VanLife Millionaires Are Leaving MILLIONS On The Table | Making a Millionaire

Robert and Keri have a…unique lifestyle. But has such a frugal lifestyle cost them huge opportunities? Let’s dive in, and find out. 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

  Robert and Kerry have a unique lifestyle.

• 0:02Speaker 01

  You guys were able to retire at age 54. That means you must have made every single financial decision correctly.

• 0:09Speaker 00

  But has such a frugal lifestyle cost them huge opportunities?

• 0:12Brian Preston?

  So, but do you consider it still cheap still? Or do you think you're?

• 0:15Speaker 01

  Oh, I'm still cheap. I mean, we still.

• 0:19Speaker 00

  Let's dive in and find out.

• 0:26Brian Preston?

  Welcome to Making a Millionaire, where we help our guests discover their great, big, beautiful tomorrow. I'm your host, Brian Preston, joined by Mr. Bo Hanson.

• 0:35Speaker 00

  That's right. We are so excited that we can help walk you through the stories of millionaires and millionaires in the making. And today is no different, Brian. We are right now sitting down with Robert and Kerry. How are you guys doing today?

• 0:48Speaker 01

  We're doing great.

• 0:49Speaker 00

  Man, I am so excited to talk with you guys because you are a little bit different. A lot of times we sit down and talk with folks who are building towards financial independence. And they're trying to get there and they're trying to get to the top of the hill. And you guys have done it. You guys are now on the other side of the equation, getting to live in your financial abundance. And I'm excited to dive in. So walk us through, what's your story? Who are you guys? Where are you from? What'd you do? How'd you end up here in studio with us today?

• 1:19Speaker 01

  Well, we both are, we're, we graduated college. We grew up in middle-class families. Maybe mine was a little lower class, lower, lower middle-class than hers. We were both, I think, primarily the first to graduate college. We were blessed to not have, have college debt. We, we both did well in high school and had, we, you know, had our scholarships and things to be able to, to fund a lot of that. So we were set on a good footing to come out of that. We both. We both worked for a living, worked hard in, in high school and then as well as in college and then, and then afterwards. And then ever since then, we've, we've tried to start off

• 2:03Speaker 01

  our marriage with the, the basic premise of living well below our means.

• 2:06Brian Preston?

  Yeah, that's great.

• 2:07Speaker 01

  And so we, we pretty much lived like we were very poor. I think misers, if you want to call it that, financial misers for a little while. So that, that basically set us on a good trajectory. And then ever since then, we, we were blessed to, to, to make more money. We were never, never really rich in terms of income. I was just an entry level IT manager at the, at the greatest, never, never anything beyond that. But we, we lived below our means and, and saved and, and then ultimately we were able to retire at age 54. So we have two kids. They're both in their, their late twenties. They both have advanced degrees

• 2:50Speaker 01

  and are doing really well. And, and on, on their way as well.

• 2:55Brian Preston?

  I, I think you're underselling yourself on your success and the fact that that discipline muscle obviously was very strong, worked incredibly well because we'll, we'll share in a minute how successful you guys are. But I loved how you talked about you essentially small incremental decisions, that discipline stacked on top with enough time really created some amazing things. Carrie, did you, did you want to add anything to this journey? Cause y'all have also been some adventure seekers too.

• 3:23Speaker 03

  We have. I was just gonna say, and I, I did not work for a lot of years. We homeschooled both of our kids all the way through high school. But when we got married, we knew that I probably wanted to stay home with the kids. So we lived off just one income.

• 3:35Brian Preston?

  That's incredible.

• 3:36Speaker 03

  Whatever I may just went to the savings account. But yeah, since we've retired, we hiked 600 miles of the Appalachian Trail and then

• 3:43Brian Preston?

  That's awesome.

• 3:44Speaker 03

  Bought an RV van and we've lived in it for two and a half years. Um, full time and then just recently bought a house.

• 3:51Speaker 00

  That's amazing. So, okay. So you guys were able to retire at age 54. That means you must have made every single financial decision correctly. Like you did everything right. Was that your experience coming through, making financial decisions?

• 4:05Speaker 01

  I usually tell people, I say, financial independence comes at maybe a million good decisions and then you try to shelter from the ones, the bad ones that you make.

• 4:14Speaker 00

  You just avoid the catastrophic ones, right?

• 4:16Speaker 01

  We all make bad decisions, you know, and I'm sure, talk about some of those. I think about, I think about like a Roth IRA was one of those that, you know, when Roths first came out, because we're older, we remember when they came out. And I remember telling her, because there was also a lot of talk back then about a federal sales tax, that there was talk about getting rid of the income tax and the federal sales tax. And I said, I don't know that I trust that they're going to honor a Roth correctly. Because if I did a Roth and paid taxes on it, and then all of a sudden they do a sales tax, am I going to get credit for it?

• 4:46Speaker 00

  You're doubled up, yeah.

• 4:47Speaker 01

  I'm going to get doubled up. So we never did Roth.

• 4:48Speaker 00

  Okay.

• 4:49Speaker 01

  So just as an example, like we never did Roth.

• 4:51Speaker 03

  Lack of trust of the government.

• 4:53Brian Preston?

  I cannot help but notice, you're from Atlanta, or from the Georgia area, and you talked about the fare tax. We're both from Georgia. That is the John Linder Neil Bortz. You obviously listen to talk radio. They got you scared and you ended up not doing the Roth IRA. I think Clark Howard would be very disappointed in that. But it's, but I still, I couldn't help but notice those, when you started talking about those things, I was like, that's an Atlanta influence going on right there.

• 5:19Speaker 01

  So I, I just remember our first year, when we had a, we were doing okay. I, I did a pretty, I had an interesting job in college, um, that set us, we had at least some savings. And then, but we, and then I had a decent job coming out of college. And we lived like we were dirt poor. We, we drove our 12, 15 year old cars that the paint was peeling off. Um, we went out to eat once, so, once a month. And it was usually like Wendy's. Like, it was like a hap, not a Happy Meal, a value meal.

• 5:48Speaker 00

  A value meal.

• 5:49Speaker 01

  A value meal at Wendy's. Like, can we keep it under 10 bucks once a month to go out to eat? And that was our big, you know, thing. And I remember we were at church and they had a marriage retreat. And we went on this marriage retreat and I realized on the bus going on the marriage retreat, I said, we never paid for it. And the church thought we were so poor.

• 6:07Speaker 00

  Okay, they sponsored you.

• 6:09Speaker 01

  We got a, we got a scholarship. And I mean, to be honest, we probably had like thirty or forty thousand dollars in the checking account at that point.

• 6:15Speaker 00

  And just never lived like it.

• 6:16Speaker 01

  Because we lived that.

• 6:18Speaker 00

  Literally the millionaires next door. I mean, that's literally what you're defining.

• 6:21Speaker 01

  And I remember just like begging our pastor, I'm like, we can afford to pay, you know, for the tuition.

• 6:26Brian Preston?

  But I do have to ask, because these things, you guys, have y'all transitioned? Because I understand some of those early discipline, good decisions that might seem extreme to your peers and relatives are what were those small decisions that led to big results down the road. But did you have a transition at any point in time where y'all actually started leaning more into the experiences and things like that?

• 6:47Speaker 01

  Well, I would say, I mean, you, you know, those better than me. Probably, we had a lot of good experiences and we've been able to travel and do cruises even.

• 6:55Speaker 00

  So not just in your retired state, but even while you're working, while you're raising kids.

• 6:59Speaker 03

  Right. We were ready to take the kids to Europe a couple of times. And we've done a lot of, done a lot of great things.

• 7:04Speaker 01

  That's awesome.

• 7:05Brian Preston?

  So but do you consider yourself cheap still? Or do you think you're?

• 7:08Speaker 01

  Oh, I'm still cheap. I mean, we still.

• 7:12Speaker 00

  Oh, yeah, yeah, yeah.

• 7:13Speaker 01

  We still book, we still book inside guaranteed cabins on a cruise ship and hope to get upgraded. We still, we don't, we don't buy the drink package. We don't, you know, we won't buy a soft drink on, on the cruise ship. I mean, it's like, if we buy one, that's like, that's a big deal. So, so, but we'd much rather do a lot of experiences. I mean, at lower cost than, than one big splurge.

• 7:35Brian Preston?

  Your basic life essentially by doing these things. And just to give you guys credit, we pay for all of our guests to have nice hotel rooms. And you guys, you brought the RV up.

• 7:46Speaker 00

  Our house is on wheels. We're gonna be just fine.

• 7:49Brian Preston?

  Is that out? Thank you. Or was that out of you? Just you're more comfortable because you, you got everything set up the way you want it?

• 7:57Speaker 01

  Well, it was, we didn't know it was pretty cool this time because of the weather, but it was when we're doing this. But no, we enjoy it. And then we also, I'm just always a cheapskate.

• 8:07Speaker 00

  I love it. I love it. Because it sounds like you are, but you're still able to enjoy life and that sort of thing. So I'm curious now. So again, you're in financial independence, right? You're in retirement, you're doing the things that you want to be doing. What are some of your concerns now? Like, what are the things that, obviously, I imagine while you're working, you're so worried, are we going to have enough? Are we going to be able to retire? Are we going to be able to get our kids through college and out of the house? But now, it's a different set of are we's. And so what are the are we's you have now? What are the things that you guys think about when it relates to like, financial goals or concerns?

• 8:41Speaker 03

  I mean, I think you're always thinking, is that the right amount of money? How much can we spend each year? Because you don't know how long, you know, you need this money to last, or how much you're going to need in future years. And so it's a, it's always a little bit of an equation to try to figure out what the right answer is.

• 8:59Speaker 00

  How have you guys been answering that? Like, how do you answer the question? Or how have you answered the question? Do we have enough? And how much can we spend?

• 9:07Speaker 01

  We don't, we don't think of it as how much can we spend? I mean, to be honest, that's never, we don't do like, oh, if I take 4% of my net assets, I could, then I'll just go spend that amount. It's like, what is the life, lifestyle that we're trying to live? And then, and then how does that really fit with this? I will say, related to that, one of the questions that we have, that's a complicated question. I don't know how to say it really well, but it's, we use the healthcare marketplace. So, which is so dependent upon your income.

• 9:38Speaker 00

  Yeah.

• 9:39Speaker 01

  And your income is so difficult to predict. Like, you know, with how you, what capital gains are, and dividends and things like that. It's really like, you're just sort of guessing at your income. And it's such a huge variance on that, about the choice that you make about healthcare. Because if it, if all of a sudden, we have really higher income, then a different choice would probably have been a better choice than using the marketplace. So, you don't want to let it wag the dog too much, but that is definitely one of the things every year when we

• 10:06Speaker 00

  To our taxes. We're like, I don't know how much money did we make last year?

• 10:09Speaker 03

  I mean, part of it is, we just know you're going to pay taxes. So if you do this, you'll pay taxes on this money. If you do the other thing, you'll pay taxes on the other money. And you just have to be okay with that.

• 10:20Speaker 00

  Okay, great.

• 10:21Speaker 01

  We're also not, we strive to not be anxious about things like it. And it just, I mean, part of that is being blessed.

• 10:29Speaker 00

  Sure. Yeah, absolutely.

• 10:30Speaker 01

  It's a little bit easy to not, not be anxious, you know, when, when the van needs a, you know, because it's a Mercedes Sprinter, right? So anytime you go to get work done, it's always $2,000.

• 10:40Speaker 00

  It's always Mercedes.

• 10:40Speaker 01

  It doesn't matter. It's just like, I'll just give you 1,800 just to start, you know, it doesn't. So, but you try not to be anxious about that. And, you know, part of that is the blessing of, of having some resources, right?

• 10:51Brian Preston?

  Um, we'll, we'll get into it in greater details, but we did notice, even when we were looking at your investments. For somebody who's now living off of your resources and assets, you're still equity heavy. Is that something that, how did you come to, because have you always? I mean, it's fine, you know, there's this whole life change. When you're younger, you want to be aggressive. But usually as you start living off of the assets, you dial it down a little bit. But when we looked at your stuff, y'all were pretty lean on cash. Now there's some lifestyle things that happened recently. That's more of a timing thing. But I did notice on the asset allocation, very, very heavy on, on equity.

• 11:26Speaker 00

  How would you describe your portfolio? Is it an aggressive portfolio? Is it a conservative portfolio?

• 11:30Speaker 01

  I would say it's aggressive. Um, here's, I think, a few things about it. One is, we have, we, we, it's always a struggle about how much you're going to spend in a year. It's one of those things. I remember asking people and it's hard to get people to be, because people don't want to be, they don't want to be perceived as prideful. And it's always personal, you know, personal finances is personal. But, but we were just trying to figure that out because it's hard to really just budget from like working to retirement. And what is your lifestyle going to be? What, you know, what choices are you going to make? So we've basically figured out that so far, we've been spending about $80,000 a year.

• 12:07Brian Preston?

  Okay.

• 12:08Speaker 01

  In retirement and that's just total. That's everything. That's, that's healthcare, you know, giving, you know, everything that we travel, all that kind of stuff.

• 12:18Speaker 01

  And that really helped us a lot to have that idea. Now, we have had some lifestyle changes recently. I'll go ahead and share that we've had our second grandchild.

• 12:26Speaker 00

  Oh, congratulations.

• 12:27Speaker 01

  And I think the second grandchild is sort of, I say it's a gravitational pull that says, maybe we're not just going to live in the van full time and be away too much to miss too many of those opportunities. So, so we did make the, the choice to, to buy a house. So we've, we had, we had no car. All we had was the van. We had no, just to be clear, we had no house. We sold our house in 2022.

• 12:50Speaker 00

  Literally living out of a van and retiring.

• 12:51Speaker 01

  I mean, when, I mean, the day that we handed our keys to the new owner of our house, and it was a fairly large, like 10 acre house in Gwinnett County in Georgia.

• 13:01Brian Preston?

  Well, it was a seven figure transaction, right?

• 13:03Speaker 01

  Yeah, it was a seven figure transaction. And we owned it outright. So, um, so we, so we handed those keys over and that day we got on the, we went to the Appalachian Trail to get on. So, I mean, it was like the storage building was full.

• 13:14Speaker 00

  That's so awesome.

• 13:15Speaker 03

  That's a little crazy.

• 13:18Speaker 01

  And at that point, we had already ordered our van. It was in the height of like when RVing was really crazy. So we paid top dollar pretty much for the van and, um, but it, and there was a backlog on it. So the van was delivered in June. So we left in March and went out on the trail in June and then got off the trail in June when the RV was ready and then just hit the trail in the RV. So we've been doing that ever since, living in the van. And then in October of 2024, we, um, we bought a house and another car, just so we have another car. And so it's been a, um, it's been a journey. So, so now we're trying to figure out what our, what our expense model is really going to look like.

• 13:59Speaker 00

  Because now you have a mortgage again and there's some stuff and, and carry costs that maybe weren't existing previously, at least in the early stages of retirement.

• 14:06Speaker 01

  Right. So we're trying to reset that. Obviously, we, we could just pay cash for the, the house, but we, we just decided not to because I mean, we're, we're doing okay with the investments. They're, they're doing okay. The, the interest rate's not great. We'll probably refinance if we decide to keep it.

• 14:22Brian Preston?

  It's right under six, like five, 5.8 somewhere around there.

• 14:26Speaker 01

  And we put 25% down. So we were carrying a good amount of cash, especially when interest rates, when

• 14:31Speaker 00

  Cash management five plus percent.

• 14:33Speaker 01

  Yeah, it was paying really nice. It wasn't too bad. So, so we had that, we had, we had basically three years of expenses in cash.

• 14:42Speaker 00

  Right.

• 14:43Speaker 01

  So, you know, when you say it's an aggressive portfolio, it's like, yeah, but I'm carrying three years of expenses in cash.

• 14:48Speaker 00

  Were.

• 14:49Speaker 01

  Were.

• 14:49Speaker 00

  Were.

• 14:50Speaker 01

  Right.

• 14:52Brian Preston?

  With the were.

• 14:53Speaker 01

  Yeah. Yeah. So now, well, that's why we're, we're, we're currently drawing down, I mean, I'll share some details. We're drawing down $9,000 from our post tax investments.

• 15:02Speaker 00

  Great.

• 15:03Speaker 01

  And we're trying to reset that to see if that'll replenish some a little bit. We're, we're honestly not sure because we had nothing like, I mean, we, we were shocked when we emptied our storage unit, which was a 10 by 20 storage unit, not very large. And it was mostly just furniture.

• 15:18Speaker 00

  Yeah.

• 15:18Speaker 01

  And like a piano and stuff like that. And it's like, oh, we don't even, I don't even have a rake. I mean, like, you know, it's like, all of a sudden you're resetting going, oh, we don't have, so we're, we're having to restock some of that to live in a house.

• 15:30Speaker 00

  I love that what you've said is, okay, the way that we got to where we are is by making just small decisions. But obviously for folks out there listening, they're hearing, hey, these people were able to sell their house and live out of a van and they must have, they must have a pretty healthy financial situation. I thought it'd be nice because you guys were kind enough to share a net worth statement. Let's kind of look at sort of where you guys are presently. So when we look at your current net worth, you've already alluded this, you beat us to the punch. You've only got about $54,000 in cash, but it's not that there's a strategy to get that number to a targeted goal. And you said that your burn rate is about $80,000 a year. So if our goal is to have somewhere between 18 to 24 months of expenses, I imagine your cash goal is going

• 16:13Speaker 00

  to be somewhere around $120,000 to $160,000. Is that what you're thinking?

• 16:19Speaker 01

  My guess is it'll be a little higher than that.

• 16:21Speaker 00

  Okay.

• 16:21Speaker 01

  Well, we're also not, we think our burn rate is going to be a little higher.

• 16:24Speaker 00

  Okay.

• 16:24Speaker 01

  With the house and.

• 16:25Speaker 00

  What do you think the burn rate will be?

• 16:26Speaker 01

  I don't know. I think it's going to be a hundred.

• 16:28Speaker 00

  Okay.

• 16:29Speaker 01

  I mean, I think it'll be a hundred if I had to guess.

• 16:31Brian Preston?

  It, but by the way, that's still not really going to stress your level of assets. I mean, so you didn't hear us like give any anxiety ourselves.

• 16:39Speaker 01

  Not at all.

• 16:39Brian Preston?

  It was actually, that's very within reasonable.

• 16:41Speaker 00

  And then when we walk through the investment portfolio, you have a really, you already mentioned you don't have a ton of Roth assets because you didn't do the Roth. We'll talk about that in a moment. But in terms of the other two buckets in the three buckets, it's pretty, it's pretty interesting. You have a lot of after tax assets split between two joint accounts, about a million, $50,000 there. Why the two joint accounts? Is there a reason that you have two separate after tax accounts?

• 17:06Speaker 01

  I had a Vanguard account for a really long time. Like one of my bad decisions was I used a, a, a very large financial management company. I think this was actually Pride.

• 17:16Speaker 00

  Okay.

• 17:17Speaker 01

  When I was in my thirties and I thought I was becoming like a big money, big deal. So I went to a large brokerage house and I said, why don't you manage some of my money?

• 17:26Speaker 00

  Okay.

• 17:26Speaker 01

  And they really did a poor job. It didn't last long.

• 17:29Speaker 00

  Okay.

• 17:30Speaker 01

  But, but the funny thing is I know my personality, my personality is I'm pretty good at buying stocks.

• 17:36Speaker 00

  Okay.

• 17:36Speaker 01

  I'm horrible at selling stocks.

• 17:38Speaker 00

  Like individual stocks?

• 17:39Speaker 01

  Like individual stocks.

• 17:40Speaker 00

  Well, that's the hard part. You gotta get it right twice.

• 17:42Speaker 01

  I'm horrible at it. And I, I, because I just question it and I doubt and I, I, I second guess after the fact. So, so the funny thing is that when they, when we, when we dumped those guys, we just transferred all of their assets into Merrill Lynch. I'm sorry, not Merrill Lynch, into Vanguard.

• 17:59Speaker 00

  Okay.

• 17:59Speaker 01

  And one of those accounts is of my Vanguard account.

• 18:02Speaker 00

  Got it. Okay.

• 18:02Speaker 01

  So we just, and honestly, I've, the only time I've ever sold those holdings that I've held for 20 years is when I'm donating like a cash, cash transaction.

• 18:13Speaker 00

  Yeah.

• 18:13Speaker 01

  So I take the things with the biggest capital gains and I do, do that for a donation. Or the one time we bought a, we bought the car.

• 18:21Brian Preston?

  So you're donating it directly to the charity, the shares. That's, that's great.

• 18:24Speaker 01

  So that's what we've been using that account for. It's been, so the holdings in that one are really not great sometimes, but I've never done anything with it.

• 18:32Speaker 00

  But so this is a big chunk of your assets. We're talking about if your total investable portfolio. Was about 3.8 million. We're talking about a million bucks that's in these accounts that are

• 18:41Speaker 01

  No brokerage number two.

• 18:42Speaker 00

  Oh, they're small. Okay.

• 18:43Speaker 01

  Brokerage number two is is is managed.

• 18:47Speaker 00

  Oh, okay, okay.

• 18:48Speaker 01

  Sorry, it's the brokerage number one, the 51,000.

• 18:50Speaker 00

  I was like, oh, my goodness, you have a million dollars.

• 18:52Speaker 01

  No, no, no, no, no. The brokerage number two is pretty well managed and actively managed.

• 18:57Speaker 00

  Wonderful. Okay. Is that something you're doing or do you have?

• 19:00Speaker 01

  We have, we have somebody else doing it.

• 19:03Speaker 00

  Okay.

• 19:04Speaker 01

  And primarily, it's because we want to enjoy life.

• 19:07Speaker 00

  Yeah.

• 19:07Speaker 01

  And I know how I am. I know I would sit around watching Fox Business or CNBC and I would just get consumed with.

• 19:15Speaker 00

  Analyzing what to do.

• 19:16Speaker 01

  And I just, we just don't want to do it.

• 19:17Speaker 00

  Sure.

• 19:18Speaker 01

  It's, it is, we're, I mean, as, you know, it's not that complex, but it just allows us.

• 19:23Speaker 00

  You're paying more for peace of mind than for the strategy of it, probably.

• 19:28Speaker 01

  And it's, yeah, and it just helps us to enjoy life.

• 19:30Brian Preston?

  I know the curse. I want our audience to hear it because you've, you just said, I'm good at picking stocks and I want to echo that because I think people who actually have a record of picking stocks, it still can be a curse. There's two reasons it really turns into a curse is because even if you choose the perfect stock, you typically, people will sell it after it makes three to four times what you initially invested because you're like, man, I've made 300%, 400%. You've owned it for three or four years, five years, you sell it. Well, then it becomes the next Nvidia or something like that. And you, you watch it go up 10 fold and then you're like, I should have never sold it at three or four. Well, the other side of it is, is

• 20:11Brian Preston?

  that if you don't sell it, because even when you're making money, when that stock goes down 5%, 6%, even though it might only be less than 1% of your total net worth, you find that 100% of your happiness for the day has been wrapped up into the emotional side of that. And that's one of the things.

• 20:29Speaker 00

  Is that true? Is that an accuracy?

• 20:31Brian Preston?

  That's why it is a curse. And I tell people, there's nothing wrong with vacation money to do individual stocks. It can be very fun. It's a great hobby. But I, we love index funds. You know, we love it because I think it takes the emotional side out of things and you're just buying, you're counting on this ever-expanding economy. The law of accelerating returns and kind of benefiting.

• 20:53Speaker 01

  Can I tell you why, why we aren't doing index funds? And then you can tell us why we're wrong. It's fine. I got a thick skin. Part of it, it's that healthcare marketplace thing. So because if I do S and P 500 index funds and I, okay, let me just say, I'm not going to pull my money out right before they do distributions, right? I'm not going to consume my life with reading when they're doing it and pulling all of my money out so that I don't get capital gains distributions. Then all of a sudden I get a big capital gains hit because these are big numbers and my income, my quote unquote adjusted gross income has drastically changed. And now my healthcare, I got to pay another 15 grand besides taxes. I got to pay another 15 or, you know, 20 grand in, in, in healthcare just because the mutual fund cut a distribution,

• 21:37Speaker 01

  right? So that's the reason that, that worries me. And I don't know if that's right.

• 21:41Brian Preston?

  You, you could, you could counter that several ways. Maybe, maybe you look at ETFs, which would allow you then just to get the dividend because you're still getting dividend income. We look at your, your projected, these statements have the projected incomes on there. That's one way to be kind of more tax efficient. It's so you can afford index funds, even if it's, even if it's the mutual fund variety, they're still more tax efficient than managed mutual funds because it's the turnover, that manager coming in there and picking the winners and losers that typically is causing those, those big distributions, those capital gain year end distributions. The mutual funds will have them because they change and even the ETFs to some degree because they change the portfolio, you know, the,

• 22:23Brian Preston?

  the Kodaks of the world disappear off of the, the S and P and then they add the, the Teslas and whatever else is the, the hot stock that joins the S and P 500. So I don't know that I think that that necessarily is as inefficient because that's one of the reasons we love index funds is they're very tax efficient.

• 22:41Speaker 01

  And then the other thing that you have the ability to do, and it looks like judging from your tax records, you probably were doing this is when there are significant downturns like 2022.

• 22:49Speaker 00

  Or like fourth quarter of 2018 or the middle of, you can do a bunch of loss harvesting where you can go out and harvest those losses. And then those losses can be used to offset future capital distributions or capital transactions. So there are ways that you can tax manage it without having that uh oh from the, you know, from the portfolio distribution.

• 23:07Speaker 01

  It is one of the things Kerry has mentioned, and we tried to look at this. It's, it seems like the tax man is pretty good about making sure that they get.

• 23:13Brian Preston?

  Oh, yeah. No, the system is set up to get taxes.

• 23:16Speaker 01

  You know, and, and we, we, we really try not to completely get wagged around. I think sometimes people get so consumed with saving, you know, not a penny, but a quarter, you know, in taxes, that they're spending an awful lot of effort to try to do that. So we, we try not to do that too much.

• 23:32Speaker 00

  Sure.

• 23:32Speaker 01

  But, um, but maybe there's, it does sneak in.

• 23:34Speaker 00

  You don't want to get into a situation where you lose control of your tax circumstance, right? Like you'd love to have an idea in there where you could control what you're paying in taxes and not just be.

• 23:45Speaker 00

  Surprise. Oh, so interesting, Brian.

• 23:47Brian Preston?

  I definitely want to get into taxes, but I do want to, there's one other behavioral thing that you've said though, that I want before we get into the tax. Cause I love taxes, by the way, so I'm not going to delay us too much.

• 23:55Speaker 00

  You love tax planning.

• 23:56Brian Preston?

  I do.

• 23:57Speaker 00

  What you mean is I love tax planning.

• 23:58Brian Preston?

  I've been in the weeds a little bit with it. But you also said that you got this house proceeds, seven figures. And then it just got washed into the market all of a sudden. And then we all know 20, in hindsight, 2022, you know, was not a great year to just throw seven figures into the market. And, but to their defense, your, your advisor, eight out of 10 years, markets make money. So, I mean, if you're going off the statistical norm, it's okay. But we typically, I worry, always worry about my retirees is that you have, cause it does hit different when the market goes down 15, 20% when you're retired versus when you're working, because when you're working, you're just like, well, I'll make a little bit more money. It'll recover. It'll be okay.

• 24:41Brian Preston?

  You, you said something that I thought was very powerful. You said, I didn't even tell Kerry what was going on with, cause I just knew it would, it would cause, these are the behavioral components. So you probably did have some stress, even though it's not even part of your personality to a degree.

• 24:56Speaker 01

  Not, not very much. To be honest, not really very much. I mean, because I mean, we pulled like $300,000 of the proceeds out and I had that sitting in a Vanguard cash account. So I'm sitting there going, I mean, luck, if I hadn't done that, I would have gone, oh man, this is not a, not a good time.

• 25:12Brian Preston?

  Then your advisor probably did it exactly right, knowing your personality profile and that. It's just that for a lot of clients that I see that maybe don't handle that emotional stuff as well. We typically, just like right now, you're going through and your dollar cost averaging out to replenish your cash. That's an aggressive stance, which does tie into just going lump some in, whereas maybe somebody who's a little more anxiety prone, we would have dollar cost averaged those housing proceeds probably over 10 months into, into the market, just to cut the corner or edge off of any type of volatility that might be happening in the short term.

• 25:46Speaker 01

  I assumed my advisor was actually going to do that, but because I didn't tell him, he said, no.

• 25:52Speaker 01

  Somebody says that time in the market or whatever. It's like, it's a good thing. It's like, well, let's just get in the market. So they pretty much over three days, which ultimately it's all okay now.

• 26:01Brian Preston?

  Sure. I mean, 2023 is gonna be great. 2024 is great. It's amazing what a little bit of time can do to save things.

• 26:10Speaker 00

  So. And so right now, as part of your strategy, you're obviously living off of these assets. You're pulling money out on a monthly basis to be able to satisfy that 80 to 100,000 dollar burn rate. But in addition to that, you're selling to raise cash. Is my, am I, because you're also doing the $9,000 a month to build up your cash. Am I understanding that correctly?

• 26:27Speaker 01

  I mean, that's all that we're, that's all that, that those investment monies are doing. So yeah, we're, the rest of it is just sitting in, I mean, we're using that brokerage one account.

• 26:37Speaker 00

  Cause the goal, the goal is to get that 50,000 up to some higher number, 150, 200. You're just doing that through a monthly distribution strategy, right?

• 26:45Speaker 01

  And we're not in that big of a hurry to do that. Maybe we should be in a little bit more of a hurry.

• 26:50Speaker 00

  Well, it just seems like having a nice, I mean, right now, market has done incredibly well and it seems like having an emergency fund in place would be valuable. Cause generally when bad things happen, they kind of happen in, in all at once, right? Market goes down and the. The Sprinter van breaks down or you have to replace the HVAC or whatever the thing may be.

• 27:11Brian Preston?

  Real estate goes bad, unemployment, inflation, all these things happen at the same time.

• 27:15Speaker 00

  And so having that emergency fund there is just one of those things. Again, if you're looking for peace of mind, things that don't keep you up, I would begin to think if my goal is to go from 50,000 to 150, 200,000, is that something I should do more quickly than I'm doing right now?

• 27:30Brian Preston?

  I also want, one thing we couldn't tell from planning prep is because you sent us a tax transcript, but it doesn't really show carry forwards or other things. Last year you took a capital loss carry for, you took the $3,000 loss. So I know sitting in the background somewhere, you have some capital loss carry forwards. It might allow you to take and fill up your, your cash reserves today while the stock market's at all time highs with zero tax impact. It's something to consider just because we don't want, I think you're wired in an incredibly healthy way where you don't stress out, but I'd like to make sure that that stays that way. Cause if the market went down 15, 20% and you

• 28:10Brian Preston?

  had to, Apple car turnover, figure out how we're going to find the $8,000 a month or whatever you need, seven to 8,000. I don't want you making those desperate decisions for, for nothing. Cause now we're getting into immaterial choices that could have material impacts in the long term if you're not careful.

• 28:30Speaker 00

  And so as we're looking at your net worth statement, obviously we have the after tax accounts. And then Robert, you have two different pre-tax accounts. You have your rollover IRA and then you have your 401k. Any, any reason you haven't consolidated those two?

• 28:43Speaker 01

  We actually have now.

• 28:44Speaker 00

  Okay, wonderful. So those are now.

• 28:45Speaker 01

  We did it just recently.

• 28:46Speaker 00

  All in one. So you have a big, were there any Roth dollars in that 401k? Okay. So it's all pre-tax money now. And then Carrie, you have a traditional IRA, all pre-tax. Then you have an inherited IRA. What's going on with that inherited IRA? Is that something you're having to take required distributions from presently? Okay. So it's money that's drawing out and did you inherit that at the time in which you're going to have 10 years to where you have to?

• 29:10Speaker 03

  No, it was before that.

• 29:11Speaker 00

  It was before that. So you're not going to have to, you're not going to have to distribute that all inside of the 10 year window?

• 29:16Speaker 03

  Right.

• 29:16Speaker 00

  Okay. Wonderful.

• 29:17Speaker 01

  And so far, all we've been doing is whatever, I mean, I think it's fidelity, whenever, whatever fidelity tells us is the required R and D, we just take that currently. But there's a, we always have that in our hip pocket that we could also go faster with that too.

• 29:32Speaker 00

  Money in there that could be tapped into. And then on the liability side, you obviously said you borrowed money for the RV. So you still owe about a hundred, a little under a hundred and thirty thousand dollars on that. And now you have a mortgage, right? So you, while you are financially independent, it is unique that you do have some debt on the books. But I say this all the time and Brian hates it when I say this, being debt free is amazing, but also having the ability to be debt free is amazing. And I would argue that with a total net worth of four million dollars and an investable net worth of like 3.8, you guys have the ability to be debt free. You've just not chosen to go that route just yet. So you guys are in a, a really, really healthy financial situation, right?

• 30:12Speaker 00

  Even living off of the 80 to a hundred thousand dollars a year, what I'm not, I don't, to me, that doesn't scream a withdrawal rate. That's like super concerning. It certainly seems like the assets.

• 30:22Brian Preston?

  You guys are less than 3%. Not that we use safe withdrawal rates to drive, but it is a great indicator of how conservative somebody's retirement is. So y'all are in a solid position. That's why when I find out you're so aggressive, like, you know, Robert gets a little grace because I mean, he's done such a disciplined job of building up assets that it's okay that he wants to be a cowboy on this part.

• 30:44Speaker 01

  Well, I, I mean, I think one of the things that made so much of this possible was when our kids were in college, like we, we homeschooled all the way through and then Carrie started tutoring at the time when tuition started to be due. And, and she was a private tutor all through their, their college. And she made enough money to basically just pay for all of college.

• 31:05Speaker 00

  Oh, that's great.

• 31:06Speaker 01

  Both of our med, med school, I mean, like a lot of things. So, so it not only allowed them to be set up really well. It allowed us to continue.

• 31:15Speaker 00

  Satisfy that cost.

• 31:16Speaker 01

  Right. And then, so, so then I, we took all of our stuff about, about the same time the house is getting paid off. And then, so we're just taking all of my money and it's just going into HSA and, and maxing out everything that we can max out.

• 31:28Brian Preston?

  Hearing you give Carrie that compliment, I, I will tell you, one of the things I enjoyed when I was preparing for, for our, our meeting today is you provided us, we had this spread. Sheet of net worth over time. And it was basically from 2018 to now. And I loved on the far right column, y'all had made personal notes. And I felt like I was going on this journey with you guys because there was the tuition payments were in there. So also you have your hard work. I loved when you obviously were helping out, like there was a car purchase to help out the kids or charitable contributions to the church. And it was fun. And I loved that I got to see that because I imagine as, as you guys, when you get to give compliments each other, and you get to look at your journey and see where your success is, doing a net worth

• 32:10Brian Preston?

  statement every year was, was pretty valuable for you guys. Because you were doing, obviously, you've been doing this since, at least from what I could see, 2018. Is this just an annual tradition for you guys?

• 32:19Speaker 01

  Yeah, we've been doing it actually for a longer time. I did something wrong and lost the file somewhere. I set a password on it or something because I was really worried about it being hidden. I did something and it just got lost. So it's been actually for a long time. You know, we basically since maybe about age 30 or 35, we targeted a $3 million number. I like, you know, when you talk about knowing your number. It wasn't with incredible like detail. I think the stuff that you do is more, more detailed. But it was sort of like I was thinking of it as a what a withdrawal rate might be and, you know, kind of get what is the escape velocity or some phrase like that. So you get to a point where it's, it's making more money than you are, than, than, than your salary.

• 33:02Speaker 00

  Even when you're building.

• 33:03Speaker 01

  Because it gets to that point where it's like, okay, my, even a decent salary, I think, you know, at a point I'm making, I'm making in the high hundreds was probably about the top end of my salary, you know, and then you're like, oh, I'm making a lot more money out of investments at a point, right? So, but, but when we started getting close to that 3 million, you could see that trajectory. That's when you get really serious about, okay, we're, we're getting close. And then by the time we saw that we were getting close to that number, by the time, I think I gave a year's notice to retire, then we were already at like 3.5 at that point, you know, and then the market corrected a little bit. We were back to three, but, but it was.

• 33:39Brian Preston?

  But as you can see, it's, it's continued to grow.

• 33:41Speaker 01

  Right.

• 33:41Speaker 00

  And build. As you, as you guys have been retired now, have you seen the accounts continue to grow? Have you seen the portfolio? Get larger, which is, which is a wonderful place to be, right? Like if the assets keep growing, what that suggests to us is that you guys are no more at like the pass or fail, like, are we going to be okay? Are we going to be able to retire? It's more about optimizing. Are we making decisions now that are optimal from a financial planning standpoint? That's where, that's where we get really, really excited because when, you know, we love talking about in financial independence, if you have three distinct tax buckets, tax buckets, you get to pick and choose how you pay taxes and where you pay taxes from and what you trigger and you can do things like manipulate your income for ACA Marketplace resources

• 34:24Speaker 00

  or for Medicare surcharge things. What's really, really interesting about you guys is you have so much in pre-tax assets and you're not actually pulling off of those pre-tax assets yet. So what's going to happen is if you continue to spend down the after-tax brokerage account, those pre-tax assets are going to grow and grow and grow and grow, which is a wonderful problem to have. But you know what happens at some point with pre-tax assets? The government says, hey, okay, now you gotta start pulling it out.

• 34:53Brian Preston?

  Well, it's back to El's point that you said, hey, the government seems to be pretty good at figuring out how they can get the taxes from you. They, they've designed the system to essentially create a tax bomb for those required minimum distributions.

• 35:05Speaker 00

  But they keep extending the age, right? They do, they do. So it's, it's a little bit lower risk. One of the things that we wanted to model out for you guys to look is that, okay, if we think about every year that remains for the rest of your life and we think about every year and we just assumed age 95, what does each year look like? We have an illustration showing a little bit of a tax projection of your income. Now, we did not know about your inherited IRA, so right there at age 60, that's when we had assumed that your IRA, your IRA would balloon, right? But what you can see is that every single year, if you're living on about $80,000 and this is all in present value dollars, you're going to be pretty consistent in terms of the taxable income you show every single year.

• 35:46Speaker 00

  But then once you get to age 75 and you have to start pulling those requirement distributions, instead of getting to live in the 12% tax bracket that you guys are living in now. All of a sudden, now you have to jump into the 24% bracket, which eventually turns into 32% bracket, which eventually turns into 35% bracket.

• 36:06Brian Preston?

  I have a question, Robert. Do you think 12% is a low tax rate?

• 36:10Speaker 00

  Oh, absolutely.

• 36:10Brian Preston?

  Yeah. It's what, I mean, when you pay 12%, you're like, man, how is the government letting us get away with paying 12%? But do you think it's interesting that even though we've agreed that 12% is a low tax rate, that you're not maximizing that time? Now, we're going to go back to, you're going to say it's my insurance premiums.

• 36:27Speaker 00

  I got insurance premiums to think about.

• 36:29Speaker 01

  No, it's just because we have, we have enjoyed living life.

• 36:32Brian Preston?

  Yeah.

• 36:33Speaker 01

  Like, we're not, we're not spending a lot of time thinking about it. And maybe we should spend a little bit more time. I mean, that's fair. But to be honest, that's really what it's been. I mean, we've seen all 50 states. We've, you know, been, we've done a bunch of travel. You know, we do about three months of international travel every year. I mean, we do a lot, right? So it's

• 36:52Brian Preston?

  And this is what we want you to do.

• 36:53Speaker 01

  So we're enjoying that. But so, so it's not like we, because I actually thought about, I actually did some of that calculation about a month ago. And I said, what if things went well and we stayed the way we were? What is my RMD going to be at 75? And I was like, and I think it was 300,000 was the number. I kind of did a quick calculation.

• 37:10Speaker 00

  You can see that. I mean, obviously, at the end of this plan, age 95, in today's dollars, you guys would have about a little under $6 million, right? That, so that's a fantastic inheritance or, you know, assets that you would be able to pass on. But over the life cycle of you guys being retired, you would have paid about $3 million in taxes in present value dollars. When we look at this, what we see is an optimization opportunity that we think has a material impact. So there are some assumptions we made. We said, hey, if we were going to implement some plan and we're going to give you guys an idea of a strategy to think through, here are some assumptions that we walked through. We said, okay, let's assume that your living expenses stay right around 80,000. You could use 100,000. It's not, not going to change the numbers. Let's assume that tax laws stay the same.

• 37:54Speaker 00

  Because obviously, you know, there's a sunset that's supposed to happen. But let's just for simplicity, let's assume that they stay flat. Let's assume that your current assets and liabilities stay roughly the same. You pay down the debt on the schedule you're going to pay down the debt. Your assets grow, you don't get an Inheritance or anything like that. We're going to assume that you true up your emergency funds. We know that's going to happen in the following year. Let's assume inflation averages about 3%. Let's say your portfolio on average could make about 7.5% per year. We think that's pretty conservative, certainly for someone who is equity heavy as you are, but pretty conservative. We said, okay, what does that look like? And this is what we said, what if just in the years that you could maximize the 12% bracket? What if you began a Roth conversion strategy where you began converting some of those pre-tax dollars to Roth

• 38:39Speaker 00

  in those early years before you get to RMDs? And when we look at how that plays out, it's pretty wild. So again, all you can see is we're maxing out up to the top of the 12% bracket. Just by doing that, we're able to, at the end of your plan, instead of having the almost $6 million you ended up with, because of that tax savings of a lifetime, you actually end up with an ending portfolio of about $7.5 million, which is a million and a half dollars more than what you're currently on track for. And your cumulative taxes that you pay over your lifetime drop by about $600,000. So let me pause for a second and ask the question, is that meaningful? Is that valuable?

• 39:22Speaker 00

  Is that something that, oh, man, I'd like to have a million and a half more dollars and pay $600,000 less?

• 39:29Brian Preston?

  Yes.

• 39:29Speaker 00

  Yes, okay. All right. I just, I didn't know where you were going to go.

• 39:34Brian Preston?

  What I also love about it is that you think about the fact that it's just like you have an inherited IRA. And right now, I mean, it's, it's good because it's an asset. But you, you know, there's some, there's some accounting you have to do where you know you have to do these required distributions every year. There, you got to pay taxes on it. What about if you pass on Roth assets to the kids? Those, they get 10 years, 10 years to let them keep growing. Um, that, that's an incredible opportunity from an estate standpoint and legacy standpoint as well.

• 40:07Speaker 01

  There was definitely a plan to do some Roth. I mean, especially, I think there's, there's always in the back of our minds. Like, are we really good? Like, are we good?

• 40:15Speaker 00

  Sure.

• 40:16Speaker 01

  So before we started making structural changes, like, I mean, we have a tax advisor, I mean, an advisor and we, it's one of our main questions. It's like, okay, we're going to buy a house. It's going to be this much. We're going to put this much down.

• 40:26Speaker 00

  Can't we afford it?

• 40:26Speaker 01

  Are we good? Are we good? Like, that's one of the benefits of paying really smart people who live and breathe this stuff like you guys. To, to just look at you and go, yes.

• 40:36Speaker 00

  How, how were they answering that question? What exercise they walking through to give you some peace of mind around that?

• 40:41Speaker 03

  He said, if you weren't good, I would tell you.

• 40:44Speaker 00

  Okay, I love it. I love it.

• 40:45Speaker 03

  So that's just what we repeated to ourselves when we were buying the house.

• 40:48Speaker 01

  And in fact, he even said, in fact, there are people that I'm currently advising that I've said, you're not good. You can't keep doing that. If you keep doing that, I don't want to be your advisor. And that's good. We, fiduciary, we kind of want that. That's, you know, and I know you guys.

• 41:02Brian Preston?

  Well, I do want to point out though, on our chart though, is it's great that we got you below where the 35% tax rate starts. But wouldn't it be nice? Cause when I look at that, I'm still like, when I ask myself, and you even heard us say it on content. We always say, when you get, if I could get your taxes below 25%, that's great. That seems historically from a context of low, 25 to 30, it's kind of in that gray zone when people are deciding between Roth or traditional and their tax savings. Over 30 is a high tax rate. And then you even add Georgia tax rates and other things, even though they give some benefits to retirees. So we, but it's, it is interesting though, that we still have a chunk of that money and me and this microphone are going to have a fistfight in a minute.

• 41:46Brian Preston?

  But the chunk of that money over 32%, I'd love if we could even push that down a little bit. So we, we did run another scenario to even optimize a little bit more.

• 41:58Speaker 00

  Yeah. We said, what if in these early years, while we could, what if we even considered maxing out the 22% bracket? Not just the 12%, but going in the 22% bracket. What does that do? Well, what it does is while it does. Increase the tax bill that you would pay in these early years. It buys down that future tax rate that you would have. And this is assuming that tax rates stay flat. Obviously, if tax rates were to increase in the future for any reason, this would be more valuable. And you can see in this scenario by doing that. And all we did is we increased it up until what we had targeted for your RMD. For your required IRA to have to balloon. You can see that the end value is almost nine and a half million dollars.

• 42:42Speaker 00

  Now, we are almost three and a half million dollars more than the original plan that you had laid out. And we've cut the total cumulative taxes by about 1.3 million dollars. Now, here's the way, at least in our world, that we do financial planning. We sit down with clients and kind of go through it. We operate under the idea that, hey, this is the strategy. This is what we want to implement. But every single year, it becomes a year by year decision because of exactly what you said. So what we would do with a client is say, hey, we're proposing that you're going to convert $180,000 to Roth this year. Let's see if we do that and we carry out this plan and we run this through Monte Carlo simulation, looking at 1,000 different iterations of 1,000 different. Do we still have a high probability of success?

• 43:26Speaker 00

  And the next year, we do the same thing. And the next year, we do the same thing. So that even as you are making some of these structural changes, it's not like you begin down a path that you cannot deviate from. You begin down a path and then you test and retest. And you keep going and you test and retest. You keep going and you test and retest. And you think about if you, over the next 20 years, really, were able to convert all of the orange that you see on screen right there to Roth. Imagine the millions upon millions of dollars you end up having tax free later on in life. That that way, if you do want to do something like go buy another RV or buy the home or pay for the fill in the blank, you have tax free dollars that are unencumbered that you can then do that with.

• 44:10Speaker 00

  It just gives you guys maximum flexibility to do things on your terms, no matter what tax policy is going on at the time.

• 44:19Brian Preston?

  So what is it? Why did you drop? What's the reason at 63 that you dropped?

• 44:24Speaker 00

  So the reason we did that is we wanted to, is a little bit of a, of a, of a goal seek to get it below

• 44:31Brian Preston?

  Trying to keep it below 32%.

• 44:32Speaker 00

  So honestly, you could have, you could be even more aggressive and you could take this all the way out till 75. This is less prescriptive and more, we want you guys to be thinking about, hey, there's, these are strategies. It's just like you said, man, when the Roth came out, I didn't jump on it. And now, sitting here, I wish I would have. I love the fact that right now in retirement, you guys are enjoying your go-go years. You're doing it. You're loving it. You're doing it. What I don't want you to do is get to age 65, when Medicare starts, and now you have to worry about Irma premiums. And you think, man, I wish I would have converted when I was in my early 50s. I wish I would have converted in my mid 50s. If you can begin thinking through some of these things now, your future self will likely think the same way that yourself today would think that younger man, if he would have been funding Roth IRAs back then.

• 45:17Brian Preston?

  And it's, it's back to that whole mindset of small decisions today. It's because these, these wouldn't be heavy lifts currently, even just getting to the full 12%, maxing out that 12% is going to get you in a lot better place. And that's not even going to cost you much money.

• 45:32Speaker 00

  That's right.

• 45:32Brian Preston?

  So it's a small decision to really create big legacy results. And I, and I had this conversation yesterday with a client because we're, we're doing this with actual clients here at the firm. And they said, well, what happens like, because we just had an election, what happens if tax rates get extended or even maybe get lower? And I said, well, look, all the, all the things we convert today, it's still these good historic rates. If you tell me that they extend or even expand the, the into lower taxes, what do you think the stock market's going to do? And I was like, it's probably going to go up under the optimism of that more people are going to be able to do this. And I was like, so you're going to have this chunk of money that you just converted, that's going to be tax-free.

• 46:13Brian Preston?

  It's going to build incredible legacy for your kids to pass down. It, it, it's kind of a great benefit. And then I played at the other side, what if taxes, because we all know that the, the federal balance sheet is pretty big. It's heavy with a lot of liabilities. What if they decide they can't extend it? You're going to be very happy that you locked in those tax-free dollars when you could, before the clock and the buzzer rung, that now you have to pay even more taxes.

• 46:38Speaker 00

  And the idea that they can grow tax free for the rest of your lives, plus 10 years of your kids' lives. I mean, that's a huge-

• 46:45Brian Preston?

  It's a great legacy building thing.

• 46:47Speaker 01

  I think we probably are letting the healthcare concern. I mean, part of it is, we just have to make a decision, you know, because honestly, we're both fairly healthy. We don't have significant issues. So, but we just, you know, you have to make those decisions about your healthcare choices. It's just kind of a weird system that we have here. Because there are other options that we could do, like a, like a medical sharing account, right? So, we could do that, which is actually more costly, but it wouldn't really be more costly than if we tried to stay with the marketplace if we had a higher income, right?

• 47:20Speaker 00

  Or if you've got a higher income and you paid more, you weigh, okay, this is additional cost, but if at the end of the day, I end up with three and a half million dollars more, was it a justifiable cost based on what I have going on?

• 47:31Brian Preston?

  We all have to be careful. I always pick on people when they let that tax tell wag the entire dog. Because as much as I love tax planning, I don't want you trying to save just a little bit here and there and impacting your full decisions. Everybody has their own tells that they're worried about wagging. For you, I could tell immediately when you brought up the subsidy you're getting on the exchange, that's something you're really putting a lot of value to. But I do think you, I would encourage you to really look at the broad picture and see all the other things that it's also impacting. Because I don't want that to be the decision matrix that's keeping you from these great legacy building opportunities and long-term tax minimization strategies, too.

• 48:10Speaker 01

  The other side of it is also just the fact that I've got to pull funds out of the market in order to pay the tax bill, right? It's not like, I don't have any income, really, right? So, so then just thinking through the mechanics of all of that, you know, you're trying to rebuild your cash reserves, but now I also, I'm going to have a bigger cash hit. And it's, it's okay. It's just a consideration.

• 48:31Speaker 00

  It's another one of those reasons why I have, if you did, one of the things that I would think through is if I did have two to three years of living expenses in cash, sitting there, and I had that $200, $300 in cash, and I was going to have a $20,000 pickup on my income taxes because I did Thousand dollar conversion. Well, I know I have the cash there to satisfy that. Another reason why it, we do like our retirees to be super cash heavy so that when it comes time to make decisions like this, where they do get to optimize, they're not having to pull a bunch of different levers. They already have cash there that can be used to satisfy that tax bill. So again, it's one of those things I would think through the strategy that I have in place to raise that cash. Is that the best strategy? Or if I think the markets are at a super high point

• 49:16Speaker 00

  right now, and I've done really well, might I want to accelerate how quickly I build that cash back up?

• 49:22Speaker 01

  So if I have a fairly aggressive desire to give, to donate, Roth's not a good answer, right? Generally.

• 49:33Brian Preston?

  But you do this in multifaceted approach. And we even thought about this because you have some, some appreciated holdings on, on the taxable account. We'll talk about that. But you also, once you reach age 70, you get that opportunity where even some of these tax deferred accounts, because you have a lot of them, QCD, qualified charitable distributions. So there's going to be lots of opportunities to do really good charity tax planning with the way you have your assets structured. If you just have the right person helping you pull the levers on that.

• 50:06Speaker 01

  But I want to make sure I understand your question about.

• 50:09Speaker 00

  Well, I don't want to be donating Roth money.

• 50:11Speaker 01

  Sure.

• 50:12Speaker 00

  That's what I'm, I mean, that's the.

• 50:13Brian Preston?

  But you've got enough. You've got enough. You're going to have plenty to do both.

• 50:17Speaker 00

  Okay.

• 50:17Brian Preston?

  I mean, that's the, that's the big thing. It's just what I see. And this is because you said something that I thought was very powerful that a lot of financial mutants are going to resonate with. They're going to hear you say that and they're going to say, yeah, that why, why are Brian and Bo not addressing that? It does feel counterproductive to sell perfectly good assets that you've got invested today to pay taxes on something that you're not going to have to pay for it seems like 15 to 20 years in the future. I'd rather have the money now. And I get that. But you have to always take it, you have to look at this from an opportunity decision of the government right now is offering me the ability to get access to this money tax free at 12%.

• 50:58Brian Preston?

  If I wait, not only is it the money I have today, but it's the money it grows, grows upon it and then, and then anything and all the decisions, when it gets pulled out in my seventies, it's going to be in the high thirties. Plus probably you, you, at that point, you're exceeding now the, the income threshold for even some of the state benefits that they give you. You, you could see that you're trading 12% for 40%, but you're also getting all the tax-free growth that you, everything that you did, you're getting, you see how this now becomes, this is a much more complicated decision matrix, but I've done, we've run the projections. That's why we always do these predictions and we use very conservative assumptions there.

• 51:40Brian Preston?

  So you can actually see the net result and even where the break even analysis is. And, and that's why I would not ask you if I didn't think it was valuable because I've seen the other side of it. When people show up here and there's, you know, late sixties, early seventies, and they show up with tax bombs and there's just no planning. I, I was like, man, if you'd have come to me 10 years ago, I, I could have fixed this for you. Cause it's, it's really the choice could be, how do we want to optimize this? And I'm sure state attorneys feel the same way when successful people come to them and go, you realize the state taxes are a choice. If you plan, it's kind of the same way as a tax planner. It's a choice on how you want to take your medicine. And if you wait because you're like, I'm living my best life now and I'll just pay the taxes. That's fine, but I, I think if you're charitably

• 52:24Brian Preston?

  minded, if you're, if you're minded that you want to leave something like a legacy to your children, your adult children who are, it sounds like they're making great decisions on their own. So you want to give them the ability to grow upon that as well. Why not maximize this thing with just a little bit? Cause like I said, maximizing the 12%, that's, that seems like duh. That's, that's a pretty, that one's, that one I would fight you on a little bit. If you were my, my client, I would be like, come on, Robert. 12%, you don't want to give the government 12% on this money and then I'm going to let it grow tax-free for the rest of your life. I mean, that's, that's a pretty good deal.

• 52:57Speaker 00

  So you said giving to charity is another goal that you guys have. Walk us through that. How do you guys approach charitable planning? How do you guys think about that in a year-over-year basis? And what are some of your goals that you have around generosity?

• 53:09Brian Preston?

  We try to live generously. I mean, we use, my money is a, it's a tool.

• 53:14Speaker 01

  It is, I mean, honestly, it's, we use it to for experiences like if, I mean, to be able to spend time with someone. So ultimately, we are trying to do that with our money mostly. And then the next thing is, we certainly want to be, we would love to be able to give generational wealth to our children.

• 53:32Speaker 00

  Great.

• 53:33Speaker 01

  We live a great life. We don't, we don't need, we don't need much more than what our current life is. I know you've talked about that. We, it would just drive me crazy to spend, to spend a lot of money at a hotel.

• 53:45Speaker 00

  For no reason.

• 53:46Speaker 01

  It really would. I mean, honestly, I'd be like, well, this showerhead's no better than any other showerhead, right? So I don't think we're going to really change our, our lifestyle significantly. We have a great lifestyle. So we've been blessed that way. So then the next thing is, is the ability to give. We, that is one of our biggest challenges is figuring that out about, I mean, here's basically what we want to do. We want to at least give 20% of our wealth away. 10% to our local church and then 10% to other charities.

• 54:16Speaker 00

  That's great.

• 54:17Speaker 01

  Now, my default answer-

• 54:18Speaker 00

  Posthumously or while you're living?

• 54:20Speaker 01

  Well, that's about what I was gonna say. Because our default answer was, I said, I'm just, we're just gonna put it in the will. And I'm gonna say 10% before our kids get 50/50 split of whatever's left, 10% to the church and then probably five other charities get 2%. This is not because I want accolades or we want accolades. It's, we don't want anything.

• 54:39Speaker 00

  You just want to use it to make the world a better place. That's wonderful.

• 54:43Speaker 01

  So, so if I decide to do it before then, it's not because I want control or recognition or anything like that. It is just because it might make more sense to do that. And that's one of the challenges that we have not figured out yet, is what is the right approach to be sure that we make it to the end, kind of financially. Like, we still keep looking at each other and going, you know, are we sure?

• 55:07Speaker 00

  Yeah.

• 55:08Speaker 01

  And also, what's the right, what's the right stewardship of those assets? We're willing to do that at almost any time. But figuring out what the right mechanism for that is.

• 55:17Speaker 00

  Well, at the end of the day, your money is your money. And so the right choice of what to do and how to do it very much depends on you guys and how you prioritize your goals. So if one of your goals is to be incredibly generous while you're living, then you can absolutely, absolutely use your money to do that. The way that we would counsel someone to go through that is okay. In the same vein that we said, hey, this is what it would look like if we did a hundred thousand dollar Roth conversion. Let's now run this through the Monte Carlo simulation and see how that works out. We would do the exact same thing if we said, hey, I want to make a hundred thousand dollar donation to charity every year for the next 10 years. I want to give away a million bucks over 10 years. Okay, well, let's now run that through the software and see, are we okay? And, and every decision we make, we answer the question is, are we okay?

• 56:02Speaker 00

  Once you've satisfied the, are we okay, then it comes down to strategy. Okay, well now how do we give to charity? Does it make sense for us to just write checks? Do we give appreciated securities? If we're going to give on a smaller scale, we're not going to give a hundred thousand dollars a year, but we're going to give fifteen thousand dollars a year. Because the standard deduction is so high right now, you guys likely aren't going to itemize most years unless something really, really unique happens. So you'd be prime candidates if you're going to give fifteen thousand dollars a year rather than giving fifteen thousand every year. You donate to a donor advised fund thirty thousand every two years. So that way on your taxes, you itemize one year, standard one year, itemize one year, standard one year. Or you could decide how to give posthumously. You name the beneficiaries inside your wills.

• 56:47Speaker 00

  Or there are even estate planning metrics. You guys, right now, it does not seem have an estate planning issue, but based on current estate laws. But if the estate laws were to change in the future and instead of having twenty four, twenty five million dollar lifetime exit or estate exemption, it dropped down to five million or 10 million. You can see you guys are now, you could potentially have a 10 million dollar estate at some point. And there are even ways that you can give to charity presently to get assets out of your estate, live off the assets when you pass away. Those assets move on. So there are a myriad of ways that you can give. But in our opinion, before you start doing the strategies, you have to answer the, are you ok's?

• 57:30Speaker 00

  And that's running through the, running through the iterations and actually iterating and then taking the steps to move in that direction.

• 57:36Brian Preston?

  Yeah, if I'm, I'm, I'm super excited for you guys because looking at your numbers, we know enough. I think yours is a both. I think you're gonna be able to do some of these goals after your death, if you so choose, with that legacy desire. But then I also think that there's nothing wrong because this system's actually gonna reward you from a tax and a financial perspective to make some of these gifts in a proactive way now, too. You could do, we'll, we'll talk about annual stacking, you know, the charitable gift funds where with some of these appreciated holdings. Also think those, those qualified charitable distributions, once you get into your seventies is going to be a very powerful thing. And there might even be some family gifting down the road to even not only help with Oh, we just hit something. Did you see that?

• 58:18Brian Preston?

  No, but it's just, but I love the fact, because here's, let me tell you, I, I, I mean, from a, and this is not to ring the, the, the coffers or the tithe barrels. So people are drawing attention to yourself. I think there is something to the fact, though. I, it's glorious, if not only you, you're leaving this legacy, but also if you do get to experience some of the fruit off of generosity. That doesn't mean you draw attention to yourself, but it just means that part of fulfillment is that you get to experience, because you, you, you guys are all about some experience. Why not also let the generosity? Because y'all, y'all have heard the thing. I mean, when we're all kids, you know, I've already, we've already made a bunch of Star Wars jokes and stuff. When I was a kid, I never understood that

• 59:02Brian Preston?

  whole saying of it's better to the give than to receive. Because when you're a kid, you're like, what's, what's the next toy? No, it's not. I'd rather get my present. But as you get older and more sentimental, you realize that adage has a lot more power about human nature than we all probably give it credit, is that you guys are in the position where you can be better to give than to receive. And, um, We've received a lot. I know. I mean, we are blessed people, so. But you love experiences. Right. And, but I think you're being very humble, and that's good. You should, you have, you have a heart that feels like, I want to make sure this doesn't, this is not a pride thing. This is, so you two, as a, as a unit, as a couple that loves each other, y'all can even

• 59:44Brian Preston?

  use this as, as something y'all reflect upon, be sentimental about, is look at the fruits that you're creating from a prosperous life and a well-lived life. Um, and I don't know if this is the perfect, I wrote it down. I was sitting here, something was said. I deal all the time where most financial mutants or even people out there in the world who haven't even discovered our content, I think they all are striving for what we call in the four levels of wealth, freedom. And the saying you hear everybody in the world say is, I do what I want, when I want, how I want. And that's what the typical American, I think, when they're building, saving, and being disciplined, they're trying to get

• 1:00:25Brian Preston?

  that freedom. I want to give you guys a huge compliment. You've gone beyond level four on your wealth. You're actually into the level five, which is abundance, which at the top of the food chain, not many people reach because it's a completely different mindset. And you're there. I can sense it when I'm just talking to you. Because now, instead of doing what I want, when I want, how I want, it's now knowing who you are, what you value, and what you wake up for, and gives you purpose in the morning. And I can already sense it. You're not moving the goalposts. You're not trying to expand your lifestyle. You guys get it. And that is, I mean, I think not, that is very rarefied air for people to kind of have resources, but also know what gives them purpose and

• 1:01:07Brian Preston?

  creates incredible things for their family. Y'all are very good, disciplined individuals who have big hearts, and you've done really good things.

• 1:01:15Speaker 01

  Thanks.

• 1:01:17Speaker 01

  So our friends still say we're cheap.

• 1:01:20Brian Preston?

  I think you do have some tensions of that. I would probably, I mean, if you were my client, I would probably, we'd have annual pick on, you know, Robert and Carrie moments, where I'd be like, what are you doing? I mean, why? I mean, like, we didn't even pick on you yet. I mean, y'all had in your notes, you donate plasma for money?

• 1:01:37Speaker 01

  We do.

• 1:01:41Brian Preston?

  You need somebody, I'm the opposite of Suzy Orman, because every, you know, Suzy Orman made her entire career telling everybody, no. I'd be like, yes, come on, yes, Robert, Carrie, yes, let's do some more.

• 1:01:53Speaker 01

  I was trying to find a four hour window in, on Monday, when we're not traveling, I was gonna try to find us time, because they're gonna give me an extra $25 if I donate plasma. It is absolutely true. I still have the email as a reminder to go, can we squeeze it in sometime?

• 1:02:07Brian Preston?

  You're a mess.

• 1:02:08Speaker 01

  That's hilarious. But it's just true. It is true.

• 1:02:10Speaker 00

  How will you guys navigate, thinking about giving, and thinking about how you're gonna do, how will you navigate that? What's the conversations you guys will have around, what can we do, and how do we do it?

• 1:02:19Speaker 03

  I mean, it depends on the need. I mean, when a need comes, like we partnered with an organization in Uganda and when, you know, they tell our church they're going to get shut down because the state has come in, then that's

• 1:02:32Speaker 00

  You can answer that call.

• 1:02:33Speaker 03

  Yeah, that's the time to give.

• 1:02:34Speaker 00

  I love it. But it doesn't sound like you guys struggle with that, right? Like, that's something you do right now and you feel comfortable with. That's not a point of tension trying to decide if or can't we do that, right?

• 1:02:43Speaker 03

  I don't think so.

• 1:02:44Speaker 01

  No. It, yeah, it's, I mean, goes, I made the comment about stewardship mainly because we do want to be, we want to be responsible stewards of the resources so that it's efficient, effective. So we do think about those kinds of things, like appreciable assets. We donate some of those. To be honest, we, we have a significant amount of carryover donations, cash donations on our taxes that you didn't see. You probably didn't see that.

• 1:03:10Speaker 00

  Probably because your income's been so low, you haven't been able to capitalize on all

• 1:03:13Brian Preston?

  Thirty percent rule and so forth.

• 1:03:15Speaker 01

  Right. Yeah, yeah. So, so we, you know, when we sold our house, we decided we were going to tithe on the, basically give a 10% to the church on the proceeds of the house, on the capital proceeds of the house. And so we estimated that the house had grown about $600,000. So, I mean, you know, that, that helps to have that carryover that's sitting there. So, I mean, we've been trying to, we try to do that now, but then we're also thinking from a legacy perspective. And then just thinking about when, what the right timing of that. There was some reason I thought that maybe it made more sense for me to, to give that. None of us know when we're going to die. So I can't, I can't say, well, a year before I die, I want to do this. But trying to think through if there is a tax

• 1:03:56Speaker 01

  advantage to do that while still alive, rather than just being in the estate. But I don't know if there is one. Maybe there's really not.

• 1:04:04Speaker 00

  Well, if you are deducting, if you are able to deduct charitable contributions against your income, that's certainly advantageous. But you guys are already doing that. What I love hearing is if you do have all these carry forward charitable contributions you've not used, you're going to do future charitable

• 1:04:14Speaker 01

  We're still itemized.

• 1:04:15Speaker 00

  Even, even if we do drive up your income through Roth conversions and stuff, you still have tax mitigators there that can offset that. So where you haven't been able to use as much of those charitable contributions, you have higher income if you go up into the full 12 or Full 22% bracket. Now you even get to mitigate that. So it makes the, it makes the tax cost even lower, which makes it an even more compelling argument.

• 1:04:38Brian Preston?

  I mean, that's what I'm sitting here. Cause y'all have capital gain carryforwards. Now you're telling me you have charitable gain carry for, I mean charitable contribution carryforwards. I'm like, man, you guys are basically begging to, to, to, to optimize some of these things. Cause y'all have all the tools, all the levers I'm looking for to make my, my masterpiece of a financial plan. You're telling me you have all these things, but yet you're just leaving them sitting over there on the shelf, collecting dust. I mean, we, we gotta get to work on these things.

• 1:05:07Speaker 00

  So we always like to send people away with some things to think about, some stuff that you ought to got, the conversation we want you to have. Uh, first thing that we saw immediately, item number one of homework is cash reserves, right? For a retired financial independent group, a couple, your cash reserves are probably in a different spot. I love that you have a strategy to get there. I would even think through, should we have a more accelerated strategy?

• 1:05:28Brian Preston?

  Don't get cute. Go ahead and fill up your cash reserves. You have, you have carryforwards. I think, let's get that, let's get that boosted up.

• 1:05:35Speaker 00

  Uh, the other thing I would think through is we looked at your allocation. You guys are in incredibly aggressive allocation. We didn't actually go through it in depth, but we know that it's about 96% equity. So it is almost an all equity portfolio. It's worked out.

• 1:05:47Brian Preston?

  To the moon.

• 1:05:48Speaker 00

  It's worked out incredibly well for you. The conversation I have you guys have is around the why. Uh, can we take on all this risk? Well, yeah, you have enough money, your withdrawal is enough, but should we? Like, can we or should we? I would walk through your allocation. The next thing that I think you guys have to know, homework item is a conversation around, you have made it. You've asked over and over, are we there? Are we there? Are we there? I think we can say by looking at the numbers that it certainly seems like you are there. We're not your advisor, so we can't say for sure, but your advisor should likely be able to say for sure. Then the question becomes now what? What is it that we really want to do? Do we want to support our family? Do we want to think about the legacy we leave behind?

• 1:06:27Speaker 00

  Do we want to optimize what we're paying in lifetime taxes? You guys have to rethink your goals. At one point in your life, your goal was be financially independent, retire. Now you gotta sit down and have another. Goal conversation. Our goals are in this order. Support ourselves for the rest of our lives, leave a legacy, give to charity, support causes we believe in, not pay a ton of tax. Whatever that thing is, you guys ought to re-prioritize and go through those. And then, once you've ordered your goals, then you start thinking about the strategy. Okay, what's the appropriate strategy? If leaving a legacy to our kids is something that's incredibly valuable, perhaps Roth conversions make a lot of sense in order to be able to do that. If giving money to organizations today that we love makes sense,

• 1:07:09Speaker 00

  perhaps we should work into our budget. We don't live off a hundred thousand dollars a year. We live off of a hundred and fifty thousand dollars a year. And we know that fifty thousand of that goes to an organization every year that we support. And then you run that through the Monte Carlo and you test it to see, is this viable? You guys are at the place right now where you're in the driver's seat. You just have to decide what you want the rest of your life, what you want the next thirty, forty, fifty years to look like. And I would argue you've spent these last few years being go-go, which is awesome. Now it makes sense to apply some intentionality around just living and experiencing. And actually, okay, this is what we're working towards. Does that make sense?

• 1:07:50Brian Preston?

  Y'all are still well in the go-go years. Our age difference isn't that far, so I'm telling you, you have lots of go-go years left. So that's why, this is so cool, because you're not even, like, you're still young retirees. So, I mean, it's just, that's, that's back to, you have tremendous layers of time. Another one of those levers that as a planner, I would be trying to pull. This has been a blast. And I'm hoping anybody who watches this can see that, yeah, those small decisions can create huge results, even with mistakes. I mean, that's why, when I was doing Millionaire Mission, I laid out all my mistakes too, is because I want, I think there's a lot of benefit in paying it forward, doing the experience shares.

• 1:08:33Brian Preston?

  But I have loved, I mean, I've gotten at least two or three harem arms moments, you know, where just to kind of celebrate all the good decisions you've made, and I can't, I can't thank you enough for coming on our show today.

• 1:08:43Speaker 01

  We've enjoyed it. Thank you.

• 1:08:45Speaker 00

  You guys have been awesome. If you would like to be a guest. On Making a Millionaire, you can go to moneyguy.com/apply. Or if you want access to all the resources we make available, you can go to moneyguy.com/resources so that you can do money better.

• 1:08:59Brian Preston?

  Guys, thanks for joining us. This has been a blast to meet some financial mutants, hearing about their great, big, beautiful tomorrow. I'm your host, Brian Preston, joined by Mr. Bo Hanson. Money Guy team, out.

• 1:09:12Speaker 00

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