They Were Burned by a Bad Financial Advisor | Making a Millionaire

Max (46) and Valerie (47) thought they were doing everything right. But while the market was soaring 8-10% for everyone else, they discovered their advisor lost his license, while they lost over $150,000, plus years of compound growth they'll never get back. We walk through the steps they can take to correct their situation and get back on track with the Financial Order of Operations. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠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

  This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.

• 0:31Speaker 01

  Low energy, unfocused, foggy? You might be dehydrated. Whether it's hot yoga, over 100 degree weather, or too much sun. Gator Light, with a specialized blend of five electrolytes, was scientifically designed to help move fluids into the body faster for rapid rehydration. Shop now at retailers nationwide. Gator Light hydrates faster than water. Is it in you? Symptoms noted are signs of mild to moderate dehydration. Consult a healthcare professional if symptoms persist.

• 0:59Speaker 02

  It just didn't feel right. So we decided to pull our money away. Forged signatures.

• 1:03Speaker 03

  Penny stocks.

• 1:04Speaker 02

  He also changed our risk profile. There was something like $300,000 that went through our account and we did not have that kind of money.

• 1:11Speaker 03

  So you asked me how I feel about being here. It's a little reserved from that.

• 1:14Brian Preston?

  I get that. I completely get that.

• 1:21Speaker 03

  So we've known each other since high school. We met at 15 years old. And that was an interesting start. She didn't really like me. I'll just let that to the record. But I worked my way into it. And so then we got married very young. I was 19 and she was 20. Oh, wow. Yeah. And so we've been together since then, so 27 years.

• 1:40Speaker 02

  Yeah, I like to say we married for love because we did not have a plan. We just were like, we're going to get married and everything will work out great.

• 1:48Speaker 03

  I say she married me for potential.

• 1:50Brian Preston?

  That's right. She was betting on the outcome. That's right.

• 1:53Speaker 03

  I had nothing.

• 1:55Speaker 02

  And we just entered the empty nester phase.

• 1:58Brian Preston?

  How's that going so far?

• 1:59Speaker 02

  Well, I mean, there's some boomerang, right? Like they're going to come back and our two youngest just started as freshmen and our oldest is like probably a sophomore, late sophomore year.

• 2:09Brian Preston?

  So three in college at the same time.

• 2:10Speaker 02

  Honestly, it feels like the middle.

• 2:13Brian Preston?

  It sounds like you did kids like, let's say with kids, and you're like, yes. And then you threw three of them in like really quick succession.

• 2:19Speaker 02

  They're all two and a half years apart, so it was quick. But it feels a little bit like the messy middle because we're paying for three kids in college and helping some extra finances. And so we have like a scholarship plan for them and we help pay for school and but they have to work and they need to be paying for their groceries and life and fun.

• 2:38Speaker 05

  So you cover school and the basics. They gotta cover everything else.

• 2:40Speaker 02

  Yes, but does that always happen?

• 2:42Speaker 05

  Well.

• 2:43Speaker 02

  It doesn't always happen. It's not always happening. They're in a small town. Sometimes finding a job is a little hard.

• 2:50Speaker 05

  Got it.

• 2:50Speaker 02

  So there might be some help that we give.

• 2:53Speaker 03

  And as far as background, none of my parents taught me anything about finances. I come from feeble beginnings. And so, once I started having money, I realized how great it was to have money and spent that money.

• 3:05Speaker 05

  This is awesome. I'm gonna spend it.

• 3:08Speaker 03

  Yeah, it's kind of it's kind of like that candy. You can't get enough, really. So so I started spending a lot of that. And then we started to kind of whip it into shape.

• 3:16Speaker 05

  When did like taking money seriously start for you guys as a couple?

• 3:19Speaker 02

  I was always the saver, the like, pay attention to my money. But in about 2015, we found Dave Ramsey.

• 3:29Speaker 05

  Okay.

• 3:30Speaker 02

  Did the Dave Ramsey thing. We never really had a lot of debt. We had a car payment. We had some medical debt from some kid things. But never really credit card. It always stressed me out. But I wanted us to like, he had a real job, like we were making real money. And I was like, let's get our let's get on track. And so we started Dave Ramsey in 2015. And

• 3:53Speaker 03

  It was hard.

• 3:54Speaker 02

  It was hard.

• 3:55Speaker 05

  What was hard? You said it was hard.

• 3:56Speaker 03

  Oh, it was hard for me. It was probably easy for her. It's the song that she sings. So for me, it was somewhat off track for me. I remember I recall, I'm gonna call you out a little bit on this one.

• 4:05Speaker 02

  Okay.

• 4:06Speaker 03

  I remember early on in our journey, I would go out to lunch, for example, and she would call me a couple hours later and say, how was that lunch?

• 4:12Speaker 05

  And she was looking at the statement.

• 4:14Speaker 03

  And this was before GPS.

• 4:16Speaker 05

  Yeah.

• 4:16Speaker 03

  And so I want I want everybody to know that.

• 4:18Speaker 02

  That's true.

• 4:19Speaker 03

  It was a little bit of a control adjustment for me. And then for her, she's come a little bit more torn to lenient side of understanding how really we need to manage our money.

• 4:28Speaker 02

  Yeah, now, after all these years, he A little bit more like, oh, I don't know if we should spend money. And I'm like, yes, yes.

• 4:35Brian Preston?

  Was it needed back then though, Max? I mean, or you, I mean, I know it's probably like, oh, I'm getting called from the boss. But was it needed back then to kind of get things going?

• 4:44Speaker 03

  Attention wasn't there. And so I think it was needed to, sometimes you over index on it, but it's necessary at that time. So I guess I'm a slow learner in this part, in this part. So I'm, I'm glad that she was patient with me, at least to, to usher me along. And so it definitely was needed.

• 5:00Brian Preston?

  And why is because she, because Valerie just shared, it's kind of flipped a little bit. Why is it now important to you? Is it because you're thinking of the future or what's going on?

• 5:08Speaker 03

  It is the future. Yeah, I, I think if I spend it now, how many more years do I have to work? Whereas younger, that wasn't even a thought. It was a spot where I'll just continue to work. I'll make more money, even if we're in the red.

• 5:20Speaker 05

  Well, obviously you guys have been doing something right. Like when it clicked, it seems like it clicked pretty well because you were kind enough to share with us a net worth statement. And as you guys sit here at 46 and 47 years old, it looks pretty solid. You have a total net worth of just under about 1.4 million dollars. A household income, 213,000, and it looks good. We have cash, about 128,000 dollars. Your investment portfolio represents about 732,000. Your home is worth 720 and you only have a mortgage on it of about 220,000 dollars. So it seems like you guys are in a pretty solid spot. Do you agree with that assessment? Do you feel like you are ahead of the curve, behind the curve, right on the curve, or you have no idea what the curve is?

• 6:03Speaker 02

  Because I've listened to you guys for a while, I know we're behind, but I also feel like we're okay.

• 6:09Brian Preston?

  But tell me why you feel behind.

• 6:10Speaker 02

  Well, when you look at our income versus that multiplier, we should have more money. But also I know we don't, sometimes that income misrepresents what actually comes home. And so I know we don't spend that much money and I know that we're saving money. And so logically, I feel like whatever that number becomes, we'll figure out how to live off of because that's what we've always done. We've never really carried the debt. But when I hear the big number, like the multiplier, I'm like, oh gosh, we're behind.

• 6:42Speaker 02

  But are we? I don't know. I guess that's where we're kind of at.

• 6:45Speaker 03

  See, and I don't have the show to reflect on, so I feel like we're behind.

• 6:48Speaker 05

  Okay.

• 6:49Speaker 03

  And the reason why-

• 6:49Speaker 05

  Based on what?

• 6:51Speaker 03

  I'd like to retire as soon as I can, so obviously I feel like I'm chasing some sort of of of goal there. But also, we had a reset in 2016 from a sense of investments. And so I feel like that time and that impact has set us back. And I feel like ever since then, we've been trying to recoup.

• 7:08Speaker 05

  What happened in 2016?

• 7:09Brian Preston?

  What happened in 2016?

• 7:10Speaker 03

  Sure, we partnered with a financial advisor during that time and that advisor-

• 7:16Brian Preston?

  You say partner, like hired a financial advisor?

• 7:18Speaker 03

  Hired, yeah. And and so we began to see that we wanted to retire and save some of our money for the future. And so we interviewed a few financial advisors. We liked that it was a family. We liked that they were young guys. And so they kind of oversold some of their credentials and oversold their brochure is what it's called. And from that side, we thought they were going to be balanced and we thought they were going to take our risk profile to in consideration, and it really went sideways.

• 7:45Speaker 05

  Like sideways, like the investments performed really poorly sideways?

• 7:49Speaker 03

  Well, this was right when Trump took office and the stock market began to recover from that side. And I was talking to my friends and they were like, oh, we're loving it. We're getting eight to 10%, sometimes more. And we're over here stuck at three, four.

• 8:01Speaker 02

  Sometimes negative.

• 8:02Speaker 03

  Sometimes negative.

• 8:03Speaker 02

  So it made us look into what was going on and it just didn't feel right. So we decided to pull our money away. And when we pulled our money away, we decided to contact a FINRA attorney. And he looked at all of our statements and basically what ended up being found was churning,

• 8:22Speaker 02

  forged signatures.

• 8:24Speaker 03

  Penny stocks.

• 8:25Speaker 02

  He also changed our risk profile.

• 8:28Speaker 03

  He did inverse ETFs and ETNs?

• 8:32Speaker 05

  Wow.

• 8:34Speaker 02

  We have no idea. So we ended up reporting him. He got, he lost his license. In total, there was a lawsuit that we were not able to be a part of. And that lawsuit was only 10 people at his firm and that they said $2.6 million at a minimum of a loss for that lawsuit. Our attorney said we had somewhere between 80 and $150,000 in loss.

• 8:59Brian Preston?

  But, but it was, it was not just the, that's what you lost. So it was probably also an opportunity cost.

• 9:04Speaker 02

  Right.

• 9:04Brian Preston?

  Of what the money could have been working and it, and it just wasn't what, um.

• 9:09Speaker 02

  So we pulled out in 2019. That's when we pulled our, our money out.

• 9:13Brian Preston?

  Okay.

• 9:14Speaker 02

  And to calculate the loss, the, the FINRA attorney was like somewhere between 80 and 150. But again, you're right. We can't calculate exactly what it would be because it was just too hard with all the churning. At one point, there was something like $300,000 that went through our account and we did not have that kind of money.

• 9:32Speaker 03

  And we were first, we were forced to pull our money out. So you asked me how I feel about being here. It's a little reserved from that.

• 9:38Brian Preston?

  I get that. I completely get that. I mean, you even, you lay, you lay your heart out there and then somebody takes advantage of it and use it. Now, I, I did think it was interesting when I looked at now how you invest, y'all are a hundred percent index funds.

• 9:52Speaker 02

  So after that, I was like, I'm not letting anyone touch our money again. Like this guy messed us over. We trusted him. We had meetings with him here or there. Occasionally he would give his brother to us who was not certified, but we thought it was just like a pass through information. And once this happened, like no way. So I started reading books that like Simple Path to Wealth. I found you guys, because this is like 2019, 2020, listened to other podcasts, read a few other things that try to give me more details about actual investing, because that's one thing you're not taught if you do just Dave Ramsey. It's just like, go invest, find somebody. And now we've been so burned. I was like, I gotta figure it out. And I just kind of went with what I could learn.

• 10:34Speaker 02

  I know there's gaps and I would kind of pass it by him and be like, this is what this says. And he'd read a podcast or, or read a book or watch a podcast and be like, okay, that sounds good. And so. Yeah, I mean, I'm just kind of at that VTSAX, kind of like, keep it as simple, as simple as can be, and it's been doing well for us, honestly.

• 10:55Brian Preston?

  Sure, sure.

• 10:55Speaker 05

  I mean, and one, thank you for sharing that. That's like a super rough, difficult, hard thing to go through. But I think it's worth level setting right now, that even though you went through that thing in 2016, or from 2016 to 2019, you guys are still okay, right? It was, I think you used the term setback. It was not like this cataclysmic thing, and you still have time on your side to move towards an ultimate goal that you guys have. I'd love to hear from you. What are the goals that you have? Obviously, you wanted to come, get some insight, and get some planning, and think about that. What is it that you guys are trying to move towards? What would be a win for you guys from a financial standpoint in the future? You said retire as soon as I can. Does that mean like today? Like tomorrow?

• 11:36Speaker 03

  Well, I throw that out there with the hopes that really, we don't have a number that we're landing on, per se, from the sense of when I can retire. Because there's a lot of dynamics going on right now, with our children still being in college, and they have not quite landed on what they're doing. So don't necessarily know what that looks like on where we can redirect some of our funds, or maybe even lower our overhead from the sense of what it takes to retire every month or so.

• 11:59Speaker 05

  Do you even know what it costs? Like, if the kids were truly out of the house, not unlike the mom and dad payroll. And out of college. Do you know what it would cost you guys to live the life that you want to live?

• 12:12Speaker 02

  My guess is somewhere between $6,000 and $8,000 a month. That's currently with a mortgage, which is a big chunk of that. So I think if our mortgage were paid off, it would be a couple thousand less than that. In Texas, our property taxes are high, so there still is always going to be a $1,200 to $1,500 monthly fee for taxes.

• 12:35Speaker 02

  So maybe, maybe if the house were paid off somewhere between five and seven.

• 12:40Speaker 05

  Well, one, you have a lot of equity in your house, right? So it's a huge, you don't have a huge mortgage relative to the value of your home. But the interest rate's pretty high at 7.375. When, when did this mortgage come to be? Walk us through how, how we ended up here.

• 12:54Speaker 02

  When our last child graduated, we were in a town we didn't want to be in. And so we just, we've had this house one year.

• 13:01Speaker 05

  Okay, so it's a new house. You just rolled a lot of equity from the prior home into this one.

• 13:05Speaker 02

  Yes. So it's a little bit smaller than we had with a family home, but it's still big enough for the kids to boomerang back and forth from. Is it going to be our forever home? I'm not sure. We, I want to be where the kids kind of land. And the next five to eight years, they're going to be starting their life and finishing college. So I don't know that this is our forever home, but also I care give for my family. I have some family members that are pretty sick that live close by. And that home could, could potentially fit them in it, or we might have to put a casita on the back, which in Texas is like a pool house. Like a little casita on the back to help with some of their caregiving as it progresses.

• 13:46Speaker 02

  So we could be here somewhere between five to eight to 10 years. But eventually wherever the kids land is probably where we'll land.

• 13:56Speaker 03

  And I've been so hyper focused on revenue. I've not necessarily worried about retirement. I just work from that perspective, increase my income, that kind of stuff to support the overall goals that we have. And so I really haven't taken a step back to, to land on a number. It feels like, and she mentioned the monthly, it feels like we're halfway there where I feel like maybe if we doubled what we currently had from our, our net, our net worth perspective, that might put us in a comfortable spot where 60, 62 comes along and we feel pretty comfortable to retire.

• 14:25Speaker 05

  So maybe like age 60, age 62 is a timeline that we can work towards. It seems feasible and reasonable.

• 14:31Speaker 02

  I told him 60. He would like to go sooner. So, I mean, sometimes I run the number and I think it has to be two and a half million. But also I feel like if it was 1.8 million, we could probably. Live on it if the house were paid off and so.

• 14:45Brian Preston?

  Well, a lot's in flux right now, too.

• 14:46Speaker 02

  Yes.

• 14:47Brian Preston?

  Kids in college.

• 14:47Speaker 02

  Yeah, and just starting, really.

• 14:49Brian Preston?

  So there's, there's, there's still a lot of, this is what I always talk about. This isn't necessarily a fire retirement, but it, but it is one of those things where I always tell people, when life is busy and happening, and you mentioned the messy middle.

• 15:00Speaker 02

  Mm hmm.

• 15:01Brian Preston?

  It's, these aren't fir-, it's hard to set firm goals. So I think all you can do is, is kind of line things up and then try to maximize the moment. But then have consistent check-ins just to make sure you're on the right path.

• 15:12Speaker 02

  Right.

• 15:13Brian Preston?

  You know, just like you'd look at your compass to make sure your journey's going well. You do the, you do the exact same thing financially.

• 15:18Speaker 02

  Yeah.

• 15:19Brian Preston?

  Um, I will tell you, you know, there's a headline just, this morning, I'm waking up and they're like, hey, first time in three years, mortgage rates have gone below 6%.

• 15:27Speaker 02

  Okay.

• 15:28Brian Preston?

  So we are now getting close to the point that you guys are probably going to be on that wave. And I know Bo's probably going to put an asterisk there for your homework list.

• 15:35Speaker 02

  Okay.

• 15:35Brian Preston?

  There might be some opportunities to get you a little relief, uh, with, through even a refinance.

• 15:40Speaker 05

  From a savings standpoint, right? From a building, you said, okay, we'd love for the accounts to kind of dou-, if we doubled from where we are now, we'd feel pretty good about that. How are you guys saving? Walk us through like on a monthly basis, where's the money going that you guys are putting to work?

• 15:53Speaker 02

  So all of 2024, Max was unemployed.

• 15:56Speaker 05

  Okay.

• 15:58Speaker 02

  And so prior to that, I was a solid 20, we were at 28% savings. 2025, we bought the house, the kids graduated from high school. We got them on to college. So we were paying for moving and getting the house situated and getting the kids off to college. So we were just matching 401k HSA. Um, 2026, our goal is to get back up to there. And so currently we're just doing 5% to his 401k. We are maxing out HSA. And then one of my big questions is we have this large rollover IRA from previous employers. One time I heard on your podcast that. If you have that, you're not allowed to do Roths.

• 16:40Speaker 02

  And so I stopped contributing to Roths because I was worried we were doing something illegal.

• 16:45Speaker 05

  So this is one of those, this is one of those areas where you heard 90% of something, but there was a little 10% that really, really matters.

• 16:52Speaker 02

  Okay.

• 16:53Speaker 05

  What you probably heard us say is that if you have outside IRAs, like a rollover IRA or a SEP IRA, you can't do what are called backdoor Roth contributions. Backdoor Roth contributions are for folks who make too much money. Their income is over the Roth eligibility threshold. You can make a contribution to a traditional IRA, not take the deduction. And if you don't have any other IRA assets, you can convert that to Roth completely tax-free. Those are for folks who are in the income threshold where they can't contribute directly to Roth. I don't think that's going to be the case for you guys. You guys are going to be in the income situation where you can do, likely do, direct Roth IRA contributions, so that rollover would likely not impede your ability. You have the number right there?

• 17:33Brian Preston?

  Yeah, I have, well, I have the 2025 number is, it starts phasing out around 236,000 to 246,000, and I know it went up in 2026 even higher.

• 17:43Speaker 02

  So we do get a bonus. It's anywhere from 0 to 30% with a projected of 20%. But this is the first year you'll get that at the new company.

• 17:53Speaker 05

  Okay.

• 17:53Speaker 02

  So we don't know.

• 17:55Speaker 05

  So you could be as high as 240-ish.

• 17:58Brian Preston?

  But here's the beauty of this is that, you know, IRA contributions allow you to go beyond the year, you know, if I, we can still make contributions for 2025, even though we're in the year 2026, you have until April. So we could wait, see what your income comes out to be, and then you still potentially, like, we could still make contributions for 2025 right now to your Roth IRA. Because if you're well below that, what I like about that is that it gives you a moment to say, hey, we were under this year, let's go load up those tax-free growth assets. And it'll let you, you know, check the box on that really strong goal.

• 18:36Speaker 02

  Yeah, I guess that clarifies it a lot because I was just worried that. Some of our income might require that backdoor and I didn't know if I was going to be doing it appropriately. And so I haven't done that for a few years.

• 18:50Brian Preston?

  This is the hard part of doing educational content is because I get it on both sides is because you guys, here you are in an income that very likely you could have just directly contributed to a Roth IRA. Meanwhile, I have dear friends of mine who call me and say, I did that. I got so excited after listening to your show. I did the Roth, you know, the backdoor Roth contribution. And I'm like, no, no, no. Remember you have a rollover IRA with this much money in it. You don't have the proper structure to do it. And he's like, oh, dag gummit. So this is, this is the part where we give away as much free advice as we can, because we want you to simplify your life, maximize things. And that's why I hate that you all got burned by a bad financial actor, is because life gets complicated the more successful you are. And you're trying to figure out how you navigate this. So it

• 19:35Brian Preston?

  just breaks my heart when even well intentioned, when we're educators at heart, it's just sometimes there's so many details that it can get muddy really quick.

• 19:45Speaker 03

  It's actually one of the main reasons why I agreed to come on is because I think the story is worth hearing because I think that we're not the only ones who have been burned by a bad financial actor, use your words. And I think that it's, it's more hopeful of the message to say it's more of a setback than a critical in the past, right?

• 20:01Speaker 05

  That's exactly right.

• 20:01Speaker 03

  And so to try to build back up that hope or that trust with somebody who can help you, such as the show, to help you on your path, so you can become much more comfortable with your finances.

• 20:11Speaker 05

  That's it. I love that. So we're doing 5% of the 401k. We're maxing out the HSA. Potentially, we could do some Roth stuff. I want to make sure as we're thinking about the plan and as we're designing this, I don't want us to like, so our goal is for you to save 25% of your gross income. That's what we love for people to be able to save. But I don't want to design a plan. If you tell me, hey, based on college and this other stuff, that's just unrealistic. Do you guys know the number? Like, hey, we could probably save this much on a monthly basis? That would be the kind of the upper limit. Because again, if 25% is not realistic, I don't want to show you a 25% savings thing. If that just doesn't align with what's going on life wise right now.

• 20:52Speaker 02

  If you look at our regular budget, what we bring home versus what we actually have, there's a couple of thousand extra dollars.

• 21:02Speaker 05

  Okay, wonderful.

• 21:03Speaker 02

  And that, that would probably

• 21:06Speaker 02

  Could all go to some sort of savings. There's a few things that we do want to save for. Our youngest child will need a car. We do help with a inexpensive car. The boys already have one. Our daughter does not. And so somewhere in that $5,000 range, we help them with a car. And

• 21:26Speaker 03

  No one deserves a luxury car when they're a teenager.

• 21:29Speaker 02

  Just to get them a light

• 21:30Brian Preston?

  I noticed y'all had some sinking funds, though. Very large sinking funds. So is that already accounted for?

• 21:34Speaker 02

  OK, in the sinking funds, a lot of that is actual college money. Because when we had that experience with him, when we pulled out some money, it was such a short timeframe for our oldest to go to college. And again, we were like, we're not trusting anybody. A big chunk of that is to pay cash for college.

• 21:51Speaker 05

  Yep.

• 21:52Speaker 03

  The other side of that, we call that our flex account from that side. So as you need to pay six months or a year worth of insurance, in essence, we pay monthly into that flex account. So then we can pay some of these larger bills.

• 22:03Brian Preston?

  So that's what my question, when I saw the budget that's up on the screen right now. I mean, there was, I didn't see college on here. So I was immediately, that was a big question I was like, if they got three kids in college.

• 22:14Speaker 05

  Surely there's some money going to it.

• 22:15Brian Preston?

  There's gotta be money coming out. I was like, maybe because your biggest category outside of your house is miscellaneous. And that always, that's always a scary thing for me when I see, because that's a catchall. Is what that is. It means you don't necessarily know where it's all going.

• 22:28Speaker 02

  Oh, I know.

• 22:29Brian Preston?

  And normally, if you're saving and investing the 25%, you know, that's A, OK. I don't care how big your miscellaneous is. But y'all've got some big things you're trying to figure out. It's because we're trying to land the airplane when Max makes it to 60. And then so we've got to, and we got three kids in college. We've got to hone in. We're no longer playing horseshoes, you know, where we're just hoping to get a few points. Because we got it close. What you actually need to know specifically. Different, you have phases. While the kids are in college, what is that burn rate going to look like? Kids out of college, out of house, but Max is still working. What does that burn rate look like? And then, hey, what do we need to just sustain us in retirement? And a happy retirement? That's phases.

• 23:14Brian Preston?

  So I see three different levels in this journey that we've got to kind of hone in and know exactly what's going on for you guys.

• 23:22Speaker 03

  If that's not the messy middle, I don't know.

• 23:25Brian Preston?

  So it's so much easier to say that than to actually do it. And that's, that's the hard part with, and that's why it really breaks my heart that y'all got burned by somebody. It's because this is why it turns into, a lot of people say, well, just give me a plan. And I'm like, well, I'll give you a plan, but your plan's going to be completely different next year. It's going to be completely different in the year after that. Because your financial life is in such a state of flux right now. Because every year, the expenses are different with the kids' college. Every year, it's different with what's going on with your, your, your benefits at work. We have to be there to navigate that throughout the entire journey. And that's why we try to do that for our clients as best we could. That's why I love that we get to do Making a Millionaire, because it really lets you kind of open the curtain, see what's going on.

• 24:10Brian Preston?

  I mean, that's why I want to make sure we don't let too much time go by. If anybody out there is watching this and has red flags that the person you're working with is not doing it right, I really do want to encourage you, go to moneyguy.com/resources. We have a resource, it's free to download, eight questions to ask your financial advisor. And I think if you will take these eight questions, and it will, should expose a bad actor if they're not doing the right thing. And we've tried to, I've done, I've been, we've been doing content together. I mean, gosh, it's 20 years now. And I remember when Bernie Madoff came on the scene, and I did some after action reports on going and pulling his ADVs and showing people all that. There's, there's usually some big telltale red flags when somebody's not acting in your

• 24:55Brian Preston?

  best interest. And that's why if we can give you the tools or the questions that will uncover that, I want anybody who's watching this to save them the heartache that you, that you guys have had to live through. It's just not good.

• 25:08Speaker 02

  Yeah, I appreciate that. I think credentials are important. We didn't, he said it, we didn't know how to research it. So the credentials were falsified, or they were rescinded from people that he had gotten in trouble before. The other thing that was big was he was not properly insured. And I don't know if that's one of your questions. But he was only insured for $250,000 total, not per incident, not per year. And so people were just kind of left stranded because we thought at first, oh, we'll take some, they'll take some because it's per incident, but that was not the case. He was not properly insured.

• 25:42Brian Preston?

  It is interesting because it was funny as we go to conferences and this has been years since we, this was talked about. There, there was a financial advisor who had gotten sued. Now, I think this person was acting in the best interest, but they just, you know, litigation happens even, even for people trying to do the best thing. But they were self insured. They didn't have any insurance and the attorneys all dropped off the case, meaning the plaintiffs dropped the case as soon as they found out they had no insurance. I hate that, by the way, not that I want to get sued, but we, we have lots of insurance.

• 26:10Speaker 05

  We operate on the other side of that spectrum.

• 26:11Brian Preston?

  But it is, it's an interesting dynamic that the world we live in is that, because you said that statement is that they only had 250. It seems like it's weird that the system rewards you for not doing the right thing. And that just, in my brain that clicks is like, that doesn't seem like that's the right way that the world should work, but somehow that, that's the path we're, we're on when it gets to litigation and holding accountability.

• 26:36Speaker 03

  That was our experience, actually. We, we were talking to the FINRA attorney and we, we said what was going on to try to get some reconciliation with that. And they said, because you pulled your money out first, you're no longer going to be a candidate for you to be included. And so we were, happened to be on vacation, I know exactly where we were. And, um, and we were just.

• 26:56Speaker 02

  It's devastating, it's so devastating because we thought we were doing what's right. We also pulled out when it felt, when we felt the red flags. And in the end, thankfully, I mean, the, he did lose his license and so he can't do this to other people, but a lot of people lost a lot of money.

• 27:14Speaker 03

  And some, some in the sense of 70% of their portfolio.

• 27:17Brian Preston?

  Goodness.

• 27:17Speaker 05

  That's awful.

• 27:18Speaker 03

  Yeah.

• 27:19Speaker 05

  As we think about planning forward, uh, I want to, because you said, if we look at your sinking funds, we noticed that there, there's a big chunk in there, about $88,000. Does that cover what you guys are planning on paying for college? Or does saving for additional college also need to factor into our plan? Like is college taken care of or does that need to come in as well?

• 27:38Speaker 02

  That is a majority college. I would say we're probably eight to $10,000 short, but it's in a high-yield savings account and over the next four years that the interest we earn on that should cover the shortfall that we have. There's a few other things in that sinking fund, like we, the new house we purchased is, there's no yard, so we have some grass and some landscape stuff we have to do. He is a car guy and so we have a car repair budget in there for a car that he wants to work on. And so there's a few little projects-

• 28:09Speaker 05

  Like a car guy, like you, you, uh, what, you work on yourself, you restore cars?

• 28:12Speaker 03

  Yeah, like working on cars.

• 28:13Speaker 05

  Let's go. What are you working on?

• 28:14Speaker 03

  Right now I have a 99 Lightning.

• 28:16Speaker 05

  Let's go.

• 28:18Speaker 03

  It's a family heirloom, but next is Fox Body. But that was one of the jokes I was gonna tell her. It was, uh, when you say, what is our goals? I say, how do I retire? And I was gonna lay this whole-

• 28:26Brian Preston?

  So you're a Ford guy?

• 28:27Speaker 03

  I am a Ford guy.

• 28:28Brian Preston?

  Okay, I can pick up on that.

• 28:29Speaker 03

  And then I, and then I, and then I would wanna say, plus get all the toys I want.

• 28:33Speaker 05

  Plus, I wanna retire and do my hobby. I love it. And I know that math doesn't math. Well, maybe, we'll see. That's, that's what's fun about putting together a plan. What we'll do is say, okay, if you lay out some gold for, goals for us, hey, we know that our burn rate is somewhere between six to $8,000 a month. We know that around age 60 is our timeline. If we can save and if we can do the 401K and we can do the HSA and we can do the Roth, and we know that right now we're at 730 and we're gonna do this for the next 12 or 13 years, where does that put us and what kind of life does that put us at? That's the fun thing to begin to uncover. Cause we may determine that you're able to fund the six to 8,000 and there might be even extra for a hobby or for travel or for the things that you guys wanna do. That's the fun part about getting to put the plan together.

• 29:18Speaker 05

  And I love that you guys are starting to think about it seriously at this stage. It's not like you are two years away from retirement saying, okay, I best, guess we better have a plan. You guys have over a decade to work on this, which I think is gonna be awesome and gets me super excited about the planning.

• 29:33Speaker 03

  Yeah, you make me smile because you sound just like her.

• 29:37Speaker 03

  Finding joy, finding joy in planning.

• 29:39Speaker 05

  Oh, man, it's awesome.

• 29:40Speaker 03

  It seems very interesting to me.

• 29:42Speaker 00

  This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.

• 30:13Speaker 06

  Low energy, unfocused, foggy? You might be dehydrated. Gatorade Zero powders have been scientifically designed to help improve hydration balance in the body. With a clinically proven electrolyte blend and no artificial colors or flavors. Great tasting hydration, no matter where you're going. Shop now online or at retailers nationwide. Gatorade hydrates better than water. Is it in you? Symptoms noted are signs of mild to moderate dehydration. Consult a healthcare professional if symptoms persist.

• 30:42Speaker 05

  What questions do you have for us? Or what are some things that we can speak to or that we ought to know about as we begin to put together a plan for you guys?

• 30:49Speaker 02

  So I know we've got to diversify better. And it has worked for us and it's been working well. Like as I've tracked how the VTSAX and VOO and all that have been, we've been doing really well since we left them. But I know as we age, it's supposed to be more diversified, that we need to figure out how to make it a little bit safer for us. And so that is a gap we definitely have. So I don't know how to appropriately fund our account if we start pulling out of that.

• 31:22Speaker 03

  And for me, she tells me that you're the tax guy. And that's the thing about me that we just haven't mastered. I think that we've got some tax opportunities on whether or not we're needed to take distributions or whether or not we should, like just our tax approach from that side. I'm not necessarily sure that we've got that pinned down.

• 31:38Brian Preston?

  Two things that y'all just talked about. For on the taxes, I'll hit that first is that so far it looks like everything's been loading up into the traditional side. So you're taking the deduction right now with the understanding that down the road, when you pull this money out, you get to pay an ordinary income tax rates. So y'all are very heavy in what we call tax deferred assets, which are great from, because even if you look at the financial order of operations, this thing is very tax focused. Because if you look at step five, these are the tax free growth opportunities. Little nervousness on why you weren't funding the Roth completely. We're gonna get that back on track. Okay. But then the next step is just maxing out those retirement benefits, not only to get the free employer match, but also just so you get the tax savings. Y'all are kind

• 32:22Brian Preston?

  of doing those things, but it is interesting. And this is why when we designed the financial order of operations, we talk about this step seven, the hyper accumulation. This is when I talk about the three buckets of getting access, because as you start thinking about how we're actually going to use this money, we're going to need to be able to navigate, what is the tax rates going and how's the impact? Because yes, you have, you know, $700,000 of investment, but when I look at that and I see close to 600 of that is all tax deferred, there's going to be a headwind from the taxes that every dollar, it's going to be expensive. Every dollar you pull out of that. So we better make sure your tax rates are low that year or have access to some other assets somewhere else that we've, so we can get you through

• 33:04Brian Preston?

  the bridge period of how are we going to use this money. So that will definitely be something we help analyze. The other thing that y'all brought up in Vowery, you talked about your 100% index right now. You know, I'm not going to pick on that necessarily. We're going to talk about it internally and figure out a plan because there'll definitely need to be some type of asset allocation. But the question, I think we have a good case study that I'd love to get while y'all two are sitting next to each other and put you on the spot and ask you the question. Last year was a pretty dynamic year, 2025. And by, was it April of last year?

• 33:40Speaker 03

  Between March and April.

• 33:40Brian Preston?

  March and April. The market was down 20% in that. Now, everybody remembers 2025 as a great year because we ended up the year strong. But if I, if I had gone back in time and said, hey, while we're in this March and April period where the market got its teeth completely kicked in and y'all wrote it 100% because it's not like you're diversified and you got, you know, 60% of the volatility, you got 100% of it. You're like, give me more. So how did y'all feel? I mean, did y'all have any conversations? Did you, did you not even notice, Max? I mean, where was y'all's, what was the emotional impact of that?

• 34:16Speaker 03

  I'll be very vulnerable. I did not notice. As much as probably I should have because that's not our plan. Our plan all along has been not timing the market, but time in the market.

• 34:25Brian Preston?

  Sure. We love that.

• 34:26Speaker 03

  And so this whole thing about dollar cost averaging and all of the other kind of stuff, right? All the terms that have kind of been thrown out there. And I know you just have to write it. And I know that there's, there's some, I don't have the stress capacity for me to daily trade, nor really watch it that.

• 34:40Brian Preston?

  Were you just not looking though? Was your strategy just, I'm working and look, that's a, that's a pretty common behavioral tactic. Everybody while you're working, it's like, you know what? I can't control this, but I have a job. I'm just going to ignore it. And you're also not the financial spouse, if I'm being honest.

• 34:59Speaker 03

  That's true. We hear who's talking.

• 35:00Brian Preston?

  So, so let me, let me pivot it back over to Valerie, because I bet you were paying attention.

• 35:04Speaker 02

  I actually don't.

• 35:06Brian Preston?

  No, really?

• 35:07Speaker 02

  I look at it maybe every six months and then at the end of the year I do my, like, so since 2021, when we took over, like the 2019, 2020, when we took it over and moved it to Vanguard, I keep track of what our percentage has been. Not a true net worth. This was the first time I did an actual true net worth, but I just, I just didn't look at it.

• 35:26Brian Preston?

  So did you not even remember that we had, we were down 20% mid-year?

• 35:30Speaker 05

  So let's take, so let's take that, right? Then that's great. We love hearing that that's the way. So you've got, I'm going to do round numbers because I can't do math on my head real well. You got $700,000. We have a 20% downturn last year. So all of a sudden 140,000 of, you know, evaporates quickly, right? And you don't even pay attention to it. Great. Let's fast forward 13 years and let's say that your portfolio is now doubled and you just retired. You got a million and a half dollar portfolio and then we see a 20% drop. And now all of a sudden, $300,000 disappears. You retire at one and a half and then you're at 1.2 at the end of the year.

• 36:07Speaker 03

  Yeah. With, with all joking aside.

• 36:10Brian Preston?

  That's not a joke.

• 36:11Speaker 03

  Then, then, then we didn't do something right with our homework here.

• 36:14Speaker 05

  That's right.

• 36:15Speaker 03

  That's the, that's my intent is not to get to that spot.

• 36:17Speaker 05

  So, so obviously something has to change. It's okay that it doesn't feel painful right now, but you both acknowledge at that point it would. So there must be some sort of path that we ought to be on to get from where we are now to what that needs to look like.

• 36:31Speaker 02

  Yes. Logically, I know we need to diversify. I just, it's a gap. I don't, from everything I've read and studied, I don't know what to do.

• 36:38Speaker 05

  Awesome.

• 36:39Speaker 02

  And we, we definitely need help there.

• 36:43Brian Preston?

  Because I'm saying this more from an educational standpoint because I have people who write us and share that they always think that they're gonna, and I always use the analogy of landing a plane, but they always think that they're going to be 100% you know, index funds, you know, and then right as they retire, they're going to slam it down on the ground into the most, you know, and then they'll start diversifying in things. Y'all, I don't get the feeling y'all would be okay if there was a, if you landed the airplane like a commercial plane where you actually came in, you're like, oh, that was a nice landing. That felt pretty good versus let's nosedive this thing and just slam it down the ground and hope that we kept the landing and gear intact. Is that a good read? Okay.

• 37:25Speaker 02

  His risk profile is higher than mine, but definitely as we start to get to a point where he's ready to be done working, he does not want, we don't want to lose the money. We don't want him to have to go back to work. We don't want to have to be like-

• 37:37Speaker 03

  And we've been shaped by our past of not losing a lot. So, a lot of that also contributes to not watching, to see that same approach is, we understand that we've seen the trend of the market as a whole. We know that it's going to be positive from, well, we assume it's going to be positive from that side. And so, we ride it out in hopes that it gets to a corrected spot. And you're right, we're not pulling that money out for a long time. The plane is not landing yet. And so, I know that we were heavy invested in some of these not maybe tax optimized scenarios, but there's a spot where we're ready to make sure that that landing gear, the suspension, whatever's necessary for this to be a comfortable landing is there. And that's why we need help.

• 38:20Brian Preston?

  I love it. I love it. All right, I've got, I've got some, so we're excited. We've got a plan that we can be able to put together. We're gonna, we're gonna paint a picture for you, but I've got some homework I want you guys to do in the interim. A very first thing I wrote down is, we ought to look at refinancing, at least just beginning to have the conversation with lenders. Hey, I'm at 7.375. What are rates right now? Now, that's not suggesting that you should refinance, but what I would do if I were in your situation, if I know that rates are at 6% right now, I would calculate, man, if my interest rate dropped to 6%, how much would my interest savings be on a month over month basis? And do we believe, because you said this is likely not our forever home, whatever that break even is, if it costs me-

• 39:00Speaker 05

  $3,000 to refinance, how many months will it take me to recoup that $3,000 cost in terms of interest savings? Okay. And I can just do the math on that to figure out, okay, yeah, if it's going to take me 14 months, and we believe we'll be in this house 14 months, refine could make a lot of sense. And that's going to immediately provide immediate reprieve to your monthly cash flow, which is going to give us additional margin to be able to fund some of these other goals. Okay. Uh, I do think since we are coming up on tax time, you guys ought to just go look at what your income was last year, verify that you were indeed Roth eligible, and you can still go back in time right now, and you can fund your 2025 Roths, even though we're in 2026. Yeah. Uh, and then I think it would be helpful, Brian laid out sort of these three different spending, uh, areas you're going to be at.

• 39:43Speaker 05

  You have spending right now while the kids are in college, you've got spending post-kids in college, pre-retirement, and you've got spending in retirement. I think it would be good for you guys to do some homework around figuring out what those numbers are and how they change. Uh, because it's, uh, just like we have, uh, when you, when a lot of folks retire, they'll have their go-go years, their slow-go years, and their no-go years. A lot of folks, as they're approaching retirement, they do savings the same way. All right, we kind of have our no-go saving right now while we have kids in college and all this stuff, and then we kind of have our slow-go, the kids are starting to get out, and then we're able to really kind of finish the drills. We run right into the last couple of years of retirement. So I think thinking through that would be super valuable for you guys. Okay. Awesome.

• 40:28Speaker 05

  We're going to put together a plan to see what 60 looks like. We're going to put together a plan to see what a glide path might look like. We're going to put together a plan to see what a personalized foo for you might look like, and I think it's going to be awesome. Brent, how awesome was it sitting down and getting to talk to Max and Valerie? What, what a lovely couple.

• 40:44Brian Preston?

  Yeah, I, I have a little soft spot for them because, um, unfortunately, they're, they're so willing to share with us, but we heard in their story, they got taken advantage of.

• 40:54Speaker 05

  They did, very badly.

• 40:55Brian Preston?

  And sadly, in the wonderful world of personal finance, there are some bad actors out there, and we tried to address that, but still, it, I could tell that they were wearing the weight of that still heavily, even though they have tremendous success in their current state, uh, it just broke my heart to see. See if they had that.

• 41:11Speaker 05

  Well, I think a lot of people that had that experience would, you know, bury their head in the sand and say, okay, no, this, the financial world is broken. I'm not even, and I love that here they are saying, okay, no, no, we have these goals. We have these things we want to accomplish. We know that there are things we don't know and want to seek out some help. I think one, it's just super brave of them to even put themselves out there to do that. And what I'm excited about is now that we got to like play with the numbers, I think their future looks pretty bright.

• 41:37Brian Preston?

  Well, and this is, this is kind of unique because we're going to talk about savings rates. And you know, anybody who watches our content, we're, we pretty much are pretty straightforward is we want you saving 25% of your gross income. Well, here we are. This is what personal finance is definitely personal. When we talk about Max and Valerie, it looks like we might be going in a little different direction.

• 41:56Speaker 05

  Yeah, we started to design a financial order of operations for them. And obviously we want Max to continue taking advantage of 401k. And for those of you that don't remember is 401k, if you put in 5%, they'll also put in 5%. So pretty exciting stuff.

• 42:10Brian Preston?

  But they make over $200,000.

• 42:13Speaker 05

  But they make us, they can't count it towards your savings, right? But it's still there. It's still going into the pot. So if we're going to base things off of a $255,000 salary for Max, that's going to be his, his base play, base pay plus what we assume a bonus is going to be. We know that he's going to have 12,750 of his money going into the 401k. Now, yes, we're not going to include it, but there is still another 12,750.

• 42:37Brian Preston?

  It's out there in the background.

• 42:38Speaker 05

  But in addition to that, we wanted to max out the HSA at 8,750. We want them to max out his Roth IRA at 7,500, then max out her Roth IRA at 7,500. If we're doing that, they're going to be saving on their own about $49,000 a year, which is about 14.3. And a lot of times at this point we'd say, okay, 14.3, where's that extra 10% going to come from? But for them.

• 43:02Brian Preston?

  Well, remember they also, they had three kids in college?

• 43:04Speaker 05

  Yep.

• 43:05Brian Preston?

  I mean, there is a lot of, when we talk about the messy middle or that life just is going to happen to you, they got a lot going on in their life. So, but here's the good news. They already have $731,000 working for you. And at their age, that's a lot of money that can start really building momentum in the background. So it was kind of fun to say, okay, what can they save with all this life that's happening? But still reward them with all the hard work they've done in the past. How does this all line up?

• 43:31Speaker 05

  Yeah, when we actually look at their path, starting at 731, saving that $49,000 a year, just doing that by age 55 gets them to about a $1.9 million portfolio. By age 60, it gets them to about a $3.2 million portfolio. Well, they told us, hey, based on the life that we want to live and the things we want to do, we need about $7,000 a month in living, in today's cost of living expenses. What's great is even at a 14% savings rate, they are on track by age 60 to be able to replicate that lifestyle, to have a portfolio that provides for them that level of income without having to go all the 25%.

• 44:11Brian Preston?

  Well, here's the good news. We use some pretty conservative assumptions in here and the kids aren't going to be in college forever.

• 44:17Speaker 05

  That's right.

• 44:17Brian Preston?

  So, and I imagine when the kids get out of school, they're going to feel like, holy cow, what are we going to do with all the success we've built? So, good on them. And, and who knows, maybe the savings rate goes up even more or they just reward themselves with more life.

• 44:31Speaker 05

  And what happens is if their savings rate does go up, because cash flow, all it does is just give them more options, more flexibility. But maybe it's not 60 where they are able to exit the workforce. Maybe it's 58, 57. So, that's kind of the way their plan looks. But there, there are some tweaks that we think might make sense. Cause one of the things that they let us know is, hey, our portfolio right now is pretty much.

• 44:51Brian Preston?

  He's a wild man. I mean, think about Max at his age, doing 100% equities. That seems a little aggressive.

• 44:57Speaker 05

  And so, in order to be able to design an appropriate allocation, you really need to understand someone's unique risk personality, their risk capacity. You need to have a real view into their entire financial picture. And we have a pretty decent view, but I would argue. It's not quite a full view just yet, but I do think that it would be possible for them to determine, okay, what sort of allocation might make sense for us? And just to kind of give them an idea, we went and pulled the Vanguard Target Retirement Funds, looking at those that are far dated to those that are more near dated to kind of show that an example glide path of what that might look like. And based on their age right now, in their mid 40s, if they were just using like a Target Retirement type structure, they might want to look like something like 82%

• 45:40Speaker 05

  risk on, 18% risk off. Now, that's not prescriptive, but that would be with the Vanguard.

• 45:44Brian Preston?

  Based upon the Vanguard, you know, allocation.

• 45:46Speaker 05

  And then as time moves on, as they get into their 50s, okay, maybe it shifts to 75% risk on, 25% risk off, and then 70, 30, and then 60, 40. And then what Vanguard would have is by the time you get to retirement, they'd be recommending a portfolio somewhere around 50/50. Now, in our experience, perhaps that's a little more conservative than someone retiring at 65 should be, but it at least gives Max and Valerie an idea of what they should be thinking as they adjust their allocation.

• 46:13Brian Preston?

  And look, I know there's for a lot of my financial mutants out there in the audience, you're thinking, well, you know what, I just, I can go 100% risk on, and then right before retirement, slam in some diversifiers. But, but here's the reality, we always worry about, it's not just risk tolerance and what you can handle, it's also risk capacity of what you actually have the time to wait for your accounts to recover and to make sure your, still your financial goals are fulfilled. Don't, don't do this. Don't get, you know, pigs get fat, hogs get slaughtered. So you want to make sure you, you, you really honor the asset allocation.

• 46:46Speaker 05

  So we think their savings rate is great. We think that their asset allocation could probably use some adjustments. And then one of the things that we uncovered is we noticed that on their current mortgage, their current interest rate was over 7%. It was 7.375. And we know that interest rates have decreased over the past couple of months. And right now, if you just look at the average interest rate on 30-year mortgages in this country, it's somewhere around 6%.

• 47:12Brian Preston?

  We've even gone below 6%, but we wanted to be somewhat conservative because, you know, I know this will go out and it's bopping around all over the place. It's still a pretty significant change because it's greater than 1%, which is the first indicator. We always say, hey, at least go do the math on refinancing. Once you get a greater than 1% delta.

• 47:30Speaker 05

  So there are two options they ought to think about. The first is they'll call their mortgage company and say, hey, I noticed that rates have dropped. I'm currently paying 7.3. Would you consider giving me a rate modification?

• 47:42Brian Preston?

  Yeah.

• 47:42Speaker 05

  Could I decrease my, now, the mortgage company may say, no, we're not interested. That's not something we want to do. Totally fine. No big deal. Then they could begin investing. Okay, what it look like if we refinanced our mortgage instead of having our 700, our 7.37, 375% mortgage? We now want a 6% mortgage. Well, refinancing is more expensive than a rate modification. There are closing costs associated with it because it's a brand new loan you're undertaking. And so what we wanted to figure out was, okay, what are the interest savings if we refinance? What are the costs of refinancing? And are those justifiable when you put them next to each other?

• 48:21Brian Preston?

  Now, this is a thought experiment. We like people to keep their payments the same. So you don't reset the amortization schedule. But you can do the math exercises. See that there's close to $200 a month interest savings by just getting the lower interest rate. And if we, we went with a pretty conservative number, we said about $6,000 of estimated closing costs. We could quickly see that their break even point on this was right around 31 months. So a little over, if you think about what that means in terms, as long as they stay in this house for at least the next three years, they're going, and they told us they were going to be in this house for the next five to seven years, if I recall.

• 48:59Speaker 05

  Yeah, if they stay in the house for the next 31 months, the interest savings alone would pay for what it costs them to refinance. So we think it's kind of a no brainer if they're there for five or six years.

• 49:10Brian Preston?

  And there's also a lever I like to pull because we are, it's an interesting time in the wonderful world of finance right now is the interest rates have gone down on mortgages. I don't love paying this $6,000 out of pocket. What I've done in the past is ask your mortgage brokers, can you take a little bit of a premium on the interest rate and then have zero closing costs?

• 49:30Speaker 05

  So instead of maybe like a 6% rate, maybe it's a 6 and an 8, and 6 and a quarter, something like that.

• 49:35Brian Preston?

  So you could do the math on that, figure out, now, look, if you're going to live in the house for a long time, and you don't think interest rates are going down, probably paying for this makes sense, but this at least gives you an option if you don't want to have to come out of pocket for the expense of refinancing, because it's nice when we're in these falling interest rates environments, if you can actually take advantage and let the premium on interest rate cover the uncertainty of what the closing costs are.

• 50:02Speaker 05

  Now, remember, if you are someone who's going to refi, what we don't necessarily want you to do, and Max and Valerie, we don't want you to do, you guys, to do this, we don't want you to refi and just start paying that lower payment, because all you're doing then is just extending your debt out. Rather, we'd love for you to keep making the same payment on the same timeline, or even if you're not going to make the same payment, at least pay in the same timeline that can provide some reprieve on your monthly cash flow, but there's a really good chance that interest savings could be substantial over the next four, five, six years for you guys.

• 50:33Brian Preston?

  Now, there is an issue we want to put an exclamation point on, because it broke my heart, I kind of started off talking about this. They got really burned by a bad financial advisor, and it's to the point that the person actually lost the ability to even be a financial advisor anymore. And they're still carrying the weight from that. We tried to talk about, how do they not, you know, how do people, and how do we educate the general public on this? We shared with them, go to moneyguy.com/resources. We actually have eight questions anyone should ask their financial advisor. Even if you think your financial advisor's a good person, doing good job, I still would go check out these questions, because it's just, it's really important that you make sure that your advisor has your interest front and

• 51:16Brian Preston?

  center, so that you don't get caught in one of these bad situations, because, you know, there's several things that are going on here. You need to have your army of dollar bills working harder than you can with your back, your brain, and your hands, and you don't To squander that valuable resource of Tom.

• 51:30Speaker 05

  That's exactly right. Man, I, I think that again, it was so kind of Max and Valerie to even let us take a peek into their financial life. Given they have that, that baggage. But what I hope that people here and take away from this is just because there was a bad event, just because there was a bad circumstance, just because things didn't go exactly the way that you would hope they would. That does not dictate what the end of your journey looks like. And from where we're sitting, I think the end of the journey looks pretty exciting for Max and Valerie.

• 51:57Brian Preston?

  So Max and Valerie, thank you for being vulnerable. Thank you for coming and sharing. I think a lot of people are going to be educated and learn how not to even fall into that mistake, or even maybe discover that they're working with a bad advisor. We're going to get them through that. Bo, if others want to come on Making a Millionaire, how do they apply?

• 52:15Speaker 05

  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 tools and calculators, go to moneyguy.com/resources.

• 52:24Brian Preston?

  Now, Max, Valerie, you're well on your way to your great, big, beautiful tomorrow. I'm your host, Brian, joined by Mr. Bo, Money Guy, out.

• 52:32Speaker 07

  The Money Guy Show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with 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.