to part-time.

• 11:34Speaker 03

  And the mortgage rate wasn't all that great.

• 11:36Speaker 00

  Yeah, it wasn't. Yeah. And so then.

• 11:38Brian Preston?

  What year was this?

• 11:39Speaker 00

  We got married in oh four. So yeah, and we bought again, so we, we were in the town home, but it wasn't an ideal place to start a family and it, that two bedrooms were upstairs, the master was downstairs and it just wasn't ideal. So we started looking for homes, thinking family and again, he was developing things. And so we found a house in two thousand and six.

• 11:59Brian Preston?

  Six, right? That was the two eighty-five.

• 12:01Speaker 00

  Two eighty-five. Yeah. It was a couple of blocks from his work. It, it like, oh, this will be perfect.

• 12:04Speaker 03

  It was like the seventh home built in the subdivision.

• 12:06Brian Preston?

  Sure. That sounds like a great way to make money because you get in early and then they keep raising prices and you get some built-in equity.

• 12:12Speaker 00

  That's what was going on then too. People who had, didn't live through it don't realize how everybody's like, this will never, they're not making more land.

• 12:18Speaker 03

  Not making more land.

• 12:19Brian Preston?

  That was the same.

• 12:20Speaker 03

  Everybody's retiring to Florida.

• 12:22Speaker 00

  And everybody's coming to Florida. Yeah, there's going to be people. So we thought, well, we'll buy this and we'll put our, our town home on the market. And we did that and then we got a contract and about then the bubble started to not burst, but things were slowing down. And then they, people backed out of their deal on the town home. And then we had to, yeah. So then we were sitting with two houses and again, luckily we were.

• 12:41Speaker 01

  The town home was paid off? It was paid for?

• 12:42Speaker 00

  It wasn't completely paid off. We had.

• 12:44Speaker 01

  A small mortgage on it?

• 12:45Speaker 00

  Yeah. And so we were paying the two. Again, it was not hurting us terribly because we had a decent income and we didn't have kids yet. But um, we finally did sell it, but not quite as much as we thought we were going to get. And then we, we had our daughter in two thousand and eight and then things just really went south with the house.

• 13:03Brian Preston?

  Well, and that's where we kind of, we, we, we paused there and then we moved on to catch the rest of your life. But I do want to hear, cause when I was reading through the notes in preparation for today. I kept noticing a little bit of a cloud over your brilliant story. We're gonna get into your accounts and your numbers in a here in a minute. And y'all have done very well. But sometimes when I was looking at your questions and concerns, like I said, it was more of the EOR side of things that had a little downer on it. And that's why I wanted to lean into this house purchase, or maybe I should talk about the house disposal. Because give us the rest of the story. What happened? You bought it for $285,000. You had trouble with the townhome, but it sounds like you eventually did get that sold.

• 13:48Speaker 00

  We sold it.

• 13:49Brian Preston?

  What happened to this house in Florida?

• 13:51Speaker 00

  We paid it off because again, we were still thinking that we were gonna be there long-term.

• 13:56Brian Preston?

  Okay, you paid it off by 2008?

• 13:59Speaker 00

  Yeah, I believe so.

• 14:00Brian Preston?

  Okay, so that's quick. Wow, y'all really, y'all threw the kitchen sink at it.

• 14:03Speaker 03

  But we were both working full-time.

• 14:04Speaker 00

  And yeah, and yeah, we threw everything. Because I took the proceeds from my sale in Georgia, put that to the townhome and the townhome, so we rolled that into this house and then we just hit it hard. We were still contributing to retirement, but not maybe maxing out. But it was our number one goal was to get that paid off.

• 14:19Brian Preston?

  So let's repeat that. You paid off a $285,000 house within two years of owning it. That's pretty amazing from a cash flow perspective alone. I mean, that's a lot of money.

• 14:29Speaker 00

  Yeah, I graduated pharmacy in 03, so that was about five years of grad.

• 14:32Brian Preston?

  I know you were rolling in other assets from proceeds from previous houses, but still, that's substantial, multiple six figures.

• 14:39Speaker 00

  And we were celebrating when we got out of it.

• 14:41Brian Preston?

  Yeah, for sure.

• 14:41Speaker 00

  We thought that was great and amazing. And we paid it off a little bit before the market first.

• 14:46Speaker 03

  And at the time, when you look at the returns on real estate in Florida at that time, the returns were just amazing. And so that felt like the best investment you could make at the time. So we were in on it and excited.

• 14:57Brian Preston?

  So how did this go negative, though? What actually led to this, creating this EOR cloud that y'all have over your financial life?

• 15:05Speaker 03

  Well, like I said, I was pretty much in the thick of it as a civil engineer doing real estate development. Instead of everybody calling me five times a day, the phone went quiet. And then I had to start calling and asking about, you know, where do you want to go with this project, this town? Of homes you want to build, what's going on with it? And that fewer returns, then we had to call about collections a little more and nobody came in the door and projects just started either dying, closing up and

• 15:33Brian Preston?

  So you're working capital, meaning your employment was now in jeopardy.

• 15:38Speaker 00

  Oh, absolutely.

• 15:38Brian Preston?

  Because of this and now, but this also had an impact on your personal finances because what happened to the house?

• 15:45Speaker 03

  Well, like I said, I think we were the eighth home to be constructed in a subdivision around 50 and

• 15:53Speaker 00

  When the market blew up, the builder bankrupt, went bankrupt and the neighborhood never got completed. There's still lots there today.

• 16:01Brian Preston?

  Wow.

• 16:02Speaker 00

  Yeah, they're finally starting to get, but I, you know, there's still places there that haven't been developed. The other thing was like he was getting nice bonuses every year from this firm and then all of a sudden he came home one day and I still remember he's like, they're starting to talk about maybe asking everybody to take a 20% pay cut so we can keep everyone on payroll, but you know, and so that might be coming. And that's when we were like, ooh, you know, again, this is all right as we're thinking about starting our family and getting things going.

• 16:26Speaker 03

  This is a situation we didn't think would ever happen.

• 16:29Speaker 00

  Completely blindsided.

• 16:30Speaker 03

  Maybe little markets here and there have a fall in real estate value, a little bit here and there, but an utter collapse was just unthinkable.

• 16:39Speaker 00

  And I think the fact that we did understand this at the time, value of money, it made it, we knew we were young, we knew we were in our years that we were supposed to be building, not having tons of our equity just vanish all but overnight. And so it still stinks. I mean, it shapes everything that we still do.

• 16:55Brian Preston?

  Because you sold the house for what?

• 16:57Speaker 00

  We sold it for, well, we had a deal to sell it for 85 and the appraisal came back, I believe at 70 or something. It was right in there.

• 17:03Speaker 01

  And why were we, the house was paid off, so it wasn't, it wasn't an expense thing. Why were we selling the house?

• 17:07Speaker 00

  It was more because of his career prospects than anything.

• 17:10Speaker 01

  Had to get somewhere else to get a different job.

• 17:12Speaker 03

  A lot of other firms were actually closing up their shops.

• 17:14Speaker 00

  And we hadn't, he hadn't been laid off or anything yet, but It was, we were worried.

• 17:19Brian Preston?

  Got it.

• 17:19Speaker 00

  And again, at that point, we had our daughter. We had family was all in Georgia, so we had an opportunity to go back to Georgia. And we thought, you know what, that just seems like a safer bet for us.

• 17:28Brian Preston?

  So, the house, now you bought it for 285. What was the most it was ever worth? Do you, I mean, if you...

• 17:33Speaker 00

  Probably 285.

• 17:34Brian Preston?

  So, you, you pretty much got it at the top.

• 17:37Speaker 00

  I think we all did, yeah.

• 17:38Brian Preston?

  But then you sold it for 75?

• 17:40Speaker 00

  Yes, right in there, yeah.

• 17:42Brian Preston?

  Okay. So, I can see how that, so that 210,000 dollars kind of haunt you, plus your, the career decisions you had to make.

• 17:50Speaker 00

  It's what ended up ultimately leading him to go to the railroad, too. I mean, it was, it just, it shaped us.

• 17:56Brian Preston?

  The Great Recession was...

• 17:58Speaker 00

  A kick in the teeth.

• 17:59Brian Preston?

  Hard. And we're going, and I want to, I'm going to come back to the emotional impacts of that. Cause I'm hoping by the end of the time y'all leave today, I can give you some guidance of somebody who not only, we lived it. By the way, we had that conversation, because we, I hired, Bo and I came on, he came on the scene in 2008. And I'll never forget that, that, that year was horrible in itself, and, and, and, you know, because markets were down, you know, 40, 50%.

• 18:27Speaker 00

  Oh yeah, our investments had lost as well.

• 18:28Brian Preston?

  I had his salary, you know, so everything was off. And I remember I came and I had this exact same conversation with Bo. I was like, hey, you're not going to lose your job. I'll just go ahead and put your, put your mind at ease. You're awesome, I love you, but I can't take any more of this myself. So, we might get to a point that I have to cut your pay. You, you remember that conversation? And I used to go home and look out my back window and go, you know, I'm sure I could plant corn right there. And I could probably feed my family. So, I don't know if, if any of you are, are younger and you weren't around during that time. It was unique. And, and everybody back then, pre the 2, the 2008 to 2011, really, the collapse of real estate. Everybody used to say, go buy as big a house as you can afford, because they don't make more real estate.

• 19:13Brian Preston?

  So, this is going to be the best thing. And then we quickly see, trees don't grow to heaven. And, and it was an accounting and reckoning that came in.

• 19:21Speaker 01

  So that's the backstory. You kind of walked us through like, let's talk about where you guys are today, right?

• 19:28Speaker 00

  It's a much better story.

• 19:29Speaker 01

  Because obviously, that was a fairly traumatic thing for you guys to go through early on in your marriage, early on in your family. But when we fast forward to today, things look a little bit different. You guys were kind enough to share with us some of your account statements. I want to kind of just go through your net worth statements or state of where you are right now. And you can see that right now, when we look at your total net worth, you have a net worth a little over $2.1 million, of which about $1.8 million of that is liquid invested assets. So you went from, uh-oh, 2008, what is going to happen to us, to now multimillionaires.

• 20:03Speaker 03

  That's incredible.

• 20:03Speaker 01

  So we ought to pause there for a moment and say, that is amazing. So here you guys are in your mid-40s with a $2 million-plus net worth. What are your financial goals? Like, what are the things that you want to work to from this point? Because you've obviously had that experience. Here's where you are now. Now, where are you guys going to?

• 20:24Speaker 00

  Well, because of that experience, I think our number one goal has always been security.

• 20:27Speaker 01

  Okay.

• 20:28Speaker 00

  We just want to be sure that no matter what the world throws at us, that we're still rocking and rolling and doing all right. And that we're never a burden to our children. And that if our parents need help, we're there. Like, we just want to be able to support people who've supported us.

• 20:46Speaker 03

  With a focus on stability.

• 20:47Speaker 00

  Stability, yeah. But also, we've gotten to a point where we've worked really hard. And I'm also, I went through thinking all of the savings that we did to get those numbers, that there'd be a time we could maybe ease up the gas just a little bit. And so I'm also at a point where I'd like to see that happen. And so I'm trying to decide, can we ease up the gas without jeopardizing that security?

• 21:09Speaker 01

  And how do you guys define security? Like, what does security, from a financial standpoint, what does that mean to you guys? Is it a number? Is it all CDs? Like, what does security mean to you?

• 21:20Speaker 03

  The ability to basically take a hit financially.

• 21:23Speaker 01

  Okay.

• 21:25Speaker 03

  That real estate issue that we had always haunts us every now and then, but it doesn't end in retirement. I mean, we looked still at Florida and see the news and that homeowners associations dues are going through the roof. Hurricane insurance going through the roof.

• 21:41Speaker 00

  Yeah, we're in South Georgia now and we had a hurricane. Who expected that in South Georgia? We did not. We thought we left that.

• 21:47Speaker 03

  The mountains of North Carolina are getting hit, you know, something like that, or, you know, out in Los Angeles, huge fires. Though, you have a downstream plan for retirement, which is great, but then in retirement, bad things can still happen. That's right. And I don't want something bad to happen to the point where we have to go back to work after we're retired. So, just enough of a buffer while we're retired to, like I said, take a hit.

• 22:12Speaker 00

  Yeah, we've always been able to weather the storms because we've had income still coming in. And so when I start thinking about, man, I'd love to, you know, kick back and go travel and enjoy what we've saved. When I think about a big hit coming and us not having that regular income to fall back on, or like, hey, I'll go pick up an extra job. I mean, I guess I could do that in retirement, but I don't want to do that.

• 22:32Speaker 03

  But the desire is not to. The desire is when you step away to be able to stay.

• 22:35Speaker 00

  I want to step away and focus on the kids, hopefully some grandkids. And I'd love to, he traveled a lot due to his Delta upbringing. I have not. I would love to see more of the world and so.

• 22:44Speaker 03

  Well, that and when we're in our early twenties, we could always lean on our parents if we had to. That was the last resort. We could lean on our parents. But now that we're at a certain age, it's more like the parents need to lean on us. It's on you guys, yeah, right? The tables have turned.

• 22:59Speaker 00

  They're not wealthy, but they've always been supportive. And, you know, there was always an open door if we really had to have it. And so, yeah, and we'd like to be able to give them that security that they provided us when we were younger.

• 23:09Speaker 03

  We're more the safety net now, instead of the parents.

• 23:12Speaker 00

  Yeah.

• 23:12Brian Preston?

  So, security potentially easing up. Were there any other goals, the big ones?

• 23:19Speaker 00

  Um, those are probably the biggest. I mean, obviously we want to get the kids through college and make sure that we haven't, you know, that we're setting them up for the strong start that we had. Again, we were really beneficial that we graduated without any college debt. The money that we had saved through working through college, we were able to use for those down payments on our first homes that we got early. And that that helped us again weather that that storm that we hit. So I want to make sure that the kids are are set up for that, too, without enabling them to just kick back and think, well, mom and dad are doing great.

• 23:48Speaker 01

  Do anything they want, but not do nothing, right?

• 23:49Speaker 00

  Yeah.

• 23:49Speaker 01

  You know, Warren Buffett is.

• 23:50Speaker 00

  Yeah, we're not that kind of wealthy, we're just, you know.

• 23:52Speaker 01

  I love it.

• 23:53Brian Preston?

  And when do you think you all want to leave the workforce? What's the goals here?

• 23:57Speaker 00

  It's so funny.

• 23:57Brian Preston?

  You're told you're in your mid 40s.

• 23:58Speaker 00

  Yeah, I originally thought when I was 50, that was based on the job that I used to have. But again, a couple of years ago, we moved and I have another job now that is a lot less stressful, that I really enjoy, feel like I'm serving the community well. And I I could see doing it for a long time, I mean, easily into my 60s.

• 24:13Speaker 01

  Oh, wow.

• 24:14Speaker 00

  Um, but I would probably like to retire around 60, just so that we could start traveling more while we're still young and.

• 24:20Speaker 01

  Love it.

• 24:20Speaker 03

  And I enjoy my job, too. I'm very fortunate, after a lot of tough jobs, to finally get to one that I like. And I don't know, mid 60s. It depends on where insurance and Medicaid and all that lies.

• 24:35Speaker 00

  Early 60s.

• 24:37Speaker 01

  So, Tellus, do you have an idea, when you get to retirement, like, when you want to live that lifestyle, like, how much is that going to cost? Like, if today you were in your mid 60s, how much would it cost you to live the life you want to live on your terms?

• 24:51Speaker 00

  I would estimate it around 8,000 a month.

• 24:53Speaker 01

  Okay.

• 24:53Speaker 00

  I think.

• 24:54Speaker 01

  Great, 8,000 a month.

• 24:55Speaker 00

  Because that gives a travel budget that... So we're thrifty, so I I could probably make it on a lot less, but I'm hoping that in retirement...

• 25:03Speaker 01

  Well, financial independence isn't always about making it on a lot less. It's about living the life you want to live, right?

• 25:06Speaker 00

  And that's the difference.

• 25:07Speaker 01

  Uh, so that's, so let's talk about your accounts and what you guys have been doing to build towards this goal. And let's kind of see, are, is it, is it realistic? Is what you've laid out possible?

• 25:17Brian Preston?

  And also the ease up. Can we ease up?

• 25:19Speaker 01

  Yeah, is that something you can do? Um, so obviously, when we look at your accounts, Megan, you have rollover IRA, pre-tax money. You have a large Roth IRA.

• 25:28Brian Preston?

  I was excited about that. How'd you get that? Is that, is that a one-time, do you buy in video or Tesla?

• 25:33Speaker 00

  No, the story of that is that it was mostly discipline. It was because when, again, we had been saving for that house and we paid the house off. After that, I started just saving the money in a cash savings account, basically, knowing that I was going to want to cut back and have kids.

• 25:46Speaker 01

  Yeah.

• 25:46Speaker 00

  We'd have a little bit of a cash buffer. Well, then... He ended up, we left the job and then he decided he wanted to change career and went back to school for a year. During that year, we had no income. So we took that year to do a big rollover and we rolled a lot into a Roth.

• 26:01Brian Preston?

  Oh, great. Did a conversion.

• 26:03Speaker 00

  Did a conversion, used the cash that we had saved when I was living, we were living off of it, but we also used that to pay the taxes. So we were able to roll the whole thing over and pay the taxes out of something that was saved on the side.

• 26:12Speaker 01

  Even a financial mutant at hard times, I mean, your income is down.

• 26:16Brian Preston?

  There's an opportunity.

• 26:17Speaker 00

  There had to be. There had to be some silver lining to that cloud.

• 26:20Speaker 01

  Well, you know, in The Millionaire Next Door, one of, one of the things that Dr. Stanley says is one of the traits is they recognize market opportunities. And even though you were in this spot, you found the silver lining. In Millionaire Mission, you talk about silver linings and you found that, that's huge. And because of you recognizing that, even that downtime, here you sit now with half a million dollars.

• 26:39Brian Preston?

  And as a couple, y'all have close to three quarters of a million dollars of Roth money. That's, that's, that's going to help out with the retirement plan.

• 26:45Speaker 00

  That's what we're hoping. Yeah, we've been big fans of Roth for a long time.

• 26:47Brian Preston?

  There's a silver lining. It is a thing. We don't like to choose favorite children on our different account structures, but definitely the Roth would be at the top of the list.

• 26:57Speaker 01

  And so when we see your retirement accounts, you have a 401k, your current 401k that looks like it maybe just started out. And then you have an old 403B with about $270,000. Any reason why you've left that in the 403B structure as opposed to rolling it into your new 401k or IRA rollover?

• 27:11Speaker 00

  Um, the paperwork headache. I, I, I called them, I looked into it. They sent me this form. They said that he would have to notarize it because as my spouse, he had, they had to make sure that he was aware I was moving the money. And then it, they sent me like, you know, 18 pages of, of teeny tiny print. And I'm like, it's fine. I just left it. That's the main reason. So, and the investments in there have been doing, I think, okay. And I don't know, I, I'd need to take care of that. And that's.

• 27:36Speaker 01

  So that's one thing, it's not something a must do, but you could obviously, that, obviously the more consolidated, you can have your picture, especially if it's inside the same tax buckets. It's a little bit easier just to manage and navigate through time. And then, um, we have, now Patrick, moving on to your accounts, you have, uh, two HSAs, HSA number one, HSA number two. Walk us through why we have two separate HSAs.

• 27:55Speaker 00

  Do you know that?

• 27:56Speaker 01

  I think you're gonna have to help me out on that.

• 27:57Speaker 00

  All right, again, I stir that money pot. Um, that's because the way his, he had one job that allowed for an HSA. And, um, they separated it. Uh, there's a thousand dollars or so that they won't invest. They said they have to keep that in. Have to keep that in cash. In cash, and then the other part is the invested part. Got it. So that's, there are two parts of that. And then we were only eligible for that HSA for about three months before there was another career change. And so it was very sad because I was looking forward to that HSA the whole time, like for years. And we finally got a job that had one and then now we're back to.

• 28:27Brian Preston?

  Was that 2023?

• 28:29Speaker 00

  Yes, I believe so.

• 28:29Brian Preston?

  Cause I, I, I did have a chance to review y'all's tax return. And I was excited when I saw the page in there for the health savings account. Um, and I saw there was an employer contribution of $333, but it didn't give you guys credit for any contribution.

• 28:45Speaker 00

  The reason we didn't, and I didn't think we could, is because we had had an FSA that year, a flex spending account. And so I was, everything I was reading said it was with the prior job. So the first job we had that year had the flex spending account, which we had contributed to. So when we went and started the HSA, the company contributed without us even asking.

• 29:01Brian Preston?

  So there was no contributions into the health savings account because of the conflict.

• 29:04Speaker 00

  Cause you already persisted in that year. And so I didn't think we could.

• 29:07Brian Preston?

  Gosh, I mean, that's what.

• 29:08Speaker 00

  I tried. Who wanted you to have HSA?

• 29:10Brian Preston?

  I was so excited because as a financial mutant, I was like, and I knew it was already going to be prorated. Cause I knew that there was, y'all weren't going to be able to take the full HSA deduction. But I was trying to get you something.

• 29:19Speaker 00

  I was too, Brian, I really was. I wanted it so badly. And then what's really sad is that his job now, it looks like we would have, be able to contribute to an HSA because it's a high deductible plan, but our actual family max is over the limit. So it doesn't qualify for HSA contributions. And so we were so close again. I, I'm calling HR, I'm like, hey, this looks like a high deductible plan. Can we have an HSA? And she's like, we don't do an HSA. I'm like, that's fine, I'll do one on my own. She's like, no, it doesn't qualify. And I was like, ah.

• 29:44Brian Preston?

  Yeah, that, that is, by the way, when, when you structure health insurance, it is something we always make sure is that, are these HSA eligible? Cause there's so many plans that get so close, but they're one or two ticks off on one of the, the coverages or the deductibles. So if you work for a company, I would advocate because there's nothing, there's.

• 30:02Speaker 00

  His company, but yeah.

• 30:04Brian Preston?

  I would advocate and ask them, hey, why, why are we doing this? Why not choose the, the option that gives, makes this HSA eligible?

• 30:12Speaker 01

  So then Patrick, obviously you have a retirement asset. You have a rollover IRA pre-tax that has about 315,000. You have a Roth with almost a quarter of a million dollars in it. And then you have a 457, which is great, you know, super unique retirement account that you're able to access earlier than traditional 401ks. And then you guys have some brokerage assets held inside our Vocable Trust of about 260,000. Where'd that money come from? Are you guys in step seven of the FOO and saving after tax?

• 30:37Speaker 00

  Pretty much, yeah. We're at step seven because we skipped ahead and did that paying off the low interest, but we're back. We're back where we're supposed to be. And yeah, so we've been saving into that because again, for a while, when we were in our prior jobs, we both thought retirement would be sooner because we were going to burn out earlier.

• 30:54Speaker 01

  Sure.

• 30:54Speaker 00

  And so we thought we needed to save into the brokerage account to have that as a bridge.

• 30:58Speaker 01

  And then it sounds like you, also there's some pensions there in the background.

• 31:01Speaker 03

  That just started with me.

• 31:02Speaker 01

  Okay. Tell us a little bit about what that looks like.

• 31:05Speaker 03

  Oh yeah. As part of the railroad, I paid into railroad retirement and was vested in there, which is railroad retirement is an alternative to social security. And part of the reason for me going to the railroad in the first place was railroad retirement.

• 31:17Speaker 00

  Security, security, security. We were looking for security and we thought, well, we don't know if social security is going to be there, but maybe railroad retirement will still be around.

• 31:25Speaker 03

  So it's either railroad retirement or social security and railroad retirement paid more and it's solvent. So that was a big bonus for me. So we did that and I'm invested in it. But now that I'm back, I'm with a municipal employer, I'm back to social security, but I now have a pension and after 10 years I'll be vested in that. And so, man, it feels like we've hit every retirement option.

• 31:51Speaker 01

  You've done every possible account.

• 31:54Speaker 03

  Every letter, combination, every number account.

• 31:56Speaker 00

  Yeah, we'd love to see that simplified a little bit. So the idea of rolling things over definitely is.

• 32:00Speaker 01

  And so those pensions are going to be about $2,100 a month in benefit. So if we're thinking, again, we're just kind of doing some like mental accounting here. You're going to have $8,000 burn rate. We're going to have some social security coming in for both of you guys. Going to have $2,000 in pensions coming in monthly. You're already starting, in terms of security, we're starting to kind of stack it up, right? Like it's feeling pretty good. Um, primary home worth $330,000. You've done great saving for the kids. You have two 529s, one with about $100,000, one with about $124,000 in there.

• 32:29Speaker 00

  Yeah, those grew a little faster than I expected too. We started that again, the day that the children were born, they each got their first lump sum put in and, and yeah, they've really performed. And then we moved back to Georgia where again, we went through school on the Hope Scholarship and we're hoping that the children will as well. And so now I'm actually a little concerned I might've over.

• 32:45Speaker 01

  Might've overfunded.

• 32:46Brian Preston?

  Well, if you've overfunded, this is the best time to be alive to overfund a 529 because they keep giving more and more opportunities on what you can do with those assets even after college. So we'll, we'll talk about that as well. So that's, that's good.

• 32:59Speaker 01

  So obviously here's where we are, sort of state of the union net worth right now, present today. Well, let's talk about how we're growing that through time because clearly you could not get to this place unless you guys were fantastic savers. And we asked you, hey, tell us a little about what you're doing from a savings standpoint. You kind of walked us through your savings plan, right? And it sounds like you're both maxing out Roth IRAs, it's $7,000 each, $14,000, 457 for you, Patrick. We're maxing that out at about 23.5, which is 30% contribution rate, which is amazing. And then Megan, your 401K, we're doing about 5%. Talk, walk us through that. What's the thought?

• 33:38Speaker 00

  Yeah, my company doesn't guarantee matching because I'm part-time. It depends on the number of hours I get in for the year. They will match up to 5%, but only if I get over a certain number. So I'm trying to do that 5% just in case.

• 33:49Brian Preston?

  You've got a hedge in there, just in case.

• 33:50Speaker 00

  So I hope I get, because I don't, the match isn't guaranteed. I'd rather, we've been putting more into his retirement where there is a guaranteed match.

• 33:56Speaker 01

  Love it.

• 33:56Brian Preston?

  Now, I'm going to go ahead and say the obvious. It shows right here that y'all are saving approximately 29% of your gross income.

• 34:03Speaker 00

  Yes.

• 34:03Brian Preston?

  Is that true?

• 34:04Speaker 00

  Yeah, that probably is true.

• 34:05Brian Preston?

  But, but this doesn't even tell the whole story because I, I wanted to wait until we got to this page. That after-tax account that's close to a quarter of a million dollars, you're like, yeah, we're throwing, we're in step seven, we're putting, so is there additional savings every month that's going into that account too?

• 34:20Speaker 00

  Not regularly.

• 34:21Brian Preston?

  Okay.

• 34:22Speaker 00

  When we sold our house in New York a couple of years ago, we took some of the proceeds of that and put that in there because the house we bought in Georgia was less expensive. So when we have little windfalls, I tuck that in there. But again, now that we're not planning on necessarily retiring that early, it didn't seem quite as important.

• 34:38Brian Preston?

  You don't see a lot of money going into that account then?

• 34:40Speaker 00

  Not a lot.

• 34:41Brian Preston?

  That's great. By the way,

• 34:42Speaker 00

  Unless we need to. That's why we're here.

• 34:44Brian Preston?

  Sure. Because you know, we talk about 25% is really the number. And since you already have multiple, you're close to multiple seven figures, you're already kind of over.

• 34:53Speaker 00

  The reason we're doing that, the whole time he was at the railroad, he had no 401k or any other retirement. It was just the railroad. And so I constantly felt like maybe we were undersaving those years because we were getting about 19%. I was maxing my retirement account.

• 35:05Speaker 01

  So you're trying to catch up for lost time?

• 35:06Speaker 00

  Right. But then I'm like, maybe I don't need to catch up for lost time.

• 35:09Brian Preston?

  That is a good question. I love it. Do I need to catch up? I love that.

• 35:13Speaker 03

  529s, we were living in upstate New York at the time. So it really had good tax advantages, New York being a high tax state. And also at the time, they wanted to stay close to home in New York. Those schools are much more expensive. So we had a very rigid savings plan in that 529.

• 35:31Speaker 00

  And then our plan's changed.

• 35:32Speaker 03

  Now, here, we still have a lot of savings. It's just instead of 529s where it's not as needed anymore, we put it more into our plan.

• 35:41Speaker 01

  Going towards retirement into your bucket. I love it. So obviously, well, tell me this, would it be accurate for us to say this is probably a conservative estimation? Like, there's probably not going to be a year you save less than this. This would probably be the lower end of what your true savings would be in any given year.

• 35:57Speaker 03

  I don't see any changes.

• 35:58Speaker 00

  Yeah, this would be our plan going forward.

• 36:00Speaker 01

  This is the plan.

• 36:01Speaker 00

  If anything, I guess it would go up because when we get to 50, we have those catch-up costs.

• 36:04Speaker 01

  Catch-up contributions. Right. So the answer is yes, this is conservative. This is, this is probably the baseline, right? This is probably the baseline. Well, when we look at your account structure, we think about the three buckets. You know, we talk about how we build, moving towards financial independence. You guys have done a great job building up your three buckets. You can see that of all of your assets, you've got about 44% in tax-deferred. Because of those decisions you made when you had the opportunity, you have about 41% in your tax-free bucket, and you have 15% in your after-tax. The beautiful Thing is that if you can build those three buckets, when you get to retirement, you decide that you're ready to start living off these assets, you get to pick and choose what you pay in taxes. Maybe I pull some out of my 457, or maybe I pull some out of my IRA rollover, and then I pull out of my Roth, or I pull out of the after-tax account. You get to be in control of your financial situation.

• 36:49Speaker 01

  One of the things you guys have said is my goal is security and certainty and stability. One of the things that's uncertain is what does the tax future for Americans look like? You guys are in a great position that with this account structure, even if taxes go up or down, you're able to optimize based on whatever the tax policy is in the years you retired. So again, like you're moving towards stability. You're moving towards security, which I think is incredible.

• 37:15Brian Preston?

  Yeah, I mean, y'all are on the way to being tax-free millionaires. I mean, think about that. You will hit Roth at a million dollars.

• 37:22Speaker 00

  But I don't know how I'm ever going to spend any of those tax-free dollars because they are my favorites.

• 37:25Brian Preston?

  But you know what? They're actually great from an estate and legacy building way as well. That's why it's the dirty little secret is that is your favorite account, and then it's the least account you want to get rid of because it does have such legacy benefits as well.

• 37:38Speaker 01

  All right, so obviously, we know where you are today, and we know what your savings strategy looks like. And so you said that our goal, we like our jobs. We're not trying to get out of the workforce super soon. Our goal is to retire around mid-sixties, early sixties. We want to retire around the early sixties. Okay, so what does that mean? What's your number? Have you done the exercise working through what our number is?

• 38:01Speaker 00

  I have. I use this great course that I found online.

• 38:05Brian Preston?

  A little nerdy spreadsheet.

• 38:06Speaker 00

  A little nerdy spreadsheet. I have a couple of nerdy spreadsheets, actually. But the thing is, is that I can play with the numbers and make it say anything I want it to say. If I tweak the, you know, the, um, what returns we're going to get, or what kind of inflation we're going to see, or again, can I live on 3,000 or 5,000, or do we need 10? I spent a lot of time on that spreadsheet, but it didn't necessarily give me quite the certainty and clarity I was hoping for because.

• 38:30Brian Preston?

  You just said something and it hit me and I'm trying to figure out the dynamic between the two of you. Because I feel a little, it's not a conflict, but it's just that it's incongruent.

• 38:41Brian Preston?

  You said, it was actually you, Meghan, that said that you want to potentially know if you could ease up because you want to travel more, do more. But I can't help but notice, I feel like you're also the gas pedal to increasing savings. Or are you kind of in conflict with yourself? Or is this something?

• 39:03Brian Preston?

  But do you see, I'm just trying to figure out what your real goal is. Because it sounds like you're trying to get more. But even the spreadsheet that tells you, hey, I'm doing great. You're trying to find excuses. Yeah, but I can get it to say anything.

• 39:15Speaker 00

  I think part of that is that.

• 39:18Speaker 03

  At least for me, the cloud of 2008 is always going to be there. We were doing the right thing. We were doing what we were told. We were doing really well. And then you lose 75% of the value of your home. So even when you're doing the right thing, there's still that cloud of something we're going to change in the future that throws all of your assumptions out the door.

• 39:40Speaker 00

  And the other thing for me is that, is that I do kind of head our family finances. That's the role that I take. And so I take a lot of responsibility in that. You know, he makes the money, he puts it in account and we have a great life that we built with it. But if that goes south, I'm going to take a lot of responsibility for that. Because I have been planning and telling him, hey, knock that savings up to this, you know? That's kind of, I've been leading that charge, so.

• 40:03Brian Preston?

  I want to, I think this is, because we're about to give you some results. But I think before we do that, we need to clear the air on some of the mindset issues.

• 40:11Brian Preston?

  Because us humans, we have this tendency where we like to anchor towards especially negative situations. You know, and y'all had, I mean, and it makes complete sense. Not only was your financial capital crushed, but you also had a lot of career stress. And I know. I mean, I dealt with that somewhat, and I've told you about my conversation is that that can just echo throughout your head and create all kind of weird dynamics for the future, your outlook. So let's kind of, let's peel back the layers and talk about that period of time a little bit. Because I want to change, see if I can shift your

• 40:51Brian Preston?

  mindset. You guys lost around $200,000 on that house transaction. Now, I can't fix the career stuff. It sounds like you've done that, Patrick. You've moved, you know, you've changed the, but I want to try to reshape how your mindset works towards that $200,000 loss. It's because you're remembering that loss as this catastrophic thing. But if I challenged you and I said, hey, let's first talk about your behavior, even if, because you feel like, I felt like there was regret that you paid it off. Now, look, I wouldn't have had you pay it off as fast as you did. But I do want to ask you the question of, because this is a philosophical thing. I had a lot of neighbors in my neighborhood

• 41:32Brian Preston?

  that even took out home equity lines and then walked away from the house. You guys personally, as a couple, was, even if you had not paid off this house, were you going to walk from this house? Or you would have paid it off with you?

• 41:45Speaker 00

  We would have, because the idea of walking away would have been the bigger failure.

• 41:50Speaker 03

  Yeah.

• 41:50Speaker 00

  And so

• 41:51Speaker 03

  I couldn't have told my parents. Yeah.

• 41:52Brian Preston?

  I get it.

• 41:53Speaker 03

  I just walked away.

• 41:53Brian Preston?

  There would have been, I would, I completely, and I resemble you, and that's why I knew the first bridge I want to get you past, is that you were never morally going to walk away from that debt anyway. So all you did was you prepaid the negative equity anyway. You would have, you would have done, we would have ended up in the exact same place. So I think you can free yourself from, if you have any regrets about prepaying, yes, there were some opportunity costs potentially, but I think you would have still paid it off. You would never have walked away from the debt.

• 42:26Speaker 00

  There, in my mind, there was one other thing that happened is that when we sold the house, we actually sold it to a coworker of mine, and that helped a little bit with the sting. Like, I knew she was getting a good home and a good deal, and she was not in a financial, she was a single mother. Not in a position otherwise, if the market hadn't crashed, she would not have been buying a house at the time. And so at least, even though we had to sell, we were able to sell it to somebody who I knew needed it. And so that that helped a little too.

• 42:48Brian Preston?

  So, go ahead.

• 42:50Speaker 03

  And when we were living in New York, we'd look at Zillow and Realtor.com every once in a while to see, is it back to what we paid for it?

• 42:57Speaker 00

  It took over a decade for it to recover. And so that was the other thing. It's like, well, should we have held on to it and tried to rent it? And at the time, we weren't in that mindset either. But we considered all of those things. And then again, no, it would have taken over a decade for it to regain its value.

• 43:12Speaker 03

  It stayed down a long time.

• 43:13Speaker 00

  And that would have been an anchor, an even heavier anchor, I think, around us had we kept it.

• 43:16Brian Preston?

  So here's the other thing that I want to help hopefully change y'all's perspective on, is that, and I do this with clients that we, that I've been fortunate that I've been managing money since, since the 90s. And I have clients that we've had here at the firm since 2002. And I try to remind them that that 2008 crisis where, you know, portfolios lost 25%, and you know, and you struggled with it, is, I want you to look, I always say, look at the chart now of where 2008, how it, in relative form to your total portfolio, it's a blip. And I would challenge you guys, because I was, Megan and I were talking about,

• 43:56Brian Preston?

  and then I brought Bo in on the fold, is that last year, we estimated, it was hard because y'all have so many accounts in different places. Last year in 2024, it was a pretty good year for the investment marketplace. Y'all made, from our estimation, probably $250,000.

• 44:15Speaker 03

  She's like, oh, let me see.

• 44:18Brian Preston?

  I was trying to estimate it.

• 44:21Speaker 00

  Yeah, I might know what we made.

• 44:23Speaker 03

  So going back to analytical mindsets from.

• 44:26Brian Preston?

  I love it, by the way. You hit the jackpot, by the way, because she, financial mutant, and y'all are, y'all are balancing and communicating.

• 44:33Speaker 00

  Yeah, the last two years were both around $200,000 each year.

• 44:36Brian Preston?

  So, so think about this. This $200,000 loss has just got this, this hangover effect. It's this cloud that's hanging over you. But yet now you guys are running a soon to be multiple seven-figure Portfolio and it is so successful that for the last two years it is it basically overwhelms the loss of that one year. You guys are doing incredible things and that's why I you know a lot of people think when you hire a financial planner that we are and I heard you I couldn't help but chuckle because you said that you used to listen to a female commentator back in the 90s.

• 45:12Speaker 00

  You probably

• 45:12Brian Preston?

  I know who it is. I can kind of guess who it is and her big thing was she said no to everything.

• 45:18Speaker 00

  Yes.

• 45:18Brian Preston?

  And I think that that gave you know a lot of people think when you hire a financial planner, we are the break to all life choices. We're gonna say no, no, no, save more.

• 45:27Speaker 00

  She's still in the back of my head saying it all the time.

• 45:29Brian Preston?

  I will tell you as a financial planner and Bo can echo this, our biggest thing especially with a couple like you is I'm going to try to unleash you in retirement to where you don't feel this this doubt or concern because you're way too far from it now because you guys are 15 years from where your actual retirement is. But if you once you're a real retiree or even within five years of landing this airplane, I'm gonna start doing Monte Carlo simulations. So you see this in thousands of simulations run on your annual portfolio and to give you the peace of mind and you're gonna see, holy cow, like 86% of the time, I'm gonna be okay. You guys might be 95%

• 46:12Brian Preston?

  of the time, you're going to be okay. Just to give you that peace of mind, then I'm gonna say, okay, now, what are we doing? Are we making more memories? Are we spending more money? Because you guys are way too hard on yourself. I love what you're doing and I love that Bo's about to unleash on you what is, you know, what we think your future potentially could look like. And even better, even if you pulled back a little bit on the savings, you have so many opportunities here, but you gotta forgive yourself because you've done some incredible things and I don't want that one period of time to define that one loss to define all your wins.

• 46:49Speaker 00

  It's so it's so hard because it was we were young. It was a very formative experience. And again, we thought we had graduated from college. We had these great jobs. We knew what we were doing and then life just slapped us down and it's

• 47:00Brian Preston?

  It was not a gradual transition there either.

• 47:03Speaker 00

  It was. And so, yeah, we've been fighting and that's, you know, to get get over that. So it's, yeah, we're hoping that we've done enough, but it's There's always that little voice.

• 47:11Speaker 01

  The thing you're concerned about, and obviously you had the traumatic experience that happened, but you're like, what about the unknown unknowns? I mean, you just mentioned all the crazy things going on in the country right now. It's a day over the past year. What if one of those things happens to us? How can we have confidence?

• 47:25Brian Preston?

  They didn't say, what if one of those? Their question was, what if all these things happened to us all at once? Because that's the part I found myself. I was trying to look at my notes. I don't have what you actually wrote us because I can't pull it up on this pad. But y'all threw out, I mean, it was hurricanes. HOA fees are going up. Insurance is going, I mean, it was, it was like everything and anything all at once. And I was like, wowzer. I mean, this is, this is really throwing the kitchen sink in a different way.

• 47:53Speaker 01

  But I want to put your mind at ease. You're not unique in that mindset. A lot of financial mutants, especially financial mutants who have come through some sort of traumatic experience, bring that baggage along with them. And no matter, we can tell you all the time, oh, it's going to be okay. It's going to be okay. But it doesn't make that feeling go away. So what we try to do is we try to remove emotion from the equation. And how can we be pragmatic and practical and logical, arriving at a really good level of confidence with the plan that we have? And the way that we do that is through like these really conservative assumptions. And we say, hey, if we build out a plan that works and everything that we do in this plan is so, so conservative that it's going to be hard for it not to turn out better than it is, then we can begin to have some like, some breathing room.

• 48:37Speaker 01

  Because if I would have asked you in 2009, right after those took place, hey, guys, would you believe that in the year 2025, we'll be sitting here together and you guys are going to be multimillionaires? Like, would you have been able to like say, like, so things turned out better even than you thought they would have? And I think what'll likely happen, and this is the case for most financial mutants, if you are conservative in your assumptions, that's what happens. And so we decided, we decided we want to put together a plan to show, okay, what is your portfolio path? That's what we call it. What does it look like? If we just continue saving the way that you are. So right now, it's a day, you guys have 1.8 million dollars. We just uncovered that you're saving about 30% of your income. We said, hey, what if we assume no pay raises, no increases, no bonuses, and we just save

• 49:21Speaker 01

  at that level for the remainder of your working career? And then we said, hey, what if your portfolio only returns 6% annualized? Now, do you know what you have been annualizing over the past?

• 49:32Speaker 00

  I believe around eight.

• 49:33Speaker 01

  Around eight? You really do know all your numbers. I love it. It's so good. We actually synthesized your current portfolio.

• 49:40Speaker 00

  I started this in 2006, by the way. It's been going the entire marriage.

• 49:44Speaker 01

  I love it. Well, your portfolio's obviously changed through time, but your portfolio snapshot today, if we just backtested over the last 15 years, you've annualized a little over 9% per year with the current portfolio. But obviously, as you age, your risk tolerance changes and that sort of thing. But we said, let's go really, really conservative and say, what if we just had a 6% rate of return? And we think 6% is incredibly conservative. Well, just with that behavior, right now, today, you start at 1.8. We estimate that just doing what you're currently doing, by the time that you get to age 60, your portfolio will be worth almost $5 million.

• 50:22Speaker 00

  That's a nice number.

• 50:23Speaker 01

  I already know you're gonna say it, because I know you're a financial media, but Bo, Inflation. $5 million in the future is not gonna be the same today, and you would be accurate in that. So if we just assume a 3% inflation rate, which aligns with historical rates of inflation, and we say, okay, what could a $5 million portfolio really generate for us in today's dollars? You can see that we could count on an annual cash flow from that portfolio of about $130,000 a year. Meaning, we brought it back to today's dollars.

• 50:54Speaker 00

  Is that pre-tax, or is that?

• 50:55Speaker 01

  That would be total income. So you have to factor in taxes, right? So that would be before you take taxes out. But remember, you're building your three-tax bucket, so it's not like that's $130,000 income. Half your money is close to tax-free, so it's not gonna be a problem. You could pull all that out of Roth and pay zero taxes, right? That's kind of the thing that you get to do. So $130,000 per year, and by the way, this assumes a 4% withdrawal rate. So the idea behind that would be, you start retirement with $5 million, and you pull out the equivalent of $130,000 in today's dollars every year. And when you guys leave this earth, at the end of your plan, you leave behind $5 million. Like, this doesn't assume getting into the principal, getting into the interest. You guys said, hey, we need about $8,000 and I'm not great at public math, but I think it's like 96,000.

• 51:37Speaker 01

  We need to spend 96 and we just showed you the portfolio will generate about $130,000. Not including pensions, not including social security.

• 51:49Speaker 00

  A little more secure.

• 51:50Brian Preston?

  Okay, so that's why when I was looking at y'all's situation, I was like, and by the way, that's 60. Even if we back this up to 55, we're still exceeding, not taking into account social security and pensions and the other things. I mean, you guys might be closer. Now, I'm not saying, what I like about financial freedom is you don't have to actually retire. If you love what you're doing and you get purpose out of your, you know, your, your work and how you spend your time. But I do think 50 might be closer to the actual flexibility point.

• 52:21Speaker 00

  And that's actually what security really does mean to me is the, the security to know that if my job did disappear, I would still be okay.

• 52:27Brian Preston?

  You own your time. You're choosing to work, not because you have to work. That is definitely financial independence.

• 52:34Speaker 01

  And so if you had a portfolio that could generate 130,000 plus in addition to pensions, in additional, in addition to social security, you would argue that that would be a financial independence, like at that level of income. Yeah, I would feel.

• 52:45Speaker 00

  I'd agree with that, yeah.

• 52:46Speaker 01

  Great. So then the question becomes, okay, well, can we ease up? What if we were to back again?

• 52:50Speaker 00

  That is the question.

• 52:51Speaker 01

  So we said, hey, what if they just got really excited and they said, you know what, all we're going to do is we're just going to max out our Roth IRAs. We're not going to do anymore. We're just going to do 7,000 and we're going to assume that the government doesn't even increase the limits. It's just going to be 7,000 for the remainder of our working career and we're not even worried about catch-ups. We're just going to do 7,000 a year until we stop working.

• 53:07Brian Preston?

  Now, I, I will tell you, the financial community is like, please get the free money though. It was a reason it's step number two in our financial order of operation.

• 53:14Speaker 00

  You don't have to worry. Don't you sleep over that.

• 53:16Brian Preston?

  The theory to have the conversation.

• 53:18Speaker 01

  Because you have built out the portfolio so well and because it's able to compound upon itself. If all you guys did was have a 10% savings rate, which is just essentially maxing out your Roth IRAs, you would still be on track by age 60 to have almost $4.4 million. And again, if we're thinking about like the income that that would create, that's about $115,000 a year. Plus the $2,000 a month pension, plus social security. So if you desire to back down your savings to just Roths, the picture looks pretty good, right? But then we said, what if they get real crazy?

• 53:56Brian Preston?

  They leave here like, wow!

• 53:59Speaker 01

  These guys are awesome. We're not gonna save any more money. What if we just cut off the saving and all we did was just consume what we have right now and let our money work for us? What does that picture look like? And you can see that even without saving another dollar, you guys have done the hard work that if your portfolio could only earn 6% annualized over the next part of your working career, by the time you get to 60, you could still have a $4 million portfolio without saving another dollar. And that $4 million portfolio would generate for you about $107,000 in annual income. They gotta factor in taxes and that sort of thing. But that's without... Now, if I were gonna ask you to give me a probability, like I'm thinking of a percentage, I'm gonna give you a probability.

• 54:43Speaker 01

  What is the probability you do not save another dollar for the remainder of your career? Zero. Zero. It's a zero, right? It's a zero. So I wanna pause there for a moment because what we did is we started with what we think is a realistic expectation. We just kinda backed down to what we would call unrealistic conservatism. When we put that out there...

• 55:02Speaker 00

  The 3D glasses.

• 55:03Speaker 01

  That's exactly what it is. And we always start with the doo-doo. That's where we like to start because if you start there, when you get to down-to-earth, or if you even get to dream, it gets real exciting. Because we're gonna show you that in a moment. But give us some feedback, just seeing these numbers. And based on your savings and income somewhere between $107,000 to $130,000 a year in today's dollars, how's that make you feel?

• 55:28Speaker 03

  I feel pretty good about that, yeah.

• 55:29Speaker 00

  Yeah, I feel great about that because that says to me, maybe we can pull back and start making more of those memories now with the kids while we still have them in the house, which is one of my... It's one of my goals. I just didn't want that goal to bite me in the butt later, so.

• 55:41Speaker 03

  And for me, it's, we have so many different little accounts. 457, 401K, 403B, 529s, two of those.

• 55:51Speaker 00

  It's seen it all.

• 55:52Speaker 03

  Pension here, pension there.

• 55:53Speaker 00

  All together.

• 55:53Speaker 03

  It's hard to grasp, are we doing enough when it's in 10 different, 12 different accounts? But it's nice to see it consolidated.

• 56:01Speaker 01

  One of the things that we love, most people fall into that situation. They're like, I've got all these different instruments and different pieces working together. Well, what we love in our day job, when we work with clients, we get to actually sit down with them, is we get to show information like this. Hey, don't, don't think about your account and your account and this one and this one. If you think about the whole picture, is it all working together cohesively towards one common goal? And the common goal you've told us is, security and stability. Not security in your 457 or in your 403, but for the enterprise, for the Patrick and Megan enterprise, are we moving towards the ultimate goal that we have? And what this shows me is that you are. Now, I just told you, we were, this was a very conservative, right? Like this is, okay, what if we were to back down to savings?

• 56:45Speaker 01

  And what if we were to only annualize 6%? We thought we would not be doing you a service, though, if we didn't show a realistic expectation of what it realistically probably could look like, based on the way that you guys actually save. So we said, we know that over the last 15 years, your portfolio has annualized like 9+ percent, if you look at the way it's currently structured. Well, maybe you decide that you're gonna change your risk profile, and you're gonna back down the aggressiveness of your portfolio as you age. Or maybe you decide you wanna hire a financial advisor, and there's gonna be some fee associated with that. We said, what if you just made 8% annualized? Not 6, but 8. How does that change that with the same savings? Look at what happens.

• 57:23Speaker 03

  Yeah.

• 57:23Speaker 01

  You start today with almost 1.8 million dollars. By the time you get to 60, just saving the way that you're saving today, no pay raises, no increases, no bonuses, and if the market were to be kind and generate an 8% rate of return, which is more in line with what you've actually seen in your portfolio, now your portfolio by 60 is worth almost 6.4 million dollars. And a 6.4 million dollar portfolio at that time could generate almost 170,000. Remember that?

• 57:52Brian Preston?

  That's more than y'all make. And that doesn't take into account social security, pensions.

• 57:57Speaker 00

  We wouldn't have to fly coach.

• 57:58Speaker 01

  Right? Like that's, this provides the opportunity where you get to do what you want to do, the way that you want to do it. So, a lot of very bad things have to happen for your plan at this point to not work. You have to stop saving and the market has to not perform at, at minimal levels of viability. You guys are well on your way to financial independence without having to make any crazy wild adjustments. It's more about continuing to do the things that got you from where you were in 2008 till today, and from today, into your great, big, beautiful tomorrow.

• 58:40Speaker 03

  It is helpful to see everything condensed into one number, because we have, like I said, so many little accounts. It's doing well, that's doing well, that's doing well. But if you put them together, is it doing enough? And I think that's the hard part for me, is how do you condense it into a number you can see?

• 58:58Speaker 00

  Yeah.

• 58:58Speaker 03

  And, yeah, that helps a lot.

• 58:59Brian Preston?

  Now, I will tell you, because we, we always talk about those three components to wealth. There's the make wealth phase, there's the maintain wealth, and then there's the multiply wealth. You guys crushed the make wealth phase. You didn't even give yourself enough credit as you're doing it. I think on the maintain, I would say part of this is, is just making sure, because with y'all's risk profile, you do want to make sure you, you take into account what y'all perceive as, as, you know, concerns with the portfolio, and get a good asset allocation that reflects your desires. That's all going to go into the risk mitigation of that. Because that's why we do have diversification. I see so many people on social media saying, "Just do VOO for life," or just do, you know, any

• 59:42Brian Preston?

  type of index fund. What you, you guys have tons of index funds, which we love index funds, but index funds don't have to only be equities. And I've noticed y'all do have some bonds and other things, but it would be just making sure you're keeping an eye on, on that asset allocation.

• 59:57Speaker 00

  Yeah, and that's definitely been something that I've been struggling with, because I don't know as much about, I'm comfortable with the ETFs, the, the, you know, stocks, the VOO, you know, but I don't know as much about bond funds. My parents were all, CDs are the way to go. That's how they, you know, and so they are not any help in that guidance either. And so like, when I look at the different buckets, and I've heard others, you should put different types of assets in each one, and I'm like, I don't quite understand their... Is the CTF a dividend fund or not? Or so that's

• 1:00:25Brian Preston?

  And that gets into portfolio theory, which is so interesting is because you would think, you know, you would, well, let's just keep it simple with just stocks and maybe a few bonds, but there's actually when you add even additional diversifiers like real estate, you know, international, y'all have some of that as well. Some of the things that even though they might perceived as risky, because they're diversifiers, they can actually help balance out the asset allocation and the portfolio for years to come. There's nothing but blue sky for you guys. That's why I get so excited because, and by the way, this would be, y'all would be such fun people because I can already tell y'all, y'all have such heavy brakes. You need more gas in your life. You really do.

• 1:01:05Speaker 00

  Yes.

• 1:01:06Brian Preston?

  And that's why you need somebody that's every year coaching you is, hey, let's look at the portfolio. Let's run it back through the Monte Carlo simulations to stress test this thing, tell you your probability because you need that to free yourself to let go of all the numbers. I mean, you really are the meme with the numbers just scrolling around in space all around you at all times.

• 1:01:29Speaker 00

  Yeah, no, I think, I think you're absolutely right. I mean, again, our whole past has been save, save, save, save, save, save some more, you know, because you need it, you're going to need it. And I am worried that we're going to get to retirement and then someone's going to be like, you should spend some of that. And we're going to be like, how about some rice and beans? That'd be great.

• 1:01:44Speaker 01

  That's one of our favorite things that we get to do as financial advisors is coach our clients through that, hey, it's okay if you take that trip. Hey, it's okay if you help your child with the down payment on their house. Hey, it's okay if you upgrade the, whatever that thing is for you, we've stress tested the plan, we've modeled, we've put it in there, it's okay. And by the way, we have the portfolio design that if the 2008 happens again, you're going to be prepared for that. You're going to be well weathered to be able to do that based on the plan of the strategy you have. You guys said something, you said, early on in our life, we felt like we could depend on our parents, but now it's on us. We're doing this alone. And you're like, hey, I know equities, but I don't know bonds and I don't know asset allocation.

• 1:02:25Speaker 01

  You're saying all the like key words of that might be the time that it does make sense to have someone partner with you so that you don't feel like you're doing it alone. So as you navigate towards your retirement, you're not just doing it with two people who have only ever retired one time, you're doing it with someone who's walked through hundreds of retirements and seen hundreds of different success stories. I think you'd be a prime candidate.

• 1:02:47Speaker 00

  Yeah, no, well, we've definitely considered that. We worked with an advisor about five years ago who did help us at least get our wills and powers of trading, all that set up. But then we kept them and after a while, they weren't doing much for us because it was kind of set and forget it. And so then we thought, well, we'll pull away from that and maybe when we're like five years out from retirement, we'll go back in. But then again, as things have grown, then I have worried maybe sooner would be better because it is hard.

• 1:03:11Speaker 01

  It's just gotten so complex. Sure.

• 1:03:12Speaker 00

  Yeah, so it's hard to know when to jump back in.

• 1:03:15Speaker 01

  10% oh on $100,000 is different than the 10% oh on a $2 million portfolio. But what we want to do is we want to put you guys, because it was great, you put some stuff in there. So again, the theme of this is how can we put your mind at ease? How can you have security? And we just, you gave us like this section, we just labeled this like, these are my keep us up at night questions. Like, these are the things that we struggle with. And we just want to say, if you were to give us a phone call and ask us these things, how would we respond to you? The first one is, what if the market doesn't perform as well? Well, one of the things, I don't even know if we need to talk about that a ton because we just showed you in the iteration where the market, where your portfolio only makes 6% annualized, your, based on the dollars you have and the way that you're saving,

• 1:03:59Speaker 01

  it's still a success. So you've built a plan around the very viability of the plan being the market underperforming. So if the market just average performs, or if it outperforms, you're on easy street. So I think one of the ways that you offset the mindset of that is plan for the worst. Start with the do-do plan of the three Ds.

• 1:04:20Speaker 00

  We're good at the do-do plan.

• 1:04:21Speaker 01

  Right? And then, and then what happens is, is you iterate and check it through time. Like, okay, well, last year, we said the market only makes 6% and it made 23.5%. Okay, that's, that gives us a few years, that gives us a few years, that gives us a few. So that's how we walk through, okay, what if the market doesn't do as well? We do not, in our opinion, we do not care if 2025 outperforms 2024. What we care about is over the long term, for our clients, for people that are investing, do they have a rate of return that will allow them to reach their goals? And we just showed you that even at something as low as 6%, you still reach your goals.

• 1:04:55Brian Preston?

  Well, I think like those first two questions are somewhat related to each other. Market doesn't perform well, market loses 50%, you just went on different degrees. Well, and timing, and timing though, because there is that concern that that first year. But I would tell you, like an advisor, when I'm working with retirees or people close to, you know, landing the airplane at retirement, if I, if you, if the market loses 50%, you shouldn't lose 50%. That's why we do have asset allocations. We're not swinging for the fences anymore. You're hopefully going to only have, you're going to lose 20%. And then I'm also going to make sure I structure your portfolio with somebody who spends like you, where you're, this is why we always say, the cash reserves. We like three to six months until you get close to retirement. Now all of a sudden, we're going to boost that up to 18 months for some people, 36,

• 1:05:40Brian Preston?

  depending upon their risk profiles. But I always look at clients' portfolios and I say, look, we're going to have an extra bit of cash for you. We're also going to have bonds and other super conservative and even some alternative asset classes that are going to be, you know, much safer or not as volatile as equities. I bet I can get you close to 10 years' worth of cash flow before we'd have to sell any of those stocks that are down 40, 50%. Because yeah, a portion of your portfolio might be down 40, 50%, but we won't have to touch that for 10 years. And from our experience, I mean diversified portfolios typically were back to making money within two to three years from those horrible events of 2008 and beyond.

• 1:06:21Brian Preston?

  Because real estate does have U-shaped recoveries, meaning you get crushed and then it might take years for the markets. Historically, stock market typically has V-shaped recoveries. Because what happens is, is that value gets disconnected from the prices that people were charged. And so the markets are pretty dynamic and efficient in trying to fix that. So you see much faster corrections, whereas real estate, because they're illiquid investments, you have to get capital markets, you know, funding for real estate. You can have land just sit there. For years on end because banks don't want to take the losses. There's all kind of weird dynamics that happen with real estate that cause it to drag bottom for and have that U-shaped recovery.

• 1:07:03Speaker 01

  Well, that's a perfect segue in the next question. What if our home value drops again? And this will sound insensitive, I don't mean for it to.

• 1:07:10Brian Preston?

  I was thinking the same thing, I know what you're gonna say.

• 1:07:13Speaker 01

  So what?

• 1:07:13Brian Preston?

  So what? Cause you're living in this house.

• 1:07:16Speaker 01

  Right, like if it's your home, does it matter? You know, Warren Buffett gives the example of someone standing on your street. If you had a neighbor yelling out, hey, I'll pay you $10 million for your home, I'll pay you $10. If he threw out a number that was way too low, you just won't sell it. If those are numbers way too high, then you might consider selling it. But if you're living there and it's a used asset, does the value of your home really matter to your financials viability?

• 1:07:37Speaker 00

  Yeah, I guess in the past, our moves have been based on career changes. But if we're in retirement, then you're right, we probably don't have quite that need to.

• 1:07:44Brian Preston?

  And y'all got enough that that's gonna be, I mean, if you look at the value of your house in relationship to your net worth, what are we talking about here? It doesn't, I mean, we're talking about rounding. It's more emotional for you guys than it's actual factual.

• 1:07:57Speaker 00

  Are you telling us to buy a big nice house?

• 1:07:58Brian Preston?

  No, I'm just saying that in relative to your total assets and net worth, it's just, it doesn't move the needle that much. So even if it went down 20, 30%, it's just not changing. Yeah, it's just not changing much.

• 1:08:10Speaker 01

  Your kitchen's still gonna cook dinner. You know what I mean? No matter what the value of the home is. How do we disaster-proof our time? We've already talked a little bit about that. One of the ways we prepare for folks getting into retirement is we want you to have tons of liquidity. So that no matter what the market does, you are covered there. Appropriate asset allocation is the other way, right? Like, if the market goes down 50%, you're in a retired portfolio, you should not be going down 50%. And the appropriate asset allocation will do that. The appropriate risk mitigation inside of the portfolio. And then, one of the ways you disaster-proof is, and look, I hate to say this, but it's just a reality. You kinda over-save and over, we showed you.

• 1:08:48Speaker 00

  I know about that, yeah.

• 1:08:49Speaker 01

  We showed you that just based on what you're currently doing. You are on the trajectory where if the market performs relative to the way that your portfolio has been performing, it's like $170,000 of income on top of pensions, on top of social security. Well, one of the ways you disaster-proof is you're not going to need all that. And so, we have clients all the time that will retire and they'll get into retirement and they'll be like, guys, if I would have known it was this easy, I would have retired forever. I keep spending all this money, the portfolio keeps getting bigger and bigger and bigger. Well, that's what happens when you have a portfolio of assets that more than sustain the lifestyle that you need. That's kind of what you guys are already on track for.

• 1:09:29Brian Preston?

  Y'all have an army of dollars that's probably going to work harder than you, as you saw. You know, even no matter what's going on out there. And then I liked the next one, then I know we get to a segue here. Buying a new car. If I had to guess, probably your advisor's going to be the one that's telling you, please go buy a new car more than you will. And this is, this is once again, a challenge to you guys as you leave here. Bo and I forever, we called ourselves tightwads. And you guys probably at some point in your life, and right now, you might still resemble this, you call yourself a tightwad. I think-

• 1:10:02Speaker 00

  I like thrifty, but okay.

• 1:10:04Brian Preston?

  But you realize, you reach a point, once you start seeing your assets start growing and your money does work harder than you can, you realize you can't take it with you. And I would, I would challenge you to make sure you're honing in. And this is why, you know, when I, when I wrote Millionaire Mission, those last two chapters were really about how I view money and I want people to know what I now know. Once you get wealth, how do you maximize it for the memory building, for making sure that you don't have regrets at each decade that you're alive? And I'm not saying go hog wild, you know, for all my 20-year-olds or 30-year-olds, but I do want people, after you've made the disciplined sacrifices and have started building the money, I don't want you to feel like you

• 1:10:48Brian Preston?

  have to keep living off of that, that way that made you wealthy.

• 1:10:53Speaker 00

  Okay. How, how dangerous is lifestyle creep then? If we were to let up the gas, because it looks like we probably could, and start spending more- How at this point in our life, like I

• 1:11:01Brian Preston?

  Is it lifestyle creep at this point, though?

• 1:11:03Speaker 00

  That's my question. Is it? Because like, I don't want to get like, I'm saying that we could easily, you know, 8,000 be great in retirement. That's based on what we're spending now and that's having a luxury for travel. But if we start living it up now, what if we want to live it up?

• 1:11:17Brian Preston?

  Well, in those go-go years, because those are the first few years you retire. It's not uncommon for my clients to actually do spend more money than they were even making because I want them to go maximize. Now, we stress test it every year. We're going and making sure and laying it next to and saying, hey, what's the probability that this thing keeps rocking and rolling? And if we have good years, like last year, you know, market made 20 plus percent and most of our clients, you know, had, you know, double digits for sure. And we were like, yeah, let's, let's go. That's the year. Let's go buy the car. Let's go on the trip. And then we'll come back next year and see what we need to adjust because human nature is when markets get their teeth kicked in, we all pucker up really quick and we all quit spending money.

• 1:11:58Brian Preston?

  That's actually why markets go down and everything because everybody does the exact same thing. We're such herd animals that we all shut it down together. So you're going to be okay because I don't, when we do all these analysis, like with 4% withdrawal rates and even with the stress test, it cracks me up because I know that they're all ultra-conservative just by any way because they don't reflect. They assume everybody's just spending every year the same way. And I don't know a single client, including myself, who does that because we all shut it down when things get scary and we self-regulate that way. So you're going to be okay. And so I get excited. You probably should buy new cars. How old are y'all's current cars?

• 1:12:39Speaker 00

  My last one I had for 13 years, but my current one is three years old.

• 1:12:42Brian Preston?

  Okay, that's a new car.

• 1:12:44Speaker 00

  Three years old, that new car. I got it used, but yeah.

• 1:12:48Speaker 03

  Nine years old? Yeah, I love it.

• 1:12:50Brian Preston?

  So don't feel guilty for buying a new car.

• 1:12:52Speaker 01

  Lifestyle creep is not bad. Lifestyle creep when it goes unchecked can be bad, but lifestyle creep is what we all ultimately want. None of us want to be living the same life at 60 that we were living at 20. I mean, we might want the same health and that kind of stuff. But we hopefully our lifestyle does increase. That's why most of us desire to have a better lifestyle in the future than we had today and a better one today than we had in the past. That's the idea of our money being a tool, allowing us to really enjoy the things that we want to enjoy and do the things we want to do. So it's not bad. Lifestyle creep is an okay thing. Just too often, people let the cart get way ahead of the horse.

• 1:13:29Brian Preston?

  Come on, bougie this thing up.

• 1:13:33Speaker 00

  We have been bedazzling for 20 years. So yeah, that's a big mind shift.

• 1:13:38Speaker 01

  I love it.

• 1:13:39Brian Preston?

  It could be fun. I will tell you, because my wife and I, I remember we did this, this is probably three years ago, we need to do it again. We did a five-year travel goal. We did it as a date night. And it's kind of fun, because this is, money is not sexy by itself, but I think when you're doing money as a planning tool in a relationship to kind of figure, daydream on what y'all want to do in life, that could be incredibly fun.

• 1:14:03Speaker 00

  I remember those conversations when we were first married and or even dating, like what we thought our life would be and, you know.

• 1:14:08Brian Preston?

  Well, in the beginning, it's probably also you're restricting. You're like, how can we be more disciplined? Now, let's flip the script. How can we live more abundantly and do the things that really give us value and bring happiness?

• 1:14:20Speaker 01

  Yeah, it looks, sounds like fun. Patrick says, I'm in. I'm in.

• 1:14:24Speaker 00

  It's hard to get him in sometimes. This is really good.

• 1:14:27Brian Preston?

  Probably because you're a good break. I can already tell you're very persuasive.

• 1:14:31Speaker 00

  All he has to say is one little negative thing. I'm like, you're right, we should stop right now. So, yeah.

• 1:14:37Speaker 01

  Another reason why having another voice help you guys could be an incredibly valuable thing to do. Another one of your sleep at night questions, this isn't really keep me up at night. This is just like, what? What if we overfunded the 529s? Do you, so first of all, if the kids go to school in Georgia, Hope Scholarship, it's a good chance you could have overfunded the 529. So I want to say this back to, what if we have too much money? That's what I, I want to reframe that. What if we have too much money for this goal that we have established?

• 1:15:03Speaker 00

  What that highlighted to me was when I started feeling about the 529s, it made me start thinking about maybe our retirement's on the same track. And then I was, so I was worried, maybe we are saving too much. Maybe we're not living enough for today. Because I don't want to get to that point and look back and be like, man, we should have gone on that riverboat cruiser. We should have. You know, done more traveling or taken the kids to Disney and stayed at the top resort instead of the value resort like and I and so when I saw there are 529s that were looking like maybe those have been under overfunded. I'm like, what if that's a symptom of a bigger problem? And so that kind of got me thinking about all of this.

• 1:15:34Brian Preston?

  You're probably nibbling on something that from a mindset issue that I would lean into.

• 1:15:39Speaker 01

  And what I love about about spending is you don't have to spend more all at once. You have to spend more forever. It's just like, that's a great, the Disney example. Okay, book a Disney trip and stay in the nice resort one time and see if you like it. You may decide, I didn't like that as much. I would rather go do a different trip or stay in a different resort.

• 1:15:57Brian Preston?

  That doesn't happen. That's why I always tell people, I worry about people that go bougie too soon. You guys are not going to do that. So if you do kick it up on vacations, like you go on a cruise and you stay in a suite versus, you know, just piling everybody in one room.

• 1:16:12Speaker 00

  We went on a vacation last month with the kids and it was a cruise and all four of us were in an interior cabin.

• 1:16:17Brian Preston?

  See, what are y'all doing? I mean, that was, y'all probably were, the interior cabins are so cheap. It probably, your grocery savings were the cost of the cruise. So we, that is not a vacation. That was just, you reallocated what you spend on daily life to staying on an interior room of a cruise ship.

• 1:16:35Speaker 00

  Because 20 years ago, we lost a lot of money, Brian.

• 1:16:38Speaker 01

  Before I give you guys your homework, any other questions for us? Anything else that we could speak to that'd be helpful for you guys to hear?

• 1:16:45Speaker 00

  Okay, actually, yes, I do. With the steps of the foo, that maxing out, that retirement step, maybe that's a step of the past for us then or?

• 1:16:55Speaker 01

  I think it's a step where you guys, it is not required anymore for you to reach your financial independence goals. So you are probably in step seven where you get to determine, is 25% saving something that we must be doing? Or have we defined now that we can actually back it down below 25% and we're still going to be okay? All right, here's your homework list.

• 1:17:15Speaker 00

  All right, homework, homework.

• 1:17:16Speaker 01

  Only one logistical thing for you guys. Consider maybe consolidating your 403B. Paperwork, but it's, it's a lot of paperwork, but it's not incredibly complicated. Then, once you get that in one place, it does become a little bit easier to wrap your heads around. Maybe even roll it into your current 401K or your IRA rollover. You can decide which one makes the most sense. I put a homework on that. Review your asset allocation. Is the risk profile of your portfolio, does it match where you guys are presently? Do you find yourself, if the market were to go down 20% over the next year, would you freak out?

• 1:17:45Speaker 00

  See, that's the thing, it doesn't bother me now, because I know we have time. I know we're still.

• 1:17:48Speaker 01

  Because you're still working.

• 1:17:49Speaker 00

  Because we're still working, yeah. The day we stop working, everything is gonna switch.

• 1:17:52Speaker 01

  Then it's gonna change.

• 1:17:53Speaker 00

  For now, yeah.

• 1:17:53Speaker 03

  And I, I'm sorry to interrupt, but as we get closer to retirement, I do feel like we're gonna look for more professional help on management.

• 1:18:00Speaker 01

  Sure.

• 1:18:01Speaker 03

  Because it is very.

• 1:18:02Speaker 01

  How do you do the glide path?

• 1:18:03Speaker 03

  High maintenance.

• 1:18:03Speaker 00

  Yeah, the glide path, the maintaining, we've figured out, obviously. But yeah, the gliding into retirement is definitely a different.

• 1:18:09Speaker 03

  That is on the horizon, is getting help once we're closer.

• 1:18:12Speaker 01

  Wonderful. And then, the big one, the big homework for you guys, is you gotta talk about what life do you want to be living today? We've already defined the life you want to live in the future and the steps that, the minimum level of steps that are required to get there. So are there things today that you want to be doing? Are there experiences you want to be having? How do you want to be saving? What are the ways you want to use your dollars today, so that when you do get to the future, you don't look back and have regrets? Now, we're not telling you to stop saving money. You can keep saving as much money as you want. If you want to save 40%, that's great.

• 1:18:43Speaker 00

  My kids are probably watching and thinking, "Yeah, keep saving, because we'll inherit that someday."

• 1:18:46Speaker 01

  No, they're thinking, "No, let's go with the nice, get us out of the interior cabin," is what they're thinking.

• 1:18:51Speaker 00

  My son's thinking that, my daughter's thinking long-term, but anyway.

• 1:18:55Brian Preston?

  Well, it's funny you say that, is because I'll always remind people, you know, it doesn't matter if you're looking at Millionaire Next Door, you look at our own research from our clients, even Ramsey Solutions and their research, somehow it always comes up that those millionaires are usually first generation out of the, you know, they, they found it. But you know, the sad part of that stat is, and we've seen this too, is that typically the wealth disappears by the second generation 70% of the time, and then by that, that third generation, meaning the grandkids, it's 90%. So, we, hopefully, this scarcity that y'all have given your children, you know, lifestyle with the interior cabin and stuff, is going to pay dividends, and maybe they break that chain. But I will tell you, historically.

• 1:19:40Brian Preston?

  Your kids will have no trouble and your grandkids will have no trouble spending all this money. So you might as well take some time yourself, make some memories, get to see this stuff and enjoy it as best you possibly can. And that's why I added a Brian honorable mention homework.

• 1:19:56Speaker 01

  Okay.

• 1:19:57Brian Preston?

  Of forgive yourself. I want y'all to look at, I want you to get rid of that Eeyore hangover cloud from that real estate collapse and let it go. I mean, because it is, I don't know how many more Disney things I could put in there with let it go and everything else. But seriously, forgive yourself.

• 1:20:14Speaker 00

  Yeah.

• 1:20:14Brian Preston?

  Because y'all have done so well. And I don't want that one negative thing to define you on a career and a life of success. I mean, that is something to be celebrated and I'm super happy for y'all's abundance.

• 1:20:27Speaker 00

  It's one of the reasons we wanted to come on the show too, is to show people who do have problems when they're young, that you can overcome them. I mean, it did take work, but, and it still stings, it will, but you can, you can overcome things. Job losses are, you know.

• 1:20:40Speaker 01

  Changes in career.

• 1:20:41Speaker 00

  Stock markets, yeah.

• 1:20:42Speaker 01

  Moving all over the country.

• 1:20:43Speaker 00

  And that's the thing, we talked about how we daydreamed when we were first getting married. None of those things were on that list. Like, oh, we're going to change, yeah, complete career paths and go move three states away and all the things that we've done.

• 1:20:53Speaker 01

  And yet still, I bet the stories turned out even better than you thought it would.

• 1:20:56Speaker 00

  It has, yeah.

• 1:20:57Speaker 01

  Isn't that amazing?

• 1:20:58Brian Preston?

  That's why I'll close it out with this, is that I, and this is why I wrote an entire book full of mistakes that I've made. And you guys have been very transparent. Thank you for being willing to come on, share all of your success, but also be open about the things that keep you up at night. And I would encourage everybody out there to know, you don't have to be perfect. Nobody is perfect. And you can make lots of mistakes, but if you just get the basics. And that's one of the reasons I wrote Millionaire Mission. That's why we designed the Financial Order of Operations a little bit today. That small decision today will have huge results in the long term. So don't sleep on it. Make

• 1:21:38Brian Preston?

  it happen. You can build your abundance. But if somebody wants to sit down and be a part of making a millionaire, where can they go?

• 1:21:46Speaker 01

  If you would like to be a guest on Making Millionaire, you can go to moneyguy.com/apply. Or if you want to check out any of our free resources, go to moneyguy.com/resources. Guys, thank you so much for coming on the show.

• 1:21:58Speaker 00

  Thanks, appreciate it.

• 1:21:59Brian Preston?

  We have a blast creating this type of content. I'm your host, Brian Preston, with Mr. Bo Hanson. Money Guy team, out.

• 1:22:08Speaker 01

  Making a Millionaire is hosted by Brian Preston and Beau Hanson. Brian and Beau 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.