The $75K Lesson That Changed Their Financial Future | Making a Millionaire

Jonah (28) and Caroline (28) understand the power of their dollars, but a series of financial missteps keeps slowing their progress. From 401(k) loans to sports cars, they walk us through the money decisions they now regret. We dig into the money psychology behind those choices, uncover the patterns driving their setbacks, and help them build a clear financial plan to get their wealth-building journey back on track. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠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. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠DRINKAG1.com/MONEYGUY Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:00Speaker 00

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• 0:27Speaker 01

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• 0:52Speaker 02

  You have all of the opportunity in the world. You are literally at the front of your journey, where what you're going to be able to accomplish financially is going to be amazing if you do the things that you have to do early on to set yourself up for that. You guys have been young, and you've been able to make less-than-ideal choices with large sums of money. The good news is, is if you can rein that in, and if you can fix that, and you can right the ship, then the future looks bright.

• 1:24Speaker 03

  I used to fly out of Smyrna.

• 1:27Speaker 02

  Okay.

• 1:27Speaker 03

  And so I stayed in the area a little bit. And our, the guy that we flew lives here in Franklin.

• 1:33Speaker 02

  Oh, you were flying private out of Smyrna?

• 1:35Speaker 03

  Yeah.

• 1:35Speaker 02

  Got it, got it, got it.

• 1:37Speaker 03

  And...

• 1:37Speaker 02

  Is the guy that you flew a name that we would know?

• 1:39Speaker 03

  Yeah.

• 1:39Speaker 02

  Yeah, that's awesome. Good for you.

• 1:41Speaker 03

  Yeah.

• 1:41Speaker 02

  That's super fun. So, did you do that before you went commercial? Before you...

• 1:45Speaker 03

  I did.

• 1:45Speaker 02

  Awesome.

• 1:46Speaker 03

  I got crazy lucky in how it worked out. I was kind of like a hangar rat.

• 1:50Speaker 02

  Okay.

• 1:51Speaker 03

  And so I would go over to the private side of the hangars and just, if there was a door open, I'd go in and start talking. And so a guy that I had met there, and a little bit of connection with a guy that I went through flight school with.

• 2:03Speaker 02

  Okay.

• 2:03Speaker 03

  And he linked me up with the guy that had all these contracts. And so I just, I got so busy, I had to leave school. And I went back and finished.

• 2:13Speaker 02

  Okay. And so how long did you do that for? And then what was, how'd you transition from that to commercial? Like, walk us through the, walk us through the career history.

• 2:20Speaker 03

  So, a year and a half. So, I went to flight school for just about 12 months. Um, in that time is when I met Caroline and

• 2:30Speaker 02

  At flight school?

• 2:30Speaker 03

  While I was at flight school.

• 2:32Speaker 02

  Were you in flight school too?

• 2:33Speaker 04

  No, so we're originally from Texas.

• 2:35Speaker 02

  Okay.

• 2:36Speaker 04

  John went to flight school in Oklahoma.

• 2:38Speaker 02

  Got it.

• 2:38Speaker 04

  So.

• 2:39Speaker 03

  I flew down. Yeah, I flew down to Conroe. Flew down to Conroe for one of my lessons. So Tulsa to Conroe is like maybe a three and a half hour flight and a little 172.

• 2:50Speaker 02

  Okay.

• 2:51Speaker 03

  And

• 2:51Brian Preston?

  That's a Cessna.

• 2:52Speaker 03

  We

• 2:54Speaker 02

  Oh, yeah, you got a little 172, obviously.

• 2:56Speaker 04

  No, no, no, small ones.

• 2:57Speaker 02

  Okay.

• 2:58Speaker 03

  Yeah, and so we, I met up with some, some old friends and they brought Caroline along. They asked, they said, can we bring our friend Caroline along? And I was like, yeah.

• 3:05Speaker 02

  All right, sure, cool.

• 3:06Brian Preston?

  Was it a download, like they were going to try to set y'all up or was it?

• 3:10Speaker 03

  No, it was, it, it is actually a messier side to it that, that one of her friends was really into me, but I was not in to her. And, uh, and, and I made it very clear that we never hang out like solo because I didn't want to get the right, the wrong ideas.

• 3:24Speaker 02

  Yeah.

• 3:25Speaker 03

  And so, and they brought Caroline long and we, we hit it off and it was

• 3:29Speaker 02

  I bet that was great for the whole friend group, right?

• 3:31Speaker 03

  Yeah.

• 3:32Speaker 02

  That worked out real well.

• 3:34Speaker 04

  What happened, happened?

• 3:36Speaker 03

  Not really, but you know.

• 3:38Speaker 02

  Oh.

• 3:39Speaker 04

  Yeah, we actually went to high school all four years together.

• 3:42Speaker 03

  Yeah.

• 3:42Speaker 04

  Um, had no clue that when

• 3:45Brian Preston?

  Oh, come on.

• 3:46Speaker 02

  One of y'all knew who the other one was. But you said y'all from Texas, right?

• 3:50Speaker 04

  Yeah.

• 3:50Speaker 02

  In Texas, they got them high schools are like colleges.

• 3:53Brian Preston?

  How big are y'all's high, how big was your high school?

• 3:54Speaker 04

  Our graduating class was like 900.

• 3:56Brian Preston?

  Oh, wow.

• 3:57Speaker 03

  A little bit different.

• 3:58Brian Preston?

  Whoa, that's, I thought I had a big class with like 230, but y'all had 901 class?

• 4:03Speaker 04

  It was in one of those big cities.

• 4:04Brian Preston?

  Wow.

• 4:05Speaker 02

  All right, so, so you meet, you're flying private and then, okay, walk us through, so you meet, you guys fall in love. How long before you met, got married, walk us, what's the timeline?

• 4:13Speaker 03

  We met, we met in January of 2016. We got married in November of 2016.

• 4:19Speaker 02

  Moved quick.

• 4:20Speaker 03

  So it was quick.

• 4:20Speaker 02

  Um, rock and roll.

• 4:21Speaker 03

  And she moved up. So it was the, our whole dating scene was long distance. But I came from an airline family, so I was non-revving, going from Tulsa to, to Houston.

• 4:32Speaker 02

  Okay.

• 4:32Speaker 03

  Fairly regularly, at least once a month. If not a couple of times a month, just fly home on the weekend and come hang out.

• 4:39Speaker 02

  So obviously 10 years this year.

• 4:41Speaker 03

  Yeah.

• 4:41Speaker 02

  Happy 10 year. What a way to celebrate by coming and making dinner. That's awesome.

• 4:45Brian Preston?

  So you were 19 years old when all this went down.

• 4:47Speaker 04

  We were.

• 4:48Speaker 02

  He just did the math. He's like, well, that's why I'm 19.

• 4:50Brian Preston?

  I'm good at 10s. I can do 10s. Just add a zero.

• 4:53Speaker 02

  Oh, that's all. Okay, so, so, uh, obviously you're a pilot. What about you? Walk us through, give us your little, your career backstory and history.

• 5:01Speaker 04

  So, up 2017, I started an early child education, uh, stayed with preschool and pre-K, and that was pretty much it.

• 5:08Speaker 02

  I love it.

• 5:09Speaker 04

  I enjoyed the small ones. I enjoyed teaching them. Um, that's pretty much what I did.

• 5:15Brian Preston?

  Well, I think I saw a picture. You all have some small ones.

• 5:17Speaker 04

  We do. They're 18 months old.

• 5:19Brian Preston?

  Not only do you like teaching small ones, but don't y'all, don't y'all have small ones?

• 5:24Speaker 04

  We do. Maverick and Chloe. They're 18 months old.

• 5:28Speaker 03

  They're twins.

• 5:28Speaker 04

  Yeah, they're twins. They're crazy.

• 5:30Speaker 02

  Did I hear a, did I hear a Maverick in there?

• 5:32Speaker 03

  Maverick.

• 5:33Speaker 02

  Let's go.

• 5:34Speaker 04

  That wasn't, that wasn't what it was meant.

• 5:37Brian Preston?

  We have it more. We should get Goose.

• 5:40Speaker 02

  The rest of the world don't think that that was on purpose.

• 5:42Brian Preston?

  The fourth one's gonna be Iceman. We got the whole, we'll have the whole group covered.

• 5:45Speaker 02

  That's awesome.

• 5:45Speaker 03

  I did not want the name Maverick initially, uh, but Caroline had a little boy in her class that was Maverick.

• 5:52Speaker 04

  Sweetest thing ever. And I just fell in love with the name. He's like, baby, they're gonna be made fun of.

• 5:56Speaker 02

  It's like, we can't. No.

• 5:57Brian Preston?

  No.

• 5:58Speaker 04

  No, it's perfect.

• 5:59Brian Preston?

  It's much better than Sue. That's the name that gets you made fun of.

• 6:02Speaker 03

  Yeah.

• 6:03Speaker 02

  Right, so they're 18 months old, so you stay home with the children right now? Awesome. Awesome, awesome. So airline pilot and stay at home right now, 29 years old, two kids. Uh, and you guys are doing pretty good, right? You were, you were kind enough to share this in net worth statement. So to kind of level set, right now, as it stands, at 29 years old, you guys have a total net worth of just under about $300,000. Uh, but you got a really big shovel, right? Right now, the case where you guys are making like $420,000.

• 6:35Brian Preston?

  Did you start making that like last month? Or how long have you been making this type of money?

• 6:38Speaker 03

  From the beginning. My very first airline job was like forty thousand.

• 6:43Speaker 02

  Yeah.

• 6:44Speaker 03

  A year. So, so over the course of starting in twenty eighteen, so twenty nineteen was my first full year. It was, I think with everything included, was just over forty thousand.

• 6:55Speaker 02

  Okay.

• 6:55Speaker 03

  Covid, I was, I was hustling. I was working really hard to try to get as many hours as I could because you, there's an hour requirement to upgrade to captain. That's when you can start feeling a little bit comfortable and, and spending a hundred thousand dollars on school, going to, making forty thousand is, is a pain.

• 7:12Speaker 02

  Rough, yeah.

• 7:13Speaker 03

  Um, but when you upgrade to captain, you're looking at now, at the time was like ninety, ninety thousand or so.

• 7:19Speaker 02

  Okay.

• 7:20Speaker 03

  So I was working really hard to, to get my thousand hours of flight time that was required to upgrade to captain. And in that process, Covid happened.

• 7:30Speaker 02

  Mm hmm.

• 7:31Speaker 03

  And so, uh, we actually moved back to Texas. We were living in Washington. We moved back to Texas because we just weren't sure with what the industry was doing.

• 7:41Speaker 03

  And when we moved back, I was thinking like maybe move jobs, which in airlines, when you move jobs, you reset.

• 7:48Speaker 02

  Mm hmm. Start back at the beginning.

• 7:49Speaker 03

  Start back at the beginning. It doesn't matter your experience. When you get hired, you start from ground zero.

• 7:56Speaker 03

  When, uh, Covid happened, I thought, I had the whole goal, starting flight school, that at twenty five years old, I wanted to be at a major. It was a goal because it was supposed to be a little bit far fetched.

• 8:07Speaker 02

  Yeah.

• 8:08Speaker 03

  And, uh, and at twenty five, uh, coming into Covid and whatnot, I was like, if I make it to a major by the time I'm thirty, that'll be good.

• 8:19Speaker 02

  Yeah.

• 8:19Speaker 03

  Well, after Covid, they did a whole bunch of early retirements. So then the airlines needed people really, really bad.

• 8:25Speaker 02

  So you make captain in December twenty, that's like comp around ninety thousand. So start at forty, get to captain comp at ninety.

• 8:31Speaker 03

  Yeah.

• 8:31Speaker 02

  Okay. Get us from ninety now to over four hundred.

• 8:34Speaker 03

  Yeah. So, uh, again, they needed people really bad. So they were hiring, hiring, hiring. Um, I got hired by my current airline, June of twenty two. And I only spent a year and a half as a first officer before I was able to upgrade to captain.

• 8:52Speaker 02

  Wow.

• 8:52Speaker 03

  Um, that's. Nearly unheard of. It just happened. I just put my, my bid and to upgrade to captain in Seattle, where we live. I didn't want to take any, any other base because I didn't want to commute and I didn't want to be stuck in a position where I'm commuting for a long time when the music stops. And I was surprised. I'll be honest with you. I was surprised when it happened. It just, it, it got down to my seniority and they said, you're going to class and here I was.

• 9:23Speaker 04

  Yeah, it was like back to back. It was so, and then we found out we were pregnant, which was like huge because it's like, that's a lot, you know? And it's just like, all these things just started falling into place.

• 9:33Brian Preston?

  Yeah. So how long have you been over 250,000? Was it really the last two and a half years, three?

• 9:37Speaker 03

  Pretty much 24. 24, January of 24.

• 9:43Brian Preston?

  So 18, 18, we're in the, we're still within the first two years of, of, of making over.

• 9:48Speaker 03

  Yeah.

• 9:48Brian Preston?

  Yeah, that's incredible.

• 9:49Speaker 02

  So as we sit here today, obviously 29 years old, you guys are in a great spot. What are the questions you have? Or what are the things that you're trying to think through as you navigate path forward? What, what brought you on making money today?

• 10:03Speaker 04

  Like mainly having a plan.

• 10:05Speaker 03

  Yeah.

• 10:05Speaker 02

  So do you feel like you have a plan currently? What, what is your plan currently?

• 10:08Speaker 03

  Yeah.

• 10:09Speaker 04

  That's more we have like an action, like we were talking about it earlier. It's like, we're putting money in places, but it's like, what are we?

• 10:17Speaker 03

  I use, I used the analogy this morning while we were at breakfast that I feel like if we were to set out of Franklin and fly or start walking west, we're eventually going to get to California. But there's maybe not, that's not.

• 10:31Speaker 02

  The most efficient way to get there.

• 10:33Speaker 03

  Efficient way to get there. And we're really fortunate. I, our, our 401k contribution is insane. But I feel like.

• 10:42Brian Preston?

  Oh, we're familiar.

• 10:44Speaker 03

  I, I feel like.

• 10:45Brian Preston?

  We have quite a few clients that, that work for this airline too.

• 10:47Speaker 03

  Yeah. And we feel so fortunate and, and I'm told nearly daily whenever I'm flying with guys, I've flown in my career, I've flown with two people younger than me in the entire time that I've been doing it. And so every guy that I'm flying with usually, not always, but 40% of the times, military guys. And they're like, man, you're set up. Like you're going to be so good in retirement.

• 11:13Speaker 03

  And going back to the analogy of going west, eventually we'll make it to California. But there's, there's gotta be planning along the way. And, and I feel like we don't have a plan, really. And so we have these automated functions of the, of the retirement and then I put in some and, and everybody says, you're gonna be good, you're gonna be good. And I just, and I, I feel that, I see that and I do the numbers and whatnot. It's like, yeah, that looks good, but I still don't, I don't, I don't know. I don't have a plan.

• 11:45Speaker 02

  So I want to hear a little bit about, cause you said, hey, we're, we're putting money in places. In a moment, I want to know about the, the places that you are putting your money currently. But I do have some questions on the net worth, cause there are some things that we saw in there that were a little unique to us. You know, obviously you bought a home and like a lot of homeowners, interest rates are not the same now that they were a number of years ago. So your mortgage is at 7.125%, which historically is fairly high, right? Like it's not ideal. But then I see some other stuff on here and I see a line on here that I can't make, make sense with what I know about you so far.

• 12:22Brian Preston?

  Well, it's almost like you're like, okay, let's just go on a tour of debt. And let's, let's just, you know, I want, I want to make sure that we turn over every rock that we possibly can. The student loans, okay, I can get that. I understand where that came from.

• 12:34Speaker 02

  And 4.2 to 4.8 at 29 does not frighten me, does not concern me.

• 12:38Brian Preston?

  Medical, I mean, we're gonna get to the, to the bottom of that. And I at least like to see, I, I don't know why you had to pay it off, but I see it's 0%. So, okay, there's probably some financial mutant, bad, foolish type mentality that, hey, we, we should just keep this cause it's 0%. But then the one, it's almost like you're walking down the street on this journey. You said if you walk west, so on your journey, there was a, a hole and it was titled 401k loan and you happened to step into it and you're like, oh my gosh, I fell into a 401k loan. Seriously, how did you end up with a 401k loan?

• 13:14Speaker 03

  In 23, we bought our first house.

• 13:16Brian Preston?

  Okay.

• 13:18Speaker 03

  And we bought this house in a beautiful neighborhood. It was just over 1,500 square feet. It was our half of the duplex. And

• 13:28Brian Preston?

  A little house hacking.

• 13:28Speaker 03

  Realist, well, I wish, but we only bought our side of the duplex.

• 13:33Speaker 02

  You bought half of a duplex.

• 13:36Speaker 03

  Most, most people who buy duplexes buy the whole thing. I just want to picture that, okay. They, I think they called them. He heard us say house hack, buy a duplex. He was like, I did, I bought.

• 13:48Brian Preston?

  I bought my house.

• 13:49Speaker 03

  Bought my, okay. We closed on that house September of 23. Found out that I got the upgrade to captain, um, November of 23. This house was, was a good house within our, within our means then. And I always go back to, it's like, I know people have done more kids in smaller places. But we were feeling when the kids started crawling and whatnot, we were like, man, we feel really cramped here.

• 14:20Brian Preston?

  And it was. You said it was 1500 square feet.

• 14:22Speaker 03

  1500 square feet and there was no yard. So we were in the process of, okay, we need a, we need to list this house. Problem is, we bought it in 23 with a 7.625 interest rate. And probably more than what it was worth. So when we went to sell it, it just sat there. Yeah. And sat there. We had.

• 14:45Brian Preston?

  People typically want to buy the whole duplex. They don't want to buy half of the duplex.

• 14:50Speaker 03

  Right. So, um, we started, we shouldn't have, but we started looking at other houses. And of course we'd go from our 1500 square foot and we'd go look at these other houses and we're like, we can stretch our elbows and there's a backyard, there's swing sets for the kids, there's, there's a yard. It's room to grow, it's a family home. Right. And I know they say that, like, just wait longer and there's going to be another perfect fit. But this house just spoke to us. So we bought that one without selling the, the old one. And I didn't know how long that was going to take to sell the old one. So the 401k loan came out because.

• 15:34Speaker 03

  My mentality was cash was king at the time. So just liquid cash to be able to weather the storm between buying this new house and selling the old one in case we had to go rent it, which would not have worked out because our mortgage was like 4,600 with all things included and comps.

• 15:53Speaker 02

  4,600 for half a duplex.

• 15:55Speaker 03

  For half a duplex. And it was, I mean, we bought it for 530. We ended up selling it for

• 16:01Speaker 02

  For 1,500 square feet?

• 16:03Speaker 03

  Yeah.

• 16:03Speaker 02

  Wow.

• 16:04Speaker 03

  We ended up selling it for 497.

• 16:06Speaker 02

  Okay.

• 16:07Speaker 03

  So we took a pretty big hit.

• 16:09Speaker 02

  So you didn't actually need the money from the 401k loan? You took it out as a mechanism to have liquidity?

• 16:15Speaker 03

  Yeah.

• 16:15Speaker 02

  And this was in 23?

• 16:17Speaker 03

  We bought that, that first house in 23 and we bought our, our current house in September last year.

• 16:23Speaker 02

  Okay. So September of 25. And so that's when you originated this 401k loan?

• 16:27Speaker 03

  Yeah.

• 16:27Speaker 02

  It makes sense because I think you probably borrowed $50,000 and yet here we are, a number of months passed that, and you still owe about 49,000 on this.

• 16:38Brian Preston?

  Can we, because I just, when did you discover our content?

• 16:42Speaker 03

  About that time.

• 16:43Brian Preston?

  Okay. Cause I, cause where I'm looking, I always try to, you know, look and figure out where,

• 16:51Brian Preston?

  where, where are things going awry?

• 16:53Speaker 03

  Sure.

• 16:55Brian Preston?

  If you go to moneyguy.com/resources, we have our home buying checklist.

• 17:00Brian Preston?

  And the first thing, because look, housing is a hot mess right now. And you know, and that's why one of the first questions is, can you be in this house for the next five to seven years? Because that's going to give you the, the ability to process. If you overpaid for the house,

• 17:15Brian Preston?

  that's okay, because time will heal all wounds and make it better. And it doesn't get you in this weird situation where exactly what happened to you guys, life changes. And you're like, oh my God, this house doesn't fit our needs. So. That's the only thing, and I'm not, we're gonna pick, believe me, I told Beau before we came in here, I can't wait to kind of, in a fun way, ask y'all some questions about some stuff I saw. But that's one that I just, I didn't plan on that being something, but it was just like, man, how much heartache would it have saved you if you'd have just not bought that first house? Because you would have thought with a five to seven year mindset and quickly realized, hey, maybe 1,500 square feet with two kids, this isn't gonna work for five years.

• 17:59Brian Preston?

  So we better, maybe we should just rent. It sucks to rent, but let's do it.

• 18:04Speaker 04

  Buying the first house, when we were going into it, that was obviously the first place we ever bought. And so we were renting a house at the time. We're like, okay, should we eat rice and beans and save? Like, you know, but then that convo comes into place where it's like, okay, but can we do this right now? Are we gonna be okay doing this right now? And I think that's where we struggle. It's like, even though we have the means, exactly, to do it, does that mean we should?

• 18:28Brian Preston?

  And achievers, I pick on achievers. My financial mutants are definitely achievers. You guys, I mean, I already can see the hallmarks of somebody who's trying to just do the things. Like you've set goals for yourself, I guess I wanted to be 25 and so forth. When you force these decisions because it's what you perceive what success is asking of you, it creates, you know, it's errors. It really is. It's unforced errors that really sets you back from your long-term of when you discover and get the wisdom from going through life. And that's the thing I just wanna make people, because I don't want the next person who watches this making a millionaire. Because we have been, and brainwash is too strong of a word, but we've definitely been influenced

• 19:13Brian Preston?

  to say, go buy a house as fast as you possibly can, because that's what successful people do. That's what the American dream is. But y'all are proof that if you just not made that error, it doesn't get into 401K loans. It doesn't, because, and you guys are gonna be fine. I'm just picking on you only because I know we'll be able to get you a solution on this. But it is a great educational moment for the next achiever that comes behind you that doesn't fall into that mental trap of let me get through all these life things as fast as possible.

• 19:42Speaker 03

  Absolutely. And that's what I thought. I thought, you know, a lot of my friends from flight school moved to other parts of the country and they were buying houses, but they were buying... Two hundred thousand dollar houses.

• 19:55Brian Preston?

  Right.

• 19:55Speaker 03

  And I was just under the impression, impression growing up and like, you know, you've made it when you bought a house.

• 20:00Brian Preston?

  Yeah.

• 20:01Speaker 03

  And Caroline and I have talked about that so many times and I did the number one time and about threw up because of how much money we lost on, on that house. And I mean, probably like seventy five thousand dollars altogether between money that we had to.

• 20:18Speaker 02

  In your mid twenties, right?

• 20:21Speaker 03

  Yeah.

• 20:21Speaker 02

  Substantial cost, the long term opportunity cost of that.

• 20:24Speaker 03

  Absolutely.

• 20:25Speaker 02

  On your 401k right now, you have your, you have it listed at a hundred and ninety two thousand dollars. I'm assuming that's inclusive of the 401k loan. So of that one hundred and ninety two thousand, forty nine thousand of that's represented by the 401k loan?

• 20:38Speaker 03

  No, so it, it would be up, I think right now it's like two oh eight. And so when I pay back that 401k loan, it'll, it'll push it up to fifty thousand essentially.

• 20:49Speaker 02

  Got it. Okay.

• 20:50Speaker 03

  It doesn't include.

• 20:50Speaker 02

  It's netted out. Perfect. Okay, great. So you said, hey, we're putting our money in some places. Why don't you walk us through, here's where we're currently putting our money. And I want to talk about from a savings standpoint first, and then we'll talk about from a spending standpoint. Fair? Yeah. Awesome. Walk us through how you're saving presently. And then tell us a little about, you said the company matches, or the company contribution's super, uh, super generous. For those that don't know, kind of walk us through what that looks like.

• 21:15Speaker 03

  So, pretty much with all airlines, all major airlines, uh, our contracts are about the same and they put in a non elective eighteen percent.

• 21:25Brian Preston?

  Y'all heard that right. We, I knew the number already, but I was, I was waiting for eighteen percent non elective, meaning no matter what you do, eighteen percent. Now, you said you've been following our stuff. Your income's over two hundred and fifty thousand. Are y'all supposed to count that as your part of your savings rate?

• 21:44Speaker 03

  No.

• 21:44Brian Preston?

  Okay, we'll get to that in a minute. I just want, I just want to put a bookmark though because, but that's amazing. Nobody, I mean, eighteen percent, and by the way, it's not like they're paying you small wages. I mean, that's pretty powerful stuff.

• 21:59Speaker 03

  Yeah, so eighteen percent of that goes into the 401k. Um, and then when it gets maxed out, uh, between, I put in seven percent.

• 22:13Speaker 03

  So in total, they're 25%. That reaches the

• 22:21Speaker 02

  415 limit?

• 22:22Speaker 03

  The maximum of 70, well, this year, 72,000. And then recently, they started that market-based cash balance for us. So, once you reach the maximum, then they start contributing the rest of it to the market base. Cash balance.

• 22:39Brian Preston?

  Pretty sweet.

• 22:40Speaker 03

  Very much, I didn't even, I didn't know until I was putting together the, the documents. I never looked at that number and I was surprised that there was already 22,000.

• 22:50Speaker 02

  Oh, there's even more to it. It's wild, but keep going.

• 22:52Speaker 03

  Yeah, so.

• 22:54Speaker 02

  So 7% to your 401k?

• 22:56Speaker 03

  7% to the 401k.

• 22:58Speaker 02

  Uh, pre-tax contributions, I'm assuming?

• 23:00Speaker 03

  Pre-tax, yeah, pre-tax.

• 23:04Speaker 03

  Then we max out our HSA. And then really, it's just been putting money into the emergency fund. And that has, there's been so much cash movement over the last six months. Right before we bought the second house, there was a little over 80,000 in there.

• 23:22Speaker 02

  I'm gonna repeat to you what I heard you say. Put 7% in my 401k and a max on my HSA. Right?

• 23:29Speaker 03

  Yeah.

• 23:29Speaker 02

  So I got 24.5 going into my 401k. Another, was it 87.50? Is that the number this year? Something like that going into the HSA.

• 23:37Speaker 03

  Yeah.

• 23:38Speaker 02

  Right? Let me ask you this question. If we were to ask you, where are you in the, both of y'all listen to the show? Both of y'all familiar with our stuff that we talk about?

• 23:47Speaker 04

  I've watched some, some.

• 23:48Speaker 02

  You're a huge fan, is what I'm hearing.

• 23:49Speaker 04

  I'm a big fan.

• 23:51Speaker 02

  We have this, we have this framework called the Financial Order of Operations. It's this idea of where should your next dollar go?

• 23:57Brian Preston?

  There's literally a book that details it.

• 24:00Speaker 02

  That really walks through it. If we were to ask you where you think you are in the Financial Order of Operations, what would your answer be?

• 24:06Speaker 03

  High interest step three.

• 24:08Speaker 02

  Okay, awesome. You're in step three. Cause one of the things I think is interesting, you have a bunch of cash, right? Sitting on the sidelines right now. I'm assuming you said that's, the nomenclature uses, I'm putting that towards the emergency fund.

• 24:19Speaker 04

  Yeah.

• 24:20Speaker 02

  Uh, walk us through from the four of you guys. What does it cost to keep the household running every month? Like, what's your month-over-month burn rate?

• 24:29Speaker 03

  We have not been good about budgeting.

• 24:31Speaker 04

  Yeah, we're not, I mean, like, I feel embarrassed to say, like, even you asked me that. It's like cricket, cause I don't, I know it's not a good thing. I truly don't, but it's like. I know we're in a good spot, but it's I know enough to recognize like what we spend over time.

• 24:47Brian Preston?

  When I saw this, I felt like these numbers that showed up on this budget, I was like, it's this. This felt like somebody was asked, like the IRS audited you and you're quickly trying to backdate receipts and try to figure out how you can make the numbers show up because it was just, it didn't look like somebody who's actually tracking expenses. So how did, how did these numbers come to be?

• 25:10Speaker 03

  So I use Rocket Money.

• 25:13Brian Preston?

  Okay.

• 25:13Speaker 03

  While I'm going through there, I, it fluctuates so drastically through the months. And so I went through and I looked at like, for example, groceries and I saw $1,800 a month for groceries. And then other months, it's a thousand dollars.

• 25:30Brian Preston?

  Right.

• 25:31Speaker 03

  And so I went to the higher end because

• 25:34Brian Preston?

  I like that.

• 25:35Speaker 03

  As far as groceries go, like our babies eat just loads of berries and berries get expensive. But you know, it's, it's, it's so, I'm looking at the

• 25:46Brian Preston?

  I mean, when I looked at that groceries.

• 25:48Speaker 02

  1,200 berries is a lot of berries.

• 25:50Brian Preston?

  1,800 of berries. I was like, when I looked at that.

• 25:53Speaker 02

  1,800 berries is a lot of berries.

• 25:54Brian Preston?

  That's a lot of berries. Talk, talk to me about, because there's a few things on here that stood out. I mean, the, the dining out to what, what, give me how that number came to be. Is that also just Rocket Money?

• 26:05Speaker 03

  A lot of that has, yeah, it's Rocket Money. A lot of that has to do with when I'm out on trips, I don't, I don't package my meals to go with me and then we kind of get on to the Uber Eats realm.

• 26:18Speaker 02

  DoorDash and Uber Eats, huh?

• 26:20Speaker 03

  Yeah.

• 26:20Brian Preston?

  And how about the personal care and entertainment?

• 26:24Speaker 03

  Personal care, a lot of, well, not a lot of, but therapies, counseling.

• 26:34Speaker 04

  Yeah.

• 26:35Speaker 03

  For Caroline. And then I kind of just mixed together that with like, getting Caroline's hair done or my hair is pretty cheap.

• 26:47Speaker 03

  But that, and then I think also Caroline likes to use like books or buy books on her phone. So we budgeted, I think, three hundred or four hundred dollars, four hundred and fifty dollars a month on buying books online.

• 27:06Brian Preston?

  Are you reading all these books?

• 27:07Speaker 04

  Yeah.

• 27:10Brian Preston?

  Did you just buy them? Well, no, I mean, but I just think of all the-

• 27:13Speaker 04

  I've found some new things now being a stay at home mom. I'm like, ooh, what other things do I have that I can do?

• 27:19Brian Preston?

  It's a lot of books.

• 27:20Speaker 03

  Yeah.

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• 27:48Speaker 01

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• 28:13Speaker 02

  Here's, here's a cold water. Uh, there's nothing wrong- Yeah. -with spending money. The, the way that you, I, I think a lot of people expect to, when they sit down with financial advisors, it's gonna be, don't spend, don't spend, don't spend, don't spend. Our goal is never to tell someone, hey, don't spend money. If you want to spend eighteen hundred dollars a month on berries, that's totally fine. If you want to spend money on books or hair care, we're never gonna fight someone on what they spend money on, or even how much they spend. I mean, a lot of people are gonna watch, they're like, oh my gosh, they spend fifteen thousand dollars a month. That's okay. So long is you're not doing that first and not taking care of the stuff that you should be taking care of first.

• 28:53Brian Preston?

  Exactly. You gotta pay yourself first.

• 28:56Speaker 02

  Cause right now, you guys are at an eight percent savings rate. Right. That's the math I did. Twenty-four, five, plus HSA, based on your income. You have all of the opportunity in the world, right? Like you, you, you were literally at the front of your journey where what you're going to be able to accomplish financially is gonna be amazing. If you do the things that you have to do early on to set yourself up for that. You guys have been in the unique position, you have a huge shovel. You make substantially more than the median income here in America. And what that affords you is the ability to be a little bit sloppy with how you make your decisions. Uh, what happens though, when we see this time and time again, we'll see someone who comes in

• 29:37Speaker 02

  and their potential client, they reach out and they say, "Hey, I wanna, I'm thinking about retirement. I'm ready to retire." And we'll look at their accounts and say, "Okay, man, you've got a million dollars saved up. That's great, a million dollars. How much do you spend a month?" And, "Oh, well, we spend fifteen thousand a month, twenty thousand." "Well, how much do you make?" "Oh, we make four hundred, five hundred." "Wait, wait, you've been making that much money for that long and all you have to show for it is this?" That's getting the priorities way out of whack. And so when I see two young people sitting here with all the opportunity in the world, but a little sloppy, it makes me think, okay, it's time to recalibrate.

• 30:13Speaker 03

  Yeah.

• 30:13Speaker 02

  A lot of times, we tell people, "Hey, you got a budget." A lot of folks have to budget out of scarcity. There's just not enough money to be able to do the things that I need to be able to do, so I gotta create a budget to stay inside that. At your income level, you guys are no longer operating from a scarcity perspective, but now you have to operate from a responsibility perspective. We have this big income, and it's gonna be crazy, because most of the times, you don't have to tell someone who makes almost half a million dollars a year, "Hey, you got a budget." But you guys probably do need to put some of that work in to figure out, "Where is my money going and how much of my money should be going there?" Because I, it doesn't sound to me that in the last 10 years, you guys have developed that muscle memory to be able to move into the place where you can be on a cash management plan. You guys-

• 30:58Speaker 02

  You were afforded the opportunity to skip some steps because of how the career worked, but that doesn't mean that you can skip those steps. Yeah. Does that make sense? Yeah.

• 31:07Brian Preston?

  Well, I think it's, I think this is an incomplete is what if I was grading your, your budget because $15,000 times 12, that's 180 grand a year. You're basically saving 30 grand if you didn't, if you took out the employer side. So you add those, you know, that's $210,000. Your income's 420. What's your net per month after, you know, all the, all this, what is, what is your pay stub that comes in or per month?

• 31:33Speaker 02

  On average?

• 31:33Brian Preston?

  Yeah.

• 31:34Speaker 03

  On average, I budget off 20,000. It's oftentimes.

• 31:38Brian Preston?

  But is that what hits in your, your account?

• 31:40Speaker 03

  Yeah.

• 31:41Brian Preston?

  So truly, so you got 240, so there's still, even off that math, there's a, there's 30 grand that's just missing from, from these numbers. And we're trying to get you to somewhere around a hundred thousand dollars a year. That, which by the way, that, let's just absorb that 29 year olds that can save a hundred grand a year. And a lot of people are like, wow, why, why put such a high goal on there? The thing I worry about for you guys, I'm old enough that I've seen where airlines get themselves in some trouble.

• 32:12Speaker 03

  Yeah.

• 32:13Brian Preston?

  And, and you know, things are good as long as they're good, but there can, we can, the economy can be cruel. And all of a sudden, what seems like can go on forever, the music stops. And that's what worries me at y'all's age is that you're basing your entire success off of a promise for these contributions from an employer in the future. And that's great. What I would, we all ought to have our Dave Grohl moment. If you, if you're wondering what I'm talking about is Dave Grohl was in not only Nirvana, but he was also in, you know, Foo Fighters. And him and his father had a weird relationship, but he said the best thing his dad ever told him was when you get that first paycheck.

• 32:56Brian Preston?

  You treat it like this is the, it's never, it's never gonna keep going like this. And I wish, when I worked with all these professional athletes and others who had huge money coming in while they were very young, I needed somebody to give them that moment too, is because you have a responsibility to, to get it right in the beginning. So then, you know, if you do this long enough, five years, seven years, 10 years, you reach a critical mass where your assets get big, you can kind of then take a, breathe in deep and go, you know what, I guess this system that is so lucrative in pay is going to stay together longer than I thought, but you can then do it out of a place of abundance and flexibility versus, you know, because nobody knows how long their career is going to be.

• 33:38Brian Preston?

  And I think you have to have a scarcity mindset until it actually lasts. Because in a lot of ways, your income coming in this big, this young, and so lucrative, you need to be a little nervous of it because you have a big income, you don't have a big net worth. So you're rich, but you're not wealthy. And there's a huge difference, and it ought to scare you because there's one thing to come from, from being, not having money, then becoming rich, meaning you have a big, strong income. But if all of a sudden the music stopped, and now you have, it's worse because now you have a wife, you have two children, you know, are counting on this, and you go back to being poor because you didn't make good, you know, decisions with it.

• 34:22Brian Preston?

  There's a weight that should be with that. And I worry, because I mean, you're not the first person I've seen this. I remember back where my hometown was, I remember I got a prospect and he was a very prominent attorney in the community. I was so excited this guy wanted to be a prospect.

• 34:38Speaker 02

  Because he was a, he was a known entity.

• 34:40Brian Preston?

  Known entity, making really good money, really good money. And then I remember when he sent me his, you know, and by the way, he came to me, he wasn't a young person at this point. And I was like, oh.

• 34:50Speaker 02

  How do you not have more savings?

• 34:52Brian Preston?

  Yeah, I mean, it makes me sad for people when I see them come to me in their 40s, when they've made 400 plus thousand dollars for decades, and then they don't even have a million bucks saved up. You're like, what are you doing? Now, I know you would have, assuming this employer keeps dumping money in there, but that's a big assumption. And I just, and that's why I took away everybody I went in the comments section. They're like, why is this guy not let people count the employer match? And I was like, well, because when you make over 200 grand a year, you're counting on somebody else when you shouldn't have to. And you ought to carry that responsibility because it's exactly what Bo said earlier is that what stinks is if you don't pay attention to this margin,

• 35:34Brian Preston?

  you're going to wake up one day and you're going to be like, where's our money going? We're supposed to, because you're going to hire a financial planner, and they're going to say the same, what do you spend a month? And you're going to say, I spend 15 grand. Malarkey, you don't spend 15 grand. You know, we can show you definitively based upon just backing into what you're paying taxes and what's coming out nut. There's more coming out, and you just don't have a grasp on it right now. And I'm not trying to be harsh, it's just, but I just get so excited for somebody in y'all's age and y'all's income. Let's do something, because y'all can, you get it all. You get to do memories, you get to do awesome things with the kids, and you get to, at the end of the rainbow, get this pot of gold. That's not something that's given.

• 36:18Brian Preston?

  Believe me, your comments section is going to be like, these people got everything. And I know that they, y'all have your own struggle too, but I'm just telling you that I want you to be energized when you leave here to actually save and build this wealth.

• 36:31Speaker 04

  Yeah, it's really nice to have you guys say something and to like, help us be aware, you know, because we only talk to each other about it, you know, so thank you.

• 36:40Brian Preston?

  Now, Bo, by the way, I talked to Bo this morning. He goes, oh, no, Brian, you've over-prepared, you've got mindsets. He goes, give these people a break because they're 29 years old.

• 36:48Speaker 02

  They're 29, and that's why a lot of us, again, a lot of people are afforded the opportunity that we're young, and they make bad choices. They make bad choices with small sums of money. You guys have been young, and you've been able to make less than ideal choices with large sums of money. The good news is if you can rein that in and if you can fix that and you can right the ship, then the future looks bright.

• 37:11Speaker 03

  Yeah.

• 37:11Speaker 02

  I mean, I'm, uh, I think mandatory retirement age for most airlines is age 65.

• 37:15Speaker 03

  Yeah.

• 37:16Speaker 02

  Do you see yourself likely flying all the way out until age 65?

• 37:19Speaker 03

  I do.

• 37:20Speaker 02

  You do? Okay. Cause a lot of folks say, hey, if I'm really doing this well at 29, there's a good chance that by the time I get to 40s, 50s, I might decide I want to do something else. Well, those sorts, that sort of flexibility and those sort of options are only available if you make the decisions now. And right now, you guys riding the ship will not require a lot of hard decisions. It'll require a lot of discipline.

• 37:42Speaker 03

  Yeah.

• 37:43Speaker 02

  But easy decisions.

• 37:44Speaker 03

  Yeah.

• 37:44Speaker 02

  The longer you wait to fix that, the more difficult the decisions become to get the ship righted. Does that make sense?

• 37:52Speaker 03

  Absolutely.

• 37:53Speaker 02

  Walk me through, uh, just one last question I had as, as we're looking at your expenses. You have a Telluride lease and a Tesla lease. Are those, those are actual leases, not auto payments?

• 38:03Speaker 03

  They're leases, yeah. So I thought, well, you know, instead of these negative equities and whatnot, which we haven't ever rolled in any negative.

• 38:12Brian Preston?

  We'll just turn into rent payment.

• 38:14Speaker 02

  Instead of having any equity at all, let's. You know what's about the negative equity?

• 38:19Brian Preston?

  We won't have negative equity, but we'll just pay rent forever.

• 38:22Speaker 03

  At the time, I thought it was a good idea. Since listening to y'all's content, I have realized very quickly that that's not a good idea. The, the Tesla, I enjoy it, but, um, I don't think I'll keep it at the end of the lease. The, the Telluride, we will. Yeah. So the plan is to pay cash for it at the end of the, the lease.

• 38:44Brian Preston?

  I would be curious, cause this does bring back to the goal number one of having a plan. If we could go back and look at the net worth statement, cause I want to give you guys an opportunity, cause I, when I was looking at this, it caught me off guard a little bit that I see, cause.

• 38:56Speaker 02

  I see a brokerage account with $3,900 in it. So, because I was like, man, at this level of income, there probably should be setting up automatic savings, not only into the retirement accounts, but probably into that after-tax brokerage account. But then I see the kids' savings accounts, also, they're right at 1,000 bucks.

• 39:13Speaker 03

  Yeah, so the child's savings accounts, that's something that just auto pulls 100 bucks a month.

• 39:18Speaker 02

  Okay.

• 39:20Speaker 03

  And then the brokerage was also, I was doing $500 a paycheck into the brokerage until the whole house situation.

• 39:30Speaker 03

  So, to go back to that, I really want to automate, because I think that's going to take the process of moving out of it, and it just, it happens. That was, that's a big goal for us for 2026. We said 2026 is our year to get ourselves right.

• 39:48Speaker 02

  Love it.

• 39:48Speaker 03

  Because I feel like we're playing with dynamite, because it's, we have the tools, and we need to utilize the tools the way that it's going to help us.

• 40:01Speaker 02

  I love it. All right, I've got some homework for you guys. You ready? Yep. Obviously, we're going to go back to the drawing board, and we're going to put together a plan, and I'm already so excited, because we know enough, because we are familiar with your employer, and we know how the benefits work, and so it's, I'm super excited. But I do think there's some work that you guys ought to do. Number one, together collectively, because when I ask you, hey, what do you spend a month? You're like, it's crickets. I'm like, ah! It's totally okay if one of you is the finance person and the other one is not the finance person, but in these early stages, it does matter that you're on the same page. Yeah. While you may not be in the app, and you may not be coding transactions, you guys should have a monthly come together where you're like, hey, how'd last month look? And y'all should be on the same page about that. So I think you should both get on the same page about budgeting, both get on the same

• 40:46Speaker 02

  page about tracking, figuring out where your money's going. One of the things that we're going to do for you, and you guys can go and start this work, is we're going to re-triage the financial order of operations. If the goal for our next dollars, to figure out where we are in the foo, okay, if I'm in this step, what do I need to do today to move through this step, and then on to the next one, and then on to the next one, and then on to the next one? So we're going to do some of that work for you, and we're going to put a timeline, based on what we know to be true for you guys. There are also some opportunities you're missing out on, that we didn't even really get a chance to talk about, but we'll put in the plan. You have a rollover IRA with $1,400 and all that thing is doing there is just being real annoying and preventing you from doing backdoor Roth contributions. So we're going to talk about opportunity that might exist there.

• 41:30Speaker 02

  Your employer also has a really unique thing where not only can you do pre-tax contributions or Roth contributions, you can also do after-tax contributions. And there's a really unique thing about your employer where if you do those after-tax contributions and you fill up your 415 limit, you don't credit out the employer. So the homework I want you to do is read a little bit on the pilot forum around the strategies that are involved there because there's some really exciting stuff that you can be doing. And the big thing is, is I think you guys should sit down and talk about, okay, what do we want our future to look like? Right now, we're making decisions that make today look good and enjoy today, but we want to make sure we're sacrificing all of tomorrow for enjoying today.

• 42:11Speaker 02

  How do we strike that balance and carry the responsibility of this big shovel really, really well so that we can give ourselves future flexibility and options?

• 42:20Brian Preston?

  I find myself sitting here because I couldn't, I was like, Brian, put the calculator down. It's because, I mean, I sit there, what's going to be frustrating for you guys, and you have to promise me you'll just finish the drill because it's going to take us a few months to get you fixed, is because immediately I can go, I'm just going ahead and laying out some, you just call them like shadows of what will be coming or foreshadowing. We're going to be, you're going to have to boost up your emergency reserves. We're going to be, have to tackle some of this debt. So it's just going to be frustrating to me because I see such an opportunity with the mega backdoor Roth. I see some opportunities with let's start loading up this Roth accounts, let's even start doing something for the kids. But we're not going to be able to do any of that for a number of months because we're

• 43:05Brian Preston?

  going to just like, hold? You know, just hold until you see the whites of their eyes because we have to get through unwinding some of these other decisions first. And that's going to be somewhat frustrating because with your level of income, we're going to want to go rip out of the starting line and we can't, we have to go back and do remedial stuff to fix the bones of your financial situation. So hang in there with us, we'll have a plan for you. And then what I look forward though is that, man, oh, man, we get you on the right path, right path with this thing. It really is going to be automatic for the people at that point is because this thing's just going to start growing and you're going to wake up one day and be like, how did we get here? And you're going to have all the flexibility and opportunity of the world.

• 43:48Speaker 03

  Awesome.

• 43:49Brian Preston?

  Very good.

• 43:49Speaker 02

  Any, any final questions for us before we get to work?

• 43:52Speaker 04

  No.

• 43:53Speaker 03

  Um, the only thing I, I do, I'm expecting the, another $20,000 check that I didn't have in the next few days.

• 44:04Brian Preston?

  Awesome. Well, that's why the order of operations is gonna be so helpful for you because it's things like that.

• 44:09Speaker 02

  We can already tell you what we're gonna do with it.

• 44:10Brian Preston?

  This process up. You'll know what to do with your next dollar.

• 44:12Speaker 03

  Yeah.

• 44:13Brian Preston?

  So it's not gonna be like, well, what are we gonna do with that $20,000 that showed? No, we'll, we'll have a place. You might, oh yeah, that just cut off. Think of that, maybe that sped it up two months for us.

• 44:21Speaker 04

  Yeah.

• 44:21Brian Preston?

  And that's gonna be really cool from, from the implementation or triaging of your financial life.

• 44:27Speaker 03

  Awesome.

• 44:28Speaker 02

  Very good. All right, we're gonna get to work.

• 44:30Speaker 03

  Awesome.

• 44:30Speaker 04

  Thanks, guys.

• 44:32Speaker 02

  Brian, what a fantastic conversation with Jonah and Caroline.

• 44:36Brian Preston?

  Yeah, I, I loved it. I mean, how often do you have somebody come to you in their late twenties?

• 44:41Speaker 02

  Just crushing it.

• 44:42Brian Preston?

  With the income potential, it's not even potential, it's what they've actually have, making over $400,000 a year. The only thing that kind of, there's a few things that, that I did wanna kind of full stop on. First of all, they've only, their investment assets are about half of where their income are, and they're about to cross into 30. We gotta get that up. We'll cover it more on that.

• 45:01Speaker 02

  The income has come along lately, right? The income has been a whole time. Cause I do wanna say that, you know, we talk about wealth creation and the three ingredients, right? They've certainly got time on their side at 29. It certainly seems like there should be a lot of margin based on the shovel. So I think the, the one that we need to tweak and the one that we need to sort of, uh, maybe double down on is the discipline. That's where I think they need to really focus their attention right now.

• 45:24Brian Preston?

  I did, we got, we got a few updates that I wanna make sure that we bring the audience up on, on the journey with us. You know, they have twins, baby twins. We found out, you know, look, Jonah has life insurance through work, but we think that he ought to go buy more term life insurance outside of work. And especially while young, healthy, and, um, term insurance is gonna be cheap, go be able to do that. So we can level set and bring that up to a much better way. And then we also found that they don't have wills yet.

• 45:52Speaker 02

  Which is a big thing that needs to change.

• 45:54Brian Preston?

  We gotta make sure all parents who watch this content, look, even if- If you think that the money will take care of itself, whether it's through beneficiary designations or something else like that, if you want to know who's going to take care of your kids, make sure it's stated in a legal document and that's what a will is going to help cover that.

• 46:09Speaker 02

  And the good news is when you have young kids, it doesn't have to be overly complicated. You just get it in place, you pay whatever the cost is for the documents, you kind of set it and forget it until it's time to revisit. So it's just a box that they ought to check. So, once they knock out the life insurance, get the wills in place, then we can start focusing on the fun stuff. And what we really wanted to figure out is, okay, how much margin do they actually have to work with? And so as we kind of went back and forth thinking about their budget, they said that realistically, they could live on about $11,000 a month. The income that he has coming in after taxes was $22,000 a month. So we have 22 coming in and 11.

• 46:47Brian Preston?

  Crazy.

• 46:47Speaker 02

  That means that we have $11,000 a month that we get to do something exciting.

• 46:53Brian Preston?

  Now, we immediately were like, good, we're going to finally be able to get rid of that crazy 401k loan. But once again, we have another update that we found out. We reached out to them after the show recorded. We found out they had a big tax refund as well as they did take some of their cash reserves.

• 47:08Speaker 02

  Sure.

• 47:09Brian Preston?

  I don't know if I exactly love that.

• 47:10Speaker 02

  I love it. Get rid of that 401k loan.

• 47:12Brian Preston?

  But they were able to completely wipe out the 401k loan. It's gone.

• 47:16Speaker 02

  So now that that's gone, that would be the high interest debt. It's satisfied. Now we get to continue moving along in the financial order of operations. And one of the things that you just said is they ended up taking some out of their emergency fund in order to be able to satisfy that 401k loan. So in my opinion, I think what they need to do is they got to build back up the emergency fund. They got to get back to a fully funded since he is the primary income earner. And since it is a large income, I'm going to argue that they need six months of living expenses inside of liquid cash available. So if we know that it cost them $11,000 a month to live, they need at least $66,000 to have a fully funded emergency fund.

• 47:54Brian Preston?

  And based upon what's kind of a leftover still, that's, here's the crazy part with the big shovel. Probably a little over four months.

• 48:00Speaker 02

  Yeah.

• 48:00Brian Preston?

  Right at it.

• 48:01Speaker 02

  They're going to knock that out really quickly.

• 48:02Brian Preston?

  That's like a hiccup more than anything.

• 48:04Speaker 02

  So, once they get there, once they knock out the emergency fund, now we get to start saving. Now, we get to start building for the future. And just because they're young, and just because they have a high income, and just because they have a lot of opportunity, doesn't mean that the food doesn't apply. I love that even in their situation, we get to begin talking through the Financial Order of Operations, and it still applies even to someone in their situation.

• 48:27Brian Preston?

  Well, this is the part, you know, where I get excited, because I don't want them to just have only retirement assets like 401K. How about step number five?

• 48:34Speaker 02

  No, I mean, tax-free accounts.

• 48:36Brian Preston?

  And we found out, Caroline, you know, we could do a spousal Roth IRA immediately for her. If we were doing a backdoor conversion process.

• 48:44Speaker 02

  That's right.

• 48:45Brian Preston?

  It would be really powerful. And then he, because he has a great 401K. We work with a lot of the pilots that work at the airline he works at. They have a great 401K that's got index funds, it's low cost. So, we could roll his IRA up into that 401K, and then he too could do backdoor Roth contributions.

• 49:02Speaker 02

  That's exactly right. As soon as he cleans up his account structure, he can put in $7,500 and do a backdoor Roth, and then she can put in $7,500 through a backdoor Roth. They've already noted they're doing the Health Savings Account. So, when they're maxing that out, that's another $8,750. Once they've done that, they've checked off step five of the Financial Order of Operations, now he gets to go to step six. And step six is now maxing out his 401K. Remember, the rules just increased to where now you can do $24,500. What's interesting is even when he maxes out at $24,500, and maxes out his Roth, and maxes out her Roth, and does the HSA, they're still only at 11.5% savings rate.

• 49:42Brian Preston?

  Right.

• 49:42Speaker 02

  They've not even hit the 25%. So, if we want to then kind of fill in the blank, fill in the gap, in order to hit a 25% savings rate, we think that in an after-tax, regular brokerage account, they ought to start saving $4,730 a month. And that would get them to a 25% savings rate.

• 50:00Brian Preston?

  And I want them to be at 25% because I know a lot of people think the easy button is, take advantage because the employer is loading it up. But, we've been around the block for a while, and I think to just assume that you're going to be able to get Eighteen percent from your employer forever is, and maybe it will, maybe it works out. But when you're so young with such a big income, I think you take that responsibility serious and you front end load it with your own money. And that way you're pleasantly surprised. You can always, it's easier to come off the gas than it is to try to catch it up later on. If just assuming everything's gonna be okay, just because of the employer.

• 50:35Speaker 02

  What I think is amazing is that if they can begin doing this and they can really exercise this discipline muscle, starting now at age 29, look at what happens. If they can start, right now they have $240,000 saved, but saving 25% of his gross income, about $100,000 a year. By the time they get to 45, their portfolio is worth over $4.7 million. By 55, 13.3. And this is astounding. By the time they get to 65, if nothing else changed, and they just stayed on this current trajectory, assuming that they made a 9% rate of return based on their age, $34 million retirement portfolio.

• 51:13Brian Preston?

  Now, look, before I start shaking because that's such a huge sum of money, we do need to kind of ground it in the fact that part of this is because they're so young.

• 51:21Speaker 02

  Sure.

• 51:21Brian Preston?

  I mean, these are people who are in their twenties. Inflation will have an impact. That's why we did bring this back to, to present value of what the purchasing power. I thought it was interesting at 45, they're going to have the potential to not even count the employer portion, close to 120 grand a year.

• 51:38Speaker 02

  $10,000 a month.

• 51:39Brian Preston?

  $10,000 a month. 55, close to a quarter of a million dollars. Age 65, little less than half a million dollars in today's purchasing power. So that's, that's the part that's exciting to me. Yes, those numbers, but I think it's hard to know when you go in 20, 30 years in the future. We don't know what these numbers really will be. And that's why you have to be careful. But looking at the purchasing power and the cash flow, that's, that's really exciting.

• 52:02Speaker 02

  Now, you have already alluded to this. This does ignore, this does not pay attention to the fact that he does work for an incredibly generous employer. And that employer is doing a huge match. And so if we look at the numbers and we factor in the employer match, not only is he saving 25%, but then you get the 18% for the employer. Well, now you can see the numbers get even more accurate. Astronomical by forty five, the portfolio could be worth seven and a half million dollars. By fifty five over twenty one million and then by sixty five, almost fifty five million dollars. And so one of the questions that somebody would probably say, well, guys, well, why on earth are you projecting a fifty million?

• 52:42Speaker 02

  Surely he doesn't need to be saving at this clip. Surely they could back down. And the answer may be that they could, but not yet. Cause I want to remind you, even though this projection shows that they are on the path for a fifty five million dollar portfolio. As it stands right now, right now, today they have two hundred and forty thousand.

• 53:01Brian Preston?

  Right.

• 53:02Speaker 02

  Two hundred and forty thousand dollars today is not fifty five million dollars tomorrow.

• 53:06Brian Preston?

  Even one times income.

• 53:07Speaker 02

  That's not, they need to begin progressing on this journey. And then as they do that, they may arrive at a conclusion that, okay, maybe we can do some other stuff. Maybe we can back down our savings right, or maybe we can take advantage of the mega backdoor Roth. Or we can start really front end loading the Roth dollars, we're building up to the 401k. But I think they have to get a little bit further down the line before they get to start making those kinds of assessments.

• 53:30Brian Preston?

  That's what, cause we do work with a lot of pilots from this airline. There's a lot of them, we race to get the money into the, to the 401k.

• 53:36Speaker 02

  Yep.

• 53:37Brian Preston?

  Because you have found, you know, we've discovered they have that cash balance plan.

• 53:41Speaker 02

  Yep.

• 53:41Brian Preston?

  That they get to, it's amazing.

• 53:43Speaker 02

  Even if you crowd out the employer, you still get the money. It's insane.

• 53:47Brian Preston?

  But I do think it's, we need to come back and remind everybody, cause a lot of people watching this might go, well, wait a minute. When do I know if I get to count my employer match or not? Remember, if you, if you're a married couple, it's over two hundred thousand dollars. If you have that type of income, we don't want you counting the employer match. And the reason is, is because with that type of income, there's a great responsibility. It's because you are beyond the social safety net of social security and beyond. You're beyond the pension benefit guarantee corporation and all that it can do for you. Your benefit is so much that we just want to make sure that you're being responsible with that big shovel.

• 54:22Speaker 02

  Now Jonah and Caroline are a prime example of someone who right now, I, I think that they just need sort of a simple plan to move them along the path. But they, they are rapidly going to get to the place to where life becomes more complicated. And they might not know what they might not know and they're gonna be prime candidates for folks that potentially should take their relationship to the next level should figure out how to get a personal plan built for them. But we just said, hey, let's think of an example of something that could likely happen for them. Like, maybe they want to do a coast fire thing and he has a high enough income that they could even do like a coast fire that turns into fat fire. So it's like coast, fat, fine, fire, potentially. If they were to do that, we said, okay, what if they just save aggressively? 25% until age 45.

• 55:07Speaker 02

  And then at age 45, maybe they'd pull off the savings and they just let the employer match continue to fall into the portfolio. Even at that level, by 45, again, saving that 25%, they get to that seven and a half million dollars. But then if they're able to just coach from that point, that seven and a half turns into 19 million by 55 with the employer match and still has the ability to turn into $48 million by retirement, which if you back it into today's dollars, could create an income of over $600,000 a year. They are going to be in the driver's seat where they get to choose what they want their life to look like. Assuming they get further down the path, they're just not quite there yet.

• 55:50Brian Preston?

  Yeah, I mean, before we let the, these, you know, illustrations amp it up too much, I still want to focus. The next five years are important.

• 55:57Speaker 02

  That's right.

• 55:57Brian Preston?

  But here's the good news. They are gonna be able to, because I know they had a big goal of they wanted to make sure that they could fund the kids 529s and other things. You know, for a lot of people, that's, that's a, you have to defer it because we have to make sure you put on your oxygen mask before you can start funding. They're gonna be able to do it all. And that's, that's a really powerful and exciting, you know, planning thing that we're gonna be able to do for them. We don't have to say, hey, be the bad guys. Don't save for the kids' college. They can actually do it all.

• 56:22Speaker 02

  I'm so excited that they came on, let us take a peek behind their finances. And man, they have a bright future. I'm so excited to see what they end up doing and where they are three, five, 10 years in the future.

• 56:36Brian Preston?

  Yeah, and this is, I mean, like I said, they're in their twenties. So when you run illustrations, because there's so much time, they get big. I get excited. Because people with this type of income, this much potential, you've already alluded to it, but I, this is what, for financial planning clients, I love these annual meetings. Because instead of this being a projection where we're running five, 10, 15 years in the future, we actually get to spot check this every year, reshape the direction. It's powerful and it's fun. This is why, it's kind of like every year my own do, you know, your home renovation tour, financial edition, that's what we're, you know, we get to do with people like Jonah and Caroline, and I just thank them for coming on. Bo, if others want to come on Making a Millionaire, what do they need to do to check it out?

• 57:21Speaker 02

  Yeah, if you'd like to be a guest on Making a Millionaire, you can go to moneyguy.com/apply. Or if you want to check out any of our free resources, any of our free tools, go to moneyguy.com/resources.

• 57:32Brian Preston?

  Guys, I'm your host, Brian, joined by Mr. Bo, Money Guy Team, out.

• 57:38Speaker 02

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

• 58:24Speaker 06

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