He’s Working 60 Hours a Week to Retire Early… Is It Worth It?

Skylar (23) and Milet (26) are already living like financial mutants. They're saving 25%, maxing Roth IRAs, and sitting on a net worth of nearly $300,000, all while Skylar works three jobs and DIYs 1,800 square feet of backyard pavers on weekends. But the system that got them here might be holding them back from the flexibility they're building toward. We reveal the solo 401(k) opportunity that could save them nearly $7,000 in taxes annually, show why their 457 accounts are perfect for early retirement, and map out how they could reach their more beautiful tomorrow by 50-55, even if they drop to one income with kids. Jump start your journey with our FREE financial resources⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Reach your goals faster with our products⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Take the relationship to the next level: become a client⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Subscribe on YouTube for early access and go beyond the podcast⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Connect with us on social media for more content⁠⁠⁠⁠⁠⁠⁠ Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:00Speaker 00

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• 0:27Speaker 01

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• 0:52Speaker 02

  We're so focused on like what's happening tomorrow and right now, we're not thinking like one, two, three years in the future.

• 0:57Speaker 03

  So let me ask you this question. There's a whole lot of life that's gonna happen between now and the time that you guys turn 50. Job changes, family changes. We so desperately want to have the entire plan planned out. If something were to deviate, if something were to throw you guys off of your plan right now, how would you handle that?

• 1:18Speaker 03

  How old are you guys?

• 1:19Speaker 02

  I'm 23.

• 1:20Speaker 04

  23. 26.

• 1:21Speaker 03

  26. How long have y'all been married?

• 1:22Speaker 02

  August of 2024, so about...

• 1:24Speaker 04

  A year and a half?

• 1:25Speaker 03

  Awesome, right. So we're still kind of in the early stages of this thing, right? Awesome. Well, how's it gone so far? A year and a half in. For those that are, because we have a ton of folks that are like getting married or about to get married, any words of wisdom you'd share with them about what's worked well for you guys?

• 1:40Speaker 04

  Communication. Like a lot of, like, we just have conversations about everything. Like, at the end of the day, it's like, how was work? How's everything? We want to know everything about each other.

• 1:50Speaker 03

  So when y'all started dating, were y'all on the same page about most things? Like, when it comes to like money and finance, were y'all on the same page with money and finance, or did y'all have to get on the same page?

• 1:59Speaker 02

  We were, we were different. Yeah, she had a car lease when we were dating.

• 2:02Speaker 03

  Okay.

• 2:03Speaker 02

  And I straight up told her, like, you should pay that off before we get married. So luckily, she, she had the $10,000 in the... Savings, she just threw it out the leash, paid it off. And I was like, okay, maybe she's serious about this. I can start introducing the other topics.

• 2:15Speaker 04

  Yeah.

• 2:15Speaker 02

  Um, and then everything after that was, was pretty easy.

• 2:17Speaker 04

  He's the one that got me to do like my first Roth IRA and it's like, okay, you better start this account. Like this is what good financial people do. And I'm like, okay, I'll look into this. And he's the one that introduced me to all the financial things.

• 2:28Brian Preston?

  But I heard she had $10,000 already saved. So there was good behaviors.

• 2:33Speaker 04

  Yeah.

• 2:33Brian Preston?

  This was not a fixer upper. It sounded like the foundation was already there on good financial management.

• 2:38Speaker 04

  I would say so. Yeah.

• 2:40Speaker 03

  So how did you know that? Were you like, did your parents teach you about personal finance? Like what? No.

• 2:45Speaker 04

  Completely opposite actually. Like my family, I grew up in a family worth a lot of credit card debt and struggling. So I was kind of seeing that. And I'm like, I want the opposite of that. I went the hyper savings. Like I would save like 50% of every single one of my paychecks. I don't want to ever not have money.

• 3:01Brian Preston?

  Sure.

• 3:02Speaker 04

  So I went like the opposite route. Like I want to make sure I have always money.

• 3:05Speaker 03

  They said like an example of what not to do and you wanted to.

• 3:08Speaker 04

  And I kind of noticed that. Like I noticed the struggle and I'm like, I don't really want that for myself. Like in a sense, like I learned from that.

• 3:15Speaker 03

  Awesome.

• 3:15Speaker 04

  So I, I always saved up like my money and I did like when he said like, hey, it's $10,000 to your lease. You can probably pay it now. Like you should, right? Like if you have the money, you might as well.

• 3:26Speaker 03

  Yeah.

• 3:26Speaker 04

  So I'm like, okay, I, I, I clicked the button and I paid it off that day.

• 3:30Speaker 03

  What about you? So you obviously knew about personal finance, at least enough to share with.

• 3:34Speaker 02

  My parents are very well off. They split when I was around like 10 years old. Um, but luckily both my mom and dad had a very good grasp on finances. And I kind of leached off after them and then kind of took on their behavior. But it was kind of for opposite reasons. They never showed that they had money. I always thought we were poor until, until I finished high school. And they kind of had the opposite mentality. They were very, uh, cheap, like, uh, misers, frugal. Yeah.

• 4:01Speaker 03

  He said the not one good word and you threw in the good one. There you go.

• 4:05Speaker 02

  And I kind of took that on as well too. So I followed a lot of the same savings habits as Milet, but for the different reasons. Um, just scarcity mindset is never enough. You gotta hold on to everything and you never want to let any of it go.

• 4:18Speaker 03

  Did they talk to you about? Like, did they teach you about money? Or did you just saw it like, oh, we we pinch pennies?

• 4:23Speaker 02

  I just saw the habits. I they never really talked about it, especially after the divorce. They didn't really want to talk about after that. But slowly, after I graduated high school, my mom started to open up like, here's what I invested in. Here's, you know, why I paid the house off early.

• 4:37Speaker 04

  College and like going into the job field, I feel like your parents started talking to you like, okay, now let's do this with money now that you're making money.

• 4:44Speaker 02

  Yeah, and it's a lot easier to talk to my dad now because we work in the same field. So he's also like, here, here's what I did. Here's what you do here with your retirement accounts, that kind of thing. So it's getting a lot easier to talk to them. But in the beginning, it was very silent. Yeah, I kind of had to figure out myself.

• 4:58Speaker 03

  And you say same career for what is it you do for a living?

• 5:00Speaker 02

  Yes, I'm a I'm a civil engineer. I currently work on airports. So I I do the designs and drawings for like any runway projects or taxiway projects. But I'm currently in a transitionary period. I'm switching from the private sector for airport design to the public sector for flood control. So I'll be working on dams and channels and floodgates, that kind of stuff.

• 5:20Speaker 04

  This is a brand new.

• 5:22Speaker 02

  Brand new career change, yeah.

• 5:23Speaker 04

  We're like in the midst of it.

• 5:24Speaker 03

  In the same company or is like different?

• 5:26Speaker 02

  No, so I worked at a private company for the airports and now I'm switching to a county government.

• 5:30Speaker 04

  Like still in the in the in between period.

• 5:32Speaker 03

  Got it.

• 5:33Speaker 02

  Like I I put in my two weeks on Monday last week.

• 5:36Speaker 03

  Wow, so we're like, we're like, we're like, right in.

• 5:39Speaker 02

  My last day is Friday this week and then I start in a couple of weeks.

• 5:42Speaker 03

  So what was it made you decide to make the change? Walk us through like why the shift?

• 5:46Speaker 02

  With civil engineering, there's the two routes, public versus private. I've always wanted to try both before I settled in. My dad also did both and he's ended up liking the public better. So he's always trying to push me towards that side. But I needed to try it for myself and an opportunity came up and I just had to jump on it because I knew I'd regret it if I didn't take it, so.

• 6:04Speaker 03

  And all the money like made sense, like it was comparable money?

• 6:07Speaker 02

  The base pay is about the same, but the government benefits are a little bit better.

• 6:11Speaker 03

  Sure.

• 6:11Speaker 02

  I'm more in it for the experience because the more experience on different types of projects I can put on my resume, the more hirable I am in the future. Plus, I'm not worried about the pay currently during the transition because I'm in the process of getting my California professional engineering license. And once I get that, I'll get like a. Forty to fifty grand bump.

• 6:31Speaker 03

  Just from getting the one license?

• 6:32Speaker 02

  Yeah.

• 6:33Speaker 03

  Forty to fifty thousand dollar pay raise?

• 6:34Speaker 02

  Then I'll be able to actually stamp my own drawings and that kind of stuff. That's where the money's at.

• 6:39Speaker 03

  That's awesome. Well, but you guys are doing pretty good right now as it stands. What is it you do professionally?

• 6:44Speaker 04

  Uh, I'm an office assistant for the state.

• 6:46Speaker 03

  Awesome.

• 6:46Speaker 04

  Yeah.

• 6:47Speaker 03

  Awesome, awesome. Well, you guys are so kind. You shared a net worth statement and for two folks just starting out.

• 6:52Brian Preston?

  It's incredible.

• 6:52Speaker 03

  It's kind of balling, right? If you look at it right now, you guys have a total net worth of almost three hundred thousand dollars. I'll tell you, you said you're twenty-three years old.

• 7:00Speaker 02

  Yes, sir.

• 7:01Speaker 03

  Right? And you said you're twenty-six years old?

• 7:02Speaker 04

  Yeah.

• 7:03Speaker 03

  And you guys have three hundred thousand dollar net worth. Do you realize how unique that is in this world in which we live?

• 7:08Speaker 04

  Yeah.

• 7:08Speaker 03

  Uh, and so you can see we've got a little under sixty thousand dollars in cash. You've got a checking account, emergency fund. We have some sinking funds. And then you have about a hundred and twenty-six thousand dollars of investment assets, which is awesome. And you guys are homeowners. You have a home that's worth five hundred and sixty-five thousand with a mortgage that's about four fifty-six. So tons of equity in this house. I think there's a lot of twenty-three-year-olds and twenty-six-year-olds looking at this saying, holy cow, how could I be in there? But how did you guys do? What, what?

• 7:35Brian Preston?

  We could go buy that house because I see the interest rate's also three point nine nine percent.

• 7:40Speaker 02

  Yeah, so we bought the house in July of twenty twenty-five.

• 7:45Speaker 04

  Last year.

• 7:45Speaker 02

  Actually.

• 7:46Speaker 04

  We're almost a year in.

• 7:47Speaker 02

  Yeah. Uh, we put a hundred thousand down. Um, and the reason why we were able to get such a low rate is we financed directly through the builder. It was a new construction community.

• 7:56Brian Preston?

  I get it.

• 7:56Speaker 02

  Um, so they were throwing all those incentives.

• 7:58Brian Preston?

  Yeah.

• 7:59Speaker 02

  Um, and it's always been my dream to own a house since I was like eighteen. So I've always been piling money into a brokerage account since I knew when I, when I could. Um, and then when we finally got married in twenty twenty-four, uh, we put our foot on the gas. And since I was living at my mom's house, she was only charging me five hundred bucks in rent and split utilities. We were really taking advantage of that with our combination of the big boy jobs, the low expenses.

• 8:23Speaker 04

  Yeah.

• 8:23Speaker 02

  Shoving, you know, five, six grand a month, um, for a year. And then at the end of the year, we, we looked at our accounts and we're like, hey, we have enough. Why don't we go start shopping for houses? Uh, and it was a complete surprise, actually. We, we were just driving through the neighborhood and we saw a for sale sign. And we're like, let's go check it out. And then the lady was like, oh, by the way, we have this cool, uh, intro rate, uh, the four percent. And we're like, all right, let's run the numbers. And then we looked at our budget with our twenty-five percent rule. It, it worked. So we're like, let's move in.

• 8:51Brian Preston?

  Is it, is it like a thirty-year mortgage?

• 8:53Speaker 02

  It's a thirty-year mortgage. It's an FHA.

• 8:55Brian Preston?

  Okay.

• 8:56Speaker 03

  And so what was the, so did you reverse engineer the math to figure out putting a hundred thousand dollars down? Like what made you decide on such a, such a big down payment for the first house?

• 9:05Speaker 02

  We were just drilled into our brains a 20%. This is before I found you guys with your, your lower rule. So that, that's why. So once we knew starter homes in, in our area are about half a million dollars. So automatically a hundred thousand down 20%. So that's where we got that number.

• 9:22Speaker 04

  We always had that number in mind, like that hundred thousand dollars for a down payment. And that was like the magical number. We started our marriage off with like maybe 50 grand in savings. But in like those first six months of marriage, we really buckled in like, hey, no spend month. We're literally putting like into our savings account, like five to six thousand a month. That's really how we build up so much of the down payment. And a lot of you like investing since you were a teenager into like actual brokerage account. He had a brokerage account since he was 18. So that was a lot of your work into it too.

• 9:52Brian Preston?

  What I want to know is, cause I'm, I'm gonna hit you on quality of life here in a minute to find out what you guys do for fun. But I need to know about savings rates, cause I want to know how, how extreme we're going into this being achievers. Cause I'm, every indication is y'all are hitting on all cylinders on making stuff happen. So what's, what's the savings rate?

• 10:10Speaker 02

  We are currently at the 25% with just the retirement contributions and stuff going into like investments. But on top of that, you see, we have a lot of cash in our sinking funds. Cause we have a lot of these little buckets that we just like to save for like these bigger expenses. Like you can talk about a little more.

• 10:27Speaker 04

  We do like.

• 10:27Speaker 03

  And you said that's your thing.

• 10:29Speaker 04

  Cause I, I, when I was like single, I was starting to do like these sinking funds. And it's like my little buckets of like a hundred bucks for entertainment and like a hundred bucks for a car or whatever. So as we got married, we combined these buckets and we have like eight. It's like, uh, saving up for a new car, car registration. Like we have all our, all of those buckets, like annual things into those sinking funds as well. Like the annual subscriptions and the car registrations and the car insurance. But we also have house maintenance, house improvement, entertainment. We have little buckets for ourselves, the Skyler fund and Mallett fund. Like that's just money that we can spend on whatever we want. Um, like our hobbies. Yeah, like those are like how we save money and we.

• 11:11Speaker 03

  Do you ever spend the money? Like you said, like, like the stuff you save up for yourselves, like what, what, what do you spend?

• 11:15Speaker 04

  I spend it on my hobbies. He's like more conservative.

• 11:19Speaker 02

  I try to save it up like my little I want bucket, um, but then whenever she sees something nice, I'll like buy it for her. I'll be like, happy birthday.

• 11:26Speaker 03

  So you spend up your bucket on her?

• 11:27Speaker 02

  Yeah, my bucket pretty much goes to her, um, but occasionally I'll get, uh, like I'll buy myself a new tool or like, um, a new car part.

• 11:35Speaker 04

  He's into cars, mechanics and just he fixes his own cars.

• 11:38Speaker 02

  That's one of the ways we're able to save a lot of money is because I do all the repairs and maintenance on our vehicles.

• 11:42Brian Preston?

  Well, and here, here's the thing that I think is interesting is that like y'all have come to Nashville for, to record this show. And we asked you about it and I, I, I mean, you packed three trips into one, one visit. I mean, because there was nothing on my list. Y'all went to Gaylord, you saw the Grand Ole Opry, you went to Broadway to do all the honky tonks. Y'all went to the Country Music Museum.

• 12:04Speaker 03

  It was all the stuff.

• 12:05Brian Preston?

  It's like you came and you conquered this city.

• 12:08Speaker 04

  Yeah.

• 12:08Brian Preston?

  In one fail, in one visit. So that's just y'all's personality. I get the feel. Is that, is that correct?

• 12:14Speaker 04

  I'm very much a planner. I need to have like, what are we doing in the day? What is happening? And I like to know where our money is going. Like we even have our own budget for the trip. Like we, we make sure everything is allocated appropriately.

• 12:26Speaker 03

  How do you track your spending and your budgeting?

• 12:28Speaker 02

  So we just have a spreadsheet template through Google Docs. Um, and over the last five years, I've molded it and tailored it to something that works for us and our lifestyle.

• 12:37Brian Preston?

  Have you ever thought about automating that with like a monarch?

• 12:39Speaker 02

  No, because I like the act of actually doing it. After every time I buy something while I'm checking out at the grocery store, I'm entering it into my spreadsheet to make sure I don't forget.

• 12:47Speaker 03

  On your, you're like doing a cell on your phone?

• 12:50Speaker 02

  Yeah, they're using the Google Doc or Google Sheets.

• 12:55Brian Preston?

  Do you enjoy doing this as well?

• 12:57Speaker 04

  I started it too at the same time. Like even before we were single, we started this template by like kind of separately, but like same thing.

• 13:03Brian Preston?

  Okay, which country we got to take over? I feel like you two is a, is a force. I mean, I'm trying to figure out where the chinks in this, this thing is, but y'all seem to be united in a lot of this.

• 13:12Speaker 03

  Oh, it's interesting. Right now, you total household income for you guys is a hundred and seventy three thousand dollars. You just said, hey, you're about to get this certification where your pay is going to go up by forty to fifty thousand dollars, right? So we're talking about a very young couple making north of two hundred thousand dollars a year, which is just insane. Where are you guys going? What are the goals? Like, what do you think about?

• 13:32Brian Preston?

  What's the struggles? I want to know also, what are y'all hoping to get out of this?

• 13:35Speaker 02

  Oh, yeah, one thing, uh, why the income is so high? I, I work three jobs. On top of the civil engineering, I do, uh, private piano lessons, pulling in about $25,000 a year. I mean, on top of that, I also work weekly at a church. They pay me about 200 bucks a week to play piano for the worship services. So I'm working maybe 55 to 60 hours a week, just between those three jobs. So one of the chinks, I guess, is I feel like I work a lot and I don't get a lot of time to just sit and relax or hang out with Milet. So I'd like to actually come down in the, the working. So I don't know how, how that factors in, but...

• 14:09Speaker 03

  You said that's 50 to 60 hours a week?

• 14:11Speaker 02

  Yeah.

• 14:12Speaker 03

  What stops you from coming down?

• 14:14Speaker 02

  Um, we only meet the 25% housing rule if I'm, keep that up. Yeah.

• 14:21Speaker 04

  Basically.

• 14:22Speaker 02

  Because of our mortgage, uh, being so high, our monthly mortgage, yeah.

• 14:25Speaker 03

  And I think you should, that your monthly mortgage right now, in terms of cash flow, I think it was a little over 3,300, is that right?

• 14:31Speaker 02

  Yes.

• 14:31Speaker 03

  3,360 a month?

• 14:32Brian Preston?

  But you're also counting those sinking funds, aren't you?

• 14:35Speaker 02

  Yes, yeah.

• 14:37Brian Preston?

  Yeah, I think you're...

• 14:37Speaker 02

  We put a lot in there.

• 14:39Brian Preston?

  You got your, I think you got your thumb on the scale, on, on your, on, on the pressure you're putting on yourself.

• 14:44Speaker 02

  Yeah, a little bit.

• 14:45Speaker 03

  50 to 60 hours a week, working. What, what do y'all do when you're not working? Like, are you, are you going out to movies and going to have liquids?

• 14:56Speaker 04

  Lately, we, since we got a new construction house, we've been working on the yard, like, making a yard for the last year. Every single weekend, we have something to do in the yard, and that's his job, but I tag along.

• 15:07Brian Preston?

  I love it.

• 15:07Speaker 02

  Yeah, since the, the backgrounds, their backyards are completely unfinished, we've been putting in, uh, 1,800 square feet of pavers by ourselves, um, building retaining walls, adding water lines, uh, installing gutters. And I'm just YouTube-ing it, kind of figuring out how I, as I go, because I don't want to pay. I look at, we got some contractor quotes, and I was like, I could save so much money if I just invested the difference and did it, did it myself. And I think it's fun. So that's, uh, what we've been doing in our downtime, is just working on the house, pretty much.

• 15:35Speaker 03

  So again, I want to think about the next 10 years. When you think about where you're at today... And what you see your life looking at, looking like 10 years from now? How's it look different? What things are different about you guys in 10 years?

• 15:46Speaker 04

  Hopefully we'll have kids.

• 15:47Speaker 03

  Oh, kids. You want to have kids. Awesome. So, want to plan for a family? How many kids you guys want to have?

• 15:52Speaker 02

  I would like two. So it's easy to go on the rides at Disneyland. It's even, yeah, she's a super Disneyland.

• 15:58Speaker 03

  Who would have thought they planned that through? Who would have thought that?

• 16:00Brian Preston?

  I'm a fellow Disney fanatic myself.

• 16:03Speaker 02

  That was one of the first things she saw when I showed her one of your episodes was the partner statue.

• 16:08Speaker 04

  I loved it.

• 16:09Speaker 03

  Alright, so want to have a family. When you have that family, will this house that you're currently in still work for a family of four? Great. So it's not something we have to worry about. What do you think will change when you have kids?

• 16:21Speaker 04

  I am hoping to like not have to work, at least for the first like three to five years of the kid's life. The goal is for like Skylar's income to go up enough to cover my income.

• 16:32Brian Preston?

  I heard from a bird that he might make $40,000 more a year.

• 16:35Speaker 04

  And that might just be enough.

• 16:36Brian Preston?

  Once that certification comes in.

• 16:37Speaker 03

  But if there's, if we, if we add 40, but we take away the piano lessons and we take away the church, he gotta keep, he gotta keep working three jobs for that to work, or?

• 16:47Speaker 02

  The goal is no, but I know you're gonna gotta pick and choose what you want to do. If I cut back the extra jobs and just focus on the primary and she stays home, we go down to one income, I'd probably be hovering around 140 to 160.

• 16:59Brian Preston?

  When do you all think you want to have kids?

• 17:00Speaker 04

  I'd say three to five years. Cause we're still young. We want to travel first and enjoy a little bit more of our twenties and then hitting closer to thirties maybe.

• 17:09Brian Preston?

  If money wasn't an issue, would it still be three to five years? Or is the money making its extend out?

• 17:15Speaker 04

  No, I think for sure three to five years. That's, cause I've always said like, oh, I want to have kids around 30 and I'm 26. So that's why this nearing the thirties. That's where I'm thinking.

• 17:24Brian Preston?

  And how close do you want to have the children? I think you've probably thought of these things because you seem like you're a plan type.

• 17:29Speaker 04

  And around, no, no, no, maybe two to three years apart. Cause that's mine, my brother's relationship, his and his brother's relationship is like that two, three year gap. And I think that's great. Like as adults, we're great friends. Like I like that relationship, grew up together almost the same time.

• 17:45Speaker 03

  She said, one of the things you want to do is like enjoy your twenties before you have kids. Do you feel like you guys are doing that now? Like, are you enjoying the things that you're doing right now? Or do you feel like, oh, we're pretty much the grindstone? Every single weekend, we're laying papers and then I'm working three jobs.

• 17:59Speaker 04

  I think we're easing up this year. Last year was very strict about saving up money. We gotta get the house. That's the goal in mind. We got the house and now we're like, okay, we gotta finish the house. But now that the house is about to be done, now I'm like, okay, maybe we can start doing more trips. And like, we already have a couple of trips planned this year.

• 18:17Speaker 03

  Awesome.

• 18:18Speaker 04

  So that's kind of where it's going. Like all our money was going to the house, house is done. Now it's going to finishing the house, almost done. So now we can start kind of living more.

• 18:28Speaker 03

  So what are some of the trips you have planned?

• 18:30Speaker 02

  Uh, we're gonna be going to Japan.

• 18:32Speaker 03

  Okay.

• 18:32Speaker 02

  Uh, in next year for my brother's graduation trip. It'll be like a big trip with our families. And then I think we want to go to Mexico sometime.

• 18:41Speaker 04

  Yeah, this year we'll go visit my family.

• 18:43Speaker 02

  Yeah.

• 18:43Speaker 04

  My family's in Mexico, so we'll be going maybe two times this year. And then like a friend's bachelorette trip in Utah next month. So like, that's like more things that in the past, we would have been like, oh, maybe, maybe not, like, I don't know. And now it's like, yeah, we have some money to spend. Like, let's go have fun. Like, let's just do it.

• 19:00Speaker 03

  And are these, like the Japan trip, Mexico, Utah, are these things that we have sinking funds for? Or we're just like, oh, we can do this out of cash flow?

• 19:06Speaker 02

  We have sinking funds for, that's part of the, one of the buckets in the 25 grand. Yeah.

• 19:11Speaker 03

  So one of the, you said there were eight buckets in there, right?

• 19:14Speaker 02

  Yes.

• 19:15Speaker 03

  And did, did I hear correctly that like one of the buckets, uh, was, was registration for the automobiles?

• 19:21Speaker 02

  Yeah.

• 19:21Speaker 03

  Is it very expensive to register automobiles in California?

• 19:24Speaker 02

  Not really, because our cars are so old. Um, but since it is an annual expense, I, I think I put like $11.36 every month.

• 19:33Speaker 04

  We put it there because all of those buckets are in a high-yield sinking fund. So they are making money if we put them all together in that sinking fund. So it's just somewhere to pull money from. So we don't have to stress about it like, oh, we gotta add it to the monthly budget. No, it's already in a sinking fund. Like that's our logic behind that.

• 19:48Brian Preston?

  What do you all fight about?

• 19:50Speaker 00

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• 20:17Speaker 01

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• 20:42Brian Preston?

  Fight?

• 20:43Speaker 04

  Not, not really.

• 20:45Brian Preston?

  Y'all ever had a fight?

• 20:46Speaker 02

  I still, yeah, we do fight.

• 20:47Brian Preston?

  About what, what's the issues that you'll fight about?

• 20:50Speaker 02

  Like, what are we eating tonight? Where do you want to go?

• 20:52Speaker 04

  Yeah.

• 20:53Speaker 03

  Let me go and tell you, that one doesn't change.

• 20:55Speaker 02

  Not really huge fights. I think we're still in the honeymoon phase. So we're still trying to figure each other out, what makes each other mad. Luckily, we haven't hit that wall yet.

• 21:06Speaker 03

  What have you figured out so far? What do you think that you do that drives her nuts?

• 21:11Speaker 02

  I think a lot of the impulsive purchases sometimes.

• 21:15Speaker 03

  Oh, you're the impulsive purchaser?

• 21:16Speaker 02

  I'm the impulsive purchaser, yeah.

• 21:18Speaker 03

  I just heard that we're budgeting $11.

• 21:21Speaker 04

  But it's also impulsive. Okay, we just had this earlier this year. We went to Vegas. We stayed at an Airbnb that had a water softener. He loved that water softener so much. The next week, he paid $1,800 to get one installed in our house. That's the impulsive vice he does.

• 21:34Speaker 02

  Yeah, so I'll.

• 21:35Speaker 04

  I guess we do clash on that. I'm like, do you really need to buy that? Because he'll make the big impulsive purchases. I'll go into the nursery and buy a little plant.

• 21:43Brian Preston?

  You don't know what the definition of impulsive purchases is, don't you? I mean, water softener? This is what we think.

• 21:48Speaker 04

  Yeah.

• 21:49Brian Preston?

  It is golf clubs. It's like, you know, exotic sports car without talking. I mean, he bought an appliance for the house. I mean, it's a, this is.

• 22:00Speaker 03

  Was it the fact that y'all didn't have a conversation about it? Or was it the fact that he just experienced it, wanted it?

• 22:05Speaker 04

  Cause we had had that conversation. We said we were gonna do it. From the time we got the house, we realized, oh, it has really hard water. Like, we should save up for it. And it was like a save up for it in the future. Maybe after we're done with the backyard, we'll do it. But after that trip, within a week, it was installed. That was the, oh, wow, okay, I guess we rushed that.

• 22:23Speaker 02

  Yeah, we, we always talk about big decisions like that. But it's, uh, it's like, how long do we wait before we actually make the decision? That can be a point of, uh, conflict sometimes.

• 22:31Speaker 03

  So how did y'all, how did y'all, like, in that specific one? How, where was the communication on how long you were gonna wait? Like, you said, hey, we're doing it now? Hey, they're, they're here to hook it up?

• 22:40Speaker 02

  I basically said, we, we started shopping. We're like, all right, we could, we could do this. We have enough, we have half the money in the sinking fund.

• 22:46Speaker 04

  We had our sinking fund of house improvement. So that's money that we are allocating to improving the house. So he's like, hey, we already have twenty-five hundred in here. Like, the hu, the water softener is gonna be about that much. Like, should we just do it? And I'm like, really? Like, go get quotes, go get, like, the best people, like, check on every single person that's coming into our house, background, whatever. Make sure they're certified. And he's like, oh, yeah, I found our neighbor. He works as a plumber. He does great work. And he'll charge us twenty-five.

• 23:15Speaker 02

  Yeah, and then, uh, we just ca, cash flowed the rest. Cause luckily, we have quite a bit of discretionary, uh, money after the end of each month. Uh, we just lower the amount we're putting in the sinking funds. And then we just apply it to whatever we want.

• 23:27Speaker 03

  All right, so impulsive purchases is what you think drives her nuts? What is, what does, uh, what do you think that you do that drives him nuts?

• 23:35Speaker 04

  Uh, I do a lot of little purchases, but like, for, again, hobbies. Like, we live near Disneyland, so I like to go there a lot.

• 23:43Brian Preston?

  You're a season ticket holder, I'm assuming, though, right?

• 23:45Speaker 04

  Uh, no, not this year. We, I used to be when I was single. It's really expensive. Like, their tickets are like sixteen hundred dollars for a pass holder, so.

• 23:53Brian Preston?

  But how many times are you going?

• 23:55Speaker 04

  Well, this year, we've gone three times.

• 23:56Brian Preston?

  Okay, well, okay.

• 23:58Speaker 04

  Yeah.

• 23:59Brian Preston?

  You're right on the line.

• 24:00Speaker 04

  My impulsive buy is like, I'll see the little trinket or the little pins or the little things, and I like to buy those collectibles. Right now, like, as of this year, I like getting into plants. Cause now that we have a house, I'm trying to decorate it and little, little plant things. And now I'm buying like pots and soil and how to repot the plants. And I'm learning all this, and he's like seeing that, like, another plant? Like, where are we gonna put this?

• 24:20Speaker 02

  Yeah, it's starting to look like Rainforest Cafe in our living room.

• 24:24Speaker 04

  So that's kind of the biggest like

• 24:26Brian Preston?

  Is it the spending? Is it the spending or the clutter that is the issue?

• 24:30Speaker 04

  I think both, like I am clutter, like upstairs, we see our office and you see his desk completely neat and perfectly good and my office, since I don't really work there, I work at an office. My desk is just a mess. So that's really a big sticking point in our relationship.

• 24:45Speaker 02

  It's more just the, I say it more the clutter. Um, it's never an issue of can we afford it? Cause we know we always can. Um, it's just like, do you need another one? That kind of thing, you know?

• 24:55Speaker 04

  Cause he's very, like, I like things. I like, I have a lot of clothes. I have shoes. I see a purse. I like, I'll just buy it. But he's like, I don't need another shirt. I don't need shoes. Like he has the same.

• 25:05Brian Preston?

  I just need a water softener. I don't need shoes.

• 25:08Speaker 04

  He does, he has the same three pairs of shoes. Since had since college. Like I don't think you've bought shoes since you've been out of college. But he, he doesn't need that stuff. And for me, I like the, the little knickknacks, the shoes, the purse.

• 25:21Brian Preston?

  So far, I mean, y'all are like the ideal star students. I mean, so I'm trying to figure out, you came on Making a Millionaire. Do you know, cause I, I actually read in the notes. You want to be a millionaire by the time you're thirty.

• 25:34Speaker 02

  That, that was.

• 25:35Brian Preston?

  Is there a why to that? Is there a why to it?

• 25:37Speaker 02

  No, that was just like, okay, that'd be cool to hit this number. Um, but after I, I applied, after I submitted that question. Um, I started running the numbers. I realized, okay, that's not going to happen unless we're saving like, you know, eighty percent of our income. Um, so I've kind of gotten away from that. Okay. Um, I know. It might not happen when I'm thirty, which is fine. I don't plan on retiring when I'm thirty. I'm just getting started in my career. Um, but our, our end goal, we'd like to actually, um, be like work optional around like fifty to fifty-five.

• 26:06Brian Preston?

  Okay.

• 26:07Speaker 02

  Um, so that's where a lot of our, um, I guess. Questions come from. We want to know if we're on the right track to do that based on our current, uh, investing and savings rate. Um, and the unfortunate thing is there's not a lot of people around us that we can kind of talk to. Um, the people we can talk to are in similar financial situations are a lot older. Um, and then the people my age are still trying to figure out if, you know, what, what alcohol we buying this weekend, you know?

• 26:32Brian Preston?

  Right.

• 26:33Speaker 02

  Um, that kind of thing. So that's like, we're more like, we don't know where we're at. We don't know if we're behind the curve, on the curve.

• 26:39Brian Preston?

  Okay.

• 26:39Speaker 02

  That kind of thing, yeah.

• 26:41Speaker 03

  So, all right, let's talk about this. If we think about work optional life around 50 to 55. All right, what's it look like? Uh, how much money do you need to be able to spend at age 50?

• 26:50Speaker 02

  So we would like to be at a hundred twenty thousand dollars, uh, after tax, take home, per year.

• 26:56Speaker 03

  How'd you come up with that?

• 26:56Brian Preston?

  Yeah.

• 26:56Speaker 02

  Um, ten thousand dollars a month, um, and then that's what I based off all my calculations on, having about three million dollars invested.

• 27:04Brian Preston?

  But y'all don't spend ten thousand dollars a month.

• 27:05Speaker 02

  Uh.

• 27:06Brian Preston?

  You spend currently somewhere between five to six thousand dollars a month, if you take out the sinking funds.

• 27:10Speaker 02

  That's true, yeah. That's based on the current with the sinking funds. We don't wanna stop the sinking funds, I guess, even after we stop working, which is, uh, this is how we're wired in our brains.

• 27:20Speaker 04

  Dying buckets of money, like, oh, if I have ten thousand dollars on my entertainment fund, then, oh, I have, I can plan a big trip with that money, like, I don't know, we just keep adding to those buckets every month, and as they grow, I can see the opportunity for more.

• 27:33Brian Preston?

  Do y'all ever worry about fatigue of, um, cause look, I was, I actually resemble y'all, my wife and I resemble y'all a lot, but I will tell you, as you, getting your thirties and forties, you're not gonna wanna track every dollar for forever. I mean, plus it creates weird dynamics once you, you start staying home with the kids. It could be some weirdness, but unless, but you probably might take over the finances, even with the kids. It's just that I'm trying to make sure y'all grow into the best version of yourselves. Do you think you'll always wanna stay on a, such a tight budget system versus what we call, kind of a managed, you know, money system to where you, you kind of automatically have the money going, but then, you just, if there's money left over, you go and live your best life. Well, give me some thoughts on that.

• 28:16Speaker 04

  I mean, I've never really thought about any other life without spreadsheets, I guess, because since we were teenagers.

• 28:22Speaker 03

  I want a T-shirt that says, "I've never thought about life without spreadsheets." Oh, that's amazing.

• 28:27Speaker 04

  That's how we've been like. In a way, growing up, like we've been, I've been doing it since I was 18. You've probably been doing it since earlier. Just kind of like, that's just the way of life. Like, we've been like, tracking our spending. Like, like I said before, like, I'm kind of in a mindset that I'm scared to not have money. So like, the spreadsheet is like a security blanket. And like, I make sure there's money there. And, oh yeah, we have $500 left at the end of the month. Cool. Like, we can put that into like, the brokerage account, or like, the more savings, or even more entertainment. Like, if that month, we want to do something extra, oh, we have like, $200 left at the end of the month. Let's just put it towards that. It's like a security that I've always like, didn't grow up having. And now I see it like, oh, we, we have money left over at the end of the month. That's crazy.

• 29:08Speaker 03

  If the goal is work optional by 50, 55. And you just said, hey, I want about $10,000 a month, after tax, $120,000 a year, in today's dollars, to be able to spend. And if we're gonna like, have two kids, exactly, and they're gonna be exactly, probably three years apart, because we're gonna plan this through. And we're gonna drop from one, from three jobs down to one job, drop from four incomes down to one income. Can you do that on $140,000? Like, at $140,000, can you save 25%? If you save 25%, is that gonna get you to this goal?

• 29:39Speaker 02

  We, we haven't actually run the numbers yet on that new income. Everything we've run is based on the now. Um, I guess that's kind of our downfall, because we're so focused on like, what's happening tomorrow. And right now, we, we're not thinking like, one, two, three years in the future.

• 29:54Speaker 03

  So let me ask you this question. Let's say that we did the numbers for you. And we ran it, we're like, hey, guys, it doesn't get there. Oh, man, it just, it doesn't, oh, it doesn't work out. So you're gonna have to, if you, you're gonna have to keep working three jobs until you're 50. How do you feel about that?

• 30:07Speaker 02

  Then that's what happens, I guess. I don't make the rules. I just follow them.

• 30:12Speaker 03

  What I'm trying to illumine here is that there's a lot of life. You're 23 and 26, there's a whole lot of life that's gonna happen between now and the time that you guys turn 50, right? I mean, just job changes, family changes, the unknown unknowns that you're just not even prepared for. And I think so often, we achievers and planners, we so desperately want to have the entire plan planned out. Where, what we say on the show all the time is that, when you're early on, when you're starting out of the beginning, it's more like throw In horseshoes, right? You're not trying to be laser precise. You just want to kind of get in the general direction. And we say get in the general direction for most folks, if you can save 25% and I'm going to go and tell you even to your age, 25% is not even going to be required to get there. You're going to be in a great spot.

• 30:54Speaker 03

  But what I hear is like, or what I worry about is if something were to deviate, if something were to throw you guys off of your plan right now, how would you handle that?

• 31:02Speaker 02

  The first thing we'd probably have to change is our lifestyle. Stop saving that much into the extra buckets. That's where most of our margin comes from. And I think that'd be the easiest thing to kind of trim down if something did affect it and we weren't able to bring as much money in.

• 31:18Speaker 03

  So if the goal is 50, 55, talk to us about where your savings, you said 25% savings, right? Walk us through kind of like your financial order of operations. Where's your savings going on a month over month basis right now?

• 31:29Speaker 02

  Yes, so I have 9% going into my 401k. There's a 3% match. I also have the Roth IRAs, both of our IRAs are getting maxed out every single year. And on top of that, we are putting a thousand dollars a month into a regular taxable brokerage account. Originally, we earmarked this as a pay off the house early when the balances meet up. But now we're starting to think it's going to be a bridge account because since our interest rate is super low, we'd rather just hang on to the mortgage like a little pet.

• 32:01Speaker 03

  It's like music to my ears.

• 32:03Speaker 02

  Yep. And that's.

• 32:05Brian Preston?

  At least until you're over 45.

• 32:06Speaker 02

  Yeah.

• 32:07Brian Preston?

  Because it's going to be, with the kids, there's going to be a lot of life. You want that margin just to make sure you're there.

• 32:11Speaker 02

  And I know you guys always say it's always good to have the ability to pay off the debt than to just pay it off.

• 32:16Speaker 03

  And then what retirement account for you?

• 32:18Speaker 04

  Through my job, I have a 457 account. I put in 250 bucks a paycheck into that, so 500 a month. And then I have a pension through my job because it's a state job. So I put 8% into it through my paycheck, but then I get reimbursed 3%. So it's really putting. Five percent out of my money.

• 32:40Speaker 03

  They actually, so they don't actually put the three percent into your pension, they pay it back out to you?

• 32:44Speaker 04

  Yeah, but put it back into my pension.

• 32:45Brian Preston?

  You sure they're not putting more money also into the pension?

• 32:48Speaker 04

  I don't know, and I don't think so.

• 32:49Brian Preston?

  Cause usually with government pensions, like I know the, the government that I used to, to work with, we had our employees put in eight percent, but when we were putting in eleven percent, the government was, because the mathematics worked out that we had to pre-fund a ton of the assets because people retire at fifty, fifty-five. And you gotta guarantee that that money's there.

• 33:09Speaker 04

  Yeah, to, like, for my job, it's a very entry level job, um, and it's also not like a permanent job. It's only for three years. So to my understanding, it's only, I, they, I put eight percent, they refund me three percent. And then I'm sure as I get higher in the, I guess, the government, but, uh, no, but not.

• 33:29Brian Preston?

  Well, what's the vesting? Do you know on your pension?

• 33:31Speaker 04

  Uh, I have no idea.

• 33:32Brian Preston?

  Okay, we probably want to find that out.

• 33:33Speaker 03

  On your 457, uh, is that Roth contributions going in?

• 33:36Speaker 04

  Yes.

• 33:36Speaker 03

  Awesome. And then on your 401K, then it's nine percent off.

• 33:40Speaker 02

  But that is at my current employer. When I switch to the new job, it's going to switch over to a pension.

• 33:46Speaker 03

  Oh, okay.

• 33:46Speaker 02

  And then a 457 as well.

• 33:49Speaker 03

  Likely going to be saving the same amount though, probably twelve percent.

• 33:52Brian Preston?

  You know what's great about those 457s?

• 33:53Speaker 02

  We, we don't actually know the difference between the 401K and 457.

• 33:55Brian Preston?

  You retire at fifty, fifty-five, there's no early withdrawal penalties.

• 33:58Speaker 02

  Really?

• 33:59Brian Preston?

  So it's, it's, it's gonna be sweet. Yeah, it works out quite nicely with y'all's plan.

• 34:03Speaker 02

  We chose right, cause she had the option to do a 401K or a 457, and we kinda just rolled the dice and we're like, I'm gonna choose one.

• 34:08Speaker 03

  Uh, cause it was the same, uh, is there, there's not matching on the 457?

• 34:12Speaker 02

  There's no matching or anything.

• 34:13Speaker 03

  Then yeah, that's a great, assuming the investment options are pretty good, that's a great way to choose. What questions do you have for us? What are some things that we could speak to or answer to be helpful for you guys?

• 34:21Speaker 02

  Since the, the profit sharing and the employer match at my current job goes into a pre-tax bucket for the 401K, as I'm leaving, should I take that money, pay the taxes on it right now, and then roll it into the Roth? Or should I leave it or that kinda stuff? Cause I also don't wanna break that pro rata rule because I expect my, our income to go over the 240 limit, um, with the backdoor Roth, that kinda thing. I don't wanna... I'm really unfamiliar with those types of rules and tax strategies and all that. So I want to make sure I'm doing it right.

• 34:54Speaker 03

  Well, the great news is right now you don't have to worry about backdoor Roth's because the income is below the threshold where you can contribute directly. But if it does go up, you would want to perhaps keep that intact. One of the things you want to check with both your, or specifically with your 457 provider with the new plan is will they accept rollovers from other retirement plans? Most will, most will allow it. Some will have restrictions on there. But assuming that's the case, you can roll your 401k from your old employer into the 457 with a new employer, potentially. You'll have to verify that because there are some unique nuances and rules you'll want to check on, but that's something that you have some time to figure that out. Because there's also nothing wrong with leaving your 401k if your current company is with a really good provider like a Vanguard or Fidelity or something like that.

• 35:37Speaker 03

  You can leave your 401k behind and still take advantage of the investment options there. You don't have to move it, don't have to roll it over. So that's something to potentially consider.

• 35:45Speaker 02

  Okay.

• 35:45Speaker 03

  On the Roth conversation, y'all live in California, right? So you're in a relatively high income tax situation federally. And then you add to that the state piece.

• 35:57Brian Preston?

  Because what's your state income tax that you're income?

• 35:59Speaker 02

  Uh, I think it's like 14%.

• 36:02Brian Preston?

  Well, it's probably, because I think.

• 36:04Speaker 03

  Probably not that high of your income.

• 36:05Brian Preston?

  Because I think that, you know, it's 13, 14% once you're over 60. But I bet it's, I bet it's somewhere between 6 to 10%.

• 36:13Speaker 02

  Okay.

• 36:13Brian Preston?

  And then you're in the federal 22% bracket right now. So I mean, it's just, it would break my heart to watch 30% just evaporate.

• 36:21Speaker 04

  Right.

• 36:21Brian Preston?

  Um, just for the sake of turning it into Roth. When y'all have the ability, exactly what Bo said, you can go ahead and fund Roth on, you know, with your Roth IRAs every year because y'all's income is not that high. And y'all likely could choose Roth 457s. Or that's one of the things we'll look at when you're trying to figure out Roth 401k or 401k versus 457. I'd love to know, do they offer Roth options on both of those? Because then if they have Roth 457. That would be pretty powerful, too.

• 36:51Speaker 03

  On your side income, the income that comes from the church, how do they pay you?

• 36:54Speaker 02

  I'm a W2 to the church and the piano is self-employed.

• 37:00Speaker 03

  How much did you say you're gonna be making through the, like, the teaching?

• 37:03Speaker 02

  Twenty-four grand a year. It's about two thousand a month.

• 37:05Speaker 04

  You have about, what, ten students?

• 37:07Speaker 02

  Yes, ten students.

• 37:08Speaker 04

  Ten students.

• 37:09Speaker 03

  So there's some fun stuff you can do in terms of like tax planning with that, given that it's self-employed income, gives a side, you know, side income. Do you think you'll have to start making estimated payments on twenty-four grand if his?

• 37:20Brian Preston?

  Well, y'all do your taxes. Are you getting refunds currently?

• 37:23Speaker 02

  No, we actually had to pay a lot last year because I filled out my W4 wrong when we got married. I didn't do the extra withholding check, so we just paid like eight grand.

• 37:31Speaker 03

  Oh, wow.

• 37:32Speaker 02

  Last year, but luckily we had the money. It wasn't an issue. So now it's just more like a, okay, lesson learned.

• 37:37Speaker 04

  A lesson learned, let's not do it again next year.

• 37:39Brian Preston?

  It all depends. Is your income going up? I mean, to, like, do you count on, like, I know it sounds like you'll make forty thousand dollars more, but hopefully there's some family planning that comes into play. It all goes into, because a lot of times, you just got to make sure you're paying greater than what you paid last year. And then once your income gets over a certain level, you got to pay greater than one hundred and ten percent of last year. And if you were naturally getting pay raises and the withholding was naturally protecting you, then it's nothing wrong with you giving the government the money in April when you either file your extension or file your tax return, because you wouldn't have any penalties. The big thing is we're trying to make sure if all of a sudden your income starts going down or, you know, from other sources, but you're making it up through the side hustles,

• 38:24Brian Preston?

  yeah, you want to make estimated tax payments, because the worst tax in the world is those penalties, because it's just unforced errors. It's just giving away free money. So it, a little planning, and it's gotten to the level. This is one of the things, because y'all are doing so many things well, that even for like a financial planner, I would throw y'all back in the water and say you're close, but you know, you just basically need somebody to go through and do the math exercises with you. And, you know, and then make sure you're in the right path and wait until you add more complexity with success. And this is, but this is. One of those areas where tax planning that I think that somebody could definitely add some value to the conversation.

• 39:05Speaker 03

  Then you said that you are changing jobs this year, right? Contributing 9% to your 401k, but it's 9% of the comp you've made so far this year?

• 39:14Speaker 02

  Uh huh.

• 39:14Speaker 03

  Right? And then with this new job, you're gonna be paying into a pension and have access to 457.

• 39:18Speaker 02

  Yes.

• 39:19Speaker 03

  Correct? So a really unique thing this year, you're gonna wanna make sure you think about is with this side income, there's even a potential where you could do a solo 401k and you could potentially, this year will be unique because you already contributed to a 401k, but in future years, you might be able to like make all of that income disappear. Cause you can contribute to 457 through the government job and the 401k through the solo. Really, really exciting way to double dip on your retirement savings. Not that you guys necessarily need to be saving more.

• 39:46Brian Preston?

  That is a completely legal loophole that he's sharing with you.

• 39:49Speaker 03

  In the way that you save, it's gonna be a really good way to drive that income down, super, super low because you're not participating in a 401k elsewhere. Uh, this year, you wanna make sure you're careful. You guys self-repair your taxes if you have an accountant?

• 40:00Speaker 02

  We had someone do it for us.

• 40:02Speaker 03

  So this year, the question you wanna ask, and we'll mention this as we kinda go through our planning is, uh, you'll wanna make sure that you don't put too much into the solo 401k, that you over contribute between what you did with your current employer and the new solo 401k. In those two, you're still capped at the 24,500. God, that got real nerdy real fast. There's some exciting things to do there. Alright, what other questions do you have for us?

• 40:25Speaker 02

  One of the questions I have is are we too cash heavy in the sinking funds? Cause the likelihood of us using all that money at the same time is very low. And me looking at it, I know cash is not making much money, just sitting in the high-yield savings account. He wants to invest. Throw it into the S and P.

• 40:41Brian Preston?

  Let me ask you, cause this is where, this is where I catch the financial mutants who are fibbing on both sides of this thing. You said you want us to plan for $10,000 a month?

• 40:50Speaker 02

  Yep.

• 40:51Brian Preston?

  What do you actually spend a month?

• 40:53Speaker 02

  We, we spend $5,000 a month.

• 40:55Speaker 03

  Like that's actual spending, not that.

• 40:57Brian Preston?

  Do you see how unique this is?

• 40:58Speaker 02

  That's only spending, yeah, bare bones, nothing else.

• 41:01Brian Preston?

  So, emergency reserves was, I mean, y'all probably would be fine doing six months, you know, three to six months, you know, I'd rather go a little conservative since you already have the cash. So, and if you think about that, you know, 30 grand. And you guys have over 50. So, I mean, you know, you're probably, you're in a pretty good place with your cash.

• 41:21Speaker 03

  And, and tell me, okay, so sinking fund, we have vacations, those are big expenses. New car, big expense. What were the other ones? That was two, there was eight of the, eight in there.

• 41:32Speaker 04

  Yeah, like house maintenance and house improvement.

• 41:34Speaker 03

  Like house ma, like house improvement, like what's an example of a house improvement?

• 41:38Speaker 02

  Like the water softener is improvement.

• 41:39Speaker 03

  Like an $1,800 expense?

• 41:42Speaker 02

  And then, so anything new that we want to add to the house that would probably increase the value, like landscaping, you know, and selling gutters, that kind of thing, that's improvement. Fixing the stuff that's already there, like a broken appliance or water here, that's the maintenance.

• 41:55Speaker 04

  And we separate it. Like, I don't know if that's like, in our brain or in my mind, like the buckets work, like, oh, I have this much in this bucket, this much in this bucket, but like, should we be combining on making our life easier or is that like helpful?

• 42:08Speaker 03

  In my opinion, yes. But I want to be very careful not to impress our bias upon you guys, because if what you're doing is working, there's something to be said for that.

• 42:17Speaker 04

  Yeah.

• 42:17Speaker 03

  I would argue it's a little over complicated and over conservative, because realistically, if you have $30,000 in an emergency fund, and that's truly an emergency fund, and you decide you want to go buy, if, and you decide you want to go out and buy a water softener, and you're telling me you have thousands of dollars of discretionary income every single month left over after you've done all your spending, then I would argue that $1,800 could just kind of probably come out of that, that's, that's, that's, that is not something that necessitates a sinking fund. Now, replacing an automobile, going on a big trip, makes all the sense in the world. But these little things like $11 a month for annual car registration.

• 42:56Speaker 04

  And we do that.

• 42:57Speaker 03

  Perhaps we're majoring in the minors there. Again, I don't want to break your system, because if it's working for you guys and. Look, we're desperate to try to pull some conflict out and you guys don't have any yet. So I don't want to suggest you got to change things. But in reality, you probably could simplify, probably could streamline, be a little more efficient. And when you add efficiency, generally you tend to add effectiveness, which would prevent you from holding so much cash.

• 43:20Speaker 04

  Okay.

• 43:21Speaker 03

  And maybe have some of that cash working for you.

• 43:22Brian Preston?

  I see y'all as having enough assets that we ought to definitely find out ahead of the curve, behind the curve, right where you're supposed to be. But then after that, you'll need a financial enabler in your corner.

• 43:33Speaker 03

  If I could, if I could go back in time, life has turned out pretty good for me. But if I could go back in time and change one thing when I was in my twenties, pre-kids, I'd have gone to more Tuesday night movies. And I'd have gone to more coffee shops and I'd done more of that little stuff. I was so tight and so worried about saving every dollar and hitting every single thing. That I assumed that that sort of thing was going to break the plan. When realistically, the behaviors that I had in place, the plan likely was not going to break. And I don't think that that survivorship bias, just because I made it to the other side. I do think realistically, I could have not focused so much on being perfect so early. And it probably would have allowed me to do more of those things. But again, it sounds like you guys are already doing a lot of that. I just want you to recognize that's something I'd go back.

• 44:13Brian Preston?

  Well, and I would give you the guidance. Doing exercises a couple, because y'all are a little different in the fact that you said you have little things like the trinkets from Disney.

• 44:23Speaker 04

  Yeah.

• 44:24Brian Preston?

  You know, not, you don't need a sinking fund. You just need to have a conversation. Is that we're just going to make sure that you get to do what brings you happiness?

• 44:32Speaker 04

  Yeah.

• 44:34Brian Preston?

  Without regret. And then the same thing for you, Skylar, is that, you know, what are the things that there's like nerdy little gadgets? Because I'm a gadget person too.

• 44:43Speaker 03

  Or tools.

• 44:43Speaker 02

  I would like a play car.

• 44:45Brian Preston?

  Let's just make sure.

• 44:46Speaker 03

  A play car?

• 44:47Speaker 02

  Like an extra car that I can like mess around with and.

• 44:49Speaker 04

  Oh, like a.

• 44:50Speaker 02

  A project car.

• 44:51Speaker 03

  I thought he meant like an RC car. And I was like, dude, go get one right now.

• 44:56Speaker 02

  I've never driven a manual car before. I've always wanted to learn, but I need to buy one in order to learn. So.

• 45:02Speaker 04

  Another one of your like hobby goals is?

• 45:04Speaker 02

  Yeah. Because our cars are old. That's also one of our big goals. Where she wants to upgrade a car. But we have a Honda Pilot. It's got 300,000 on it. And we also have a Prius. It's got two hundred and twenty thousand on it. And they blasted this long because I take care of my cars.

• 45:18Speaker 03

  Sure.

• 45:19Speaker 02

  But eventually we would like something new and we're getting bored of the old reliable cars. We want something new. But that's one of my impulse buys. I'd like, I want a Honda Fit. Those little rally cars and I want to modify it to be able to like drive in the desert, that kind of thing.

• 45:35Speaker 03

  But that not your daily driver?

• 45:36Speaker 02

  No, not my daily driver. So that's one of my impulses I've been thinking about for like two years.

• 45:42Speaker 03

  Wonderful, thinking fun thing to build for, right?

• 45:44Speaker 04

  Another one he has, it's the pilot's license.

• 45:46Speaker 03

  Okay.

• 45:47Speaker 04

  He has been talking about getting a pilot's license since I can remember.

• 45:51Speaker 02

  So since I work in aviation, I'm always on site on the airports doing construction, doing the construction management. So I'm always talking to the tower or the pilots and I always see those guys flying up in the sky. I'm like, that'd be so cool to do it. But in California, it's going to be a twenty to thirty thousand dollars just to get a private pilot's license. And that's one of my other goals. But I don't know really where that fits in to the foo. There's no pilot's license step.

• 46:13Brian Preston?

  No, it is. I mean, it's because those are kind of abundance goals.

• 46:17Speaker 03

  Once you're saving twenty five percent, everything else is fair game. Honda Fit rally cars, becoming a private pilot, all those things are fair game. Once you've checked the box and done what you need to do, they're not additional things you have to build into your budget. You can spend freely. That's why we have the twenty five percent so that you can spend freely and not be concerned about it.

• 46:37Brian Preston?

  See, I feel like now we're starting to get the real stuff out. You want to make sure that y'all got the Star Student Award first, you know, and put the gold star next to you before you now. And you don't have to, you don't have to be bashful. If it brings you joy, if it brings you happiness, it's okay to spend this money because that's the thing. Sometimes with us financial mutants, we're so tight with, and we're so good at saving and we're rewarded by building these nice net worth statements. It's okay for somebody to be in your ear going, do it. Go enjoy yourself, you know, because I want you to live this life with so much excitement and zeal that when you get to be my age, you go, well done.

• 47:15Speaker 03

  Awesome. We're excited to get to work. We'll put together a plan and see what path are you guys on? And is that path the path you want to be on?

• 47:23Speaker 04

  Yeah.

• 47:24Speaker 03

  I have a feeling it's gonna be.

• 47:25Brian Preston?

  Yeah, it's gonna be great.

• 47:27Speaker 03

  Awesome. Thank you guys so much.

• 47:29Brian Preston?

  Thank you.

• 47:29Speaker 04

  No, thank you guys.

• 47:30Speaker 03

  Brian, what an awesome conversation with Skylar and Milet. And honestly, I don't know exactly what to say because, man, they're doing a lot of stuff. Really, really good.

• 47:42Brian Preston?

  This one threw me a little bit because I came in thinking I was gonna bring in some old man wisdom. Cause I was like, look at these young, you know, financial mutants. There's no way they're doing everything right. Surely they're leaving something behind. Cause I was like, it's not uncommon. We see people who are so amped up about saving for the future. That they're, they're doing that at the expense also of building blossoming memories and enjoying today and so forth. Surprisingly, when Skylar and Milet came in here today, they're actually not only great at saving and building wealth, but they actually have been doing a very good job of, of making memories. I mean, even the fact, when they came to Nashville, they had like a hit list that took out like the entire city in like a two day period. So really impressive couple.

• 48:26Speaker 03

  Yeah, they're doing a lot of stuff right, but they still have some unknown things coming their way. And so, uh, I think when we broke down their savings strategy, where they're at currently right now, uh, Skylar's putting nine percent in his 401ks, getting a three percent match. Milet's putting money into her 457 on the Roth side. They're both maxing out Roth IRAs. They have a thousand bucks a month going to the after-tax brokerage account. So when you look at their savings rate, they're currently saving more than 25%. So they are doing exactly what you want a financial mutant to be doing. And this doesn't even factor in Milet's pension. So like they're, they're doing the hard work, even if there wasn't a pension there.

• 49:10Speaker 03

  The future looks pretty bright for them. When I, when I think about where they sit right now, I'd argue even at the young ages of 23 and 26, they're kind of like in step eight. That's where they are in the financial order of operations.

• 49:21Brian Preston?

  Let's actually, let's see if we can actually add some value to these overachievers. I was happy to, to, to see, well, at least happy to see we have an opportunity to have some value here. There's a unique thing with the fact that a 457 is on the table, plus enough side income. To where a solo 401k could be really powerful.

• 49:41Speaker 03

  Yeah, it's really interesting as he changes jobs, he's going to go from having access to a 401k to now a 457. And those exist in two different parts, the tax code. So one of the things he could potentially do was some of the side income he has coming in. I think he said it was like $33,000. Right now, it's all taxable. And so if he were to receive that income, pay tax on it as a, as a self-employed sole proprietor, he's going to pay about $9,200 just in federal and state income taxes. But if he were to in future years, be able to open up a solo 401k, he could still defer 24,500 into that solo 401k rather than showing $33,000 of taxable income. He's only going to show about $8,500.

• 50:23Speaker 03

  Ju- just doing that, you know, shifting that 24,500 into the 401k would save them almost $7,000 in taxes in total. So it's a great tax savings opportunity, not, not that they necessarily need to be saving more, but it is an opportunity to save money in taxes. Now, there is one thing that we were talking about. He has to be careful this year because he's transitioning jobs this year. He was contributing to a 401k at his previous employer. So he's not going to be able to do a full 24/5 into a solo 401k. He's going to have to coordinate to make sure he doesn't run afoul of that salary deferral limit.

• 50:57Brian Preston?

  Another great benefit of this is that because they are so young, adding flexibility in the system that they did want to leave the workforce early, that 457 is not going to have the early withdrawal penalties.

• 51:08Speaker 03

  That's right.

• 51:08Brian Preston?

  So one more planning flexibility element that they'll have, not only with the tax savings of the solo 401k, but also just having easy early access to the 457s.

• 51:18Speaker 03

  And they've already, they let us know that, you know, they're both doing Roth contributions, which we think makes a ton of sense for them. We did a little bit of analysis. It looks like they're going to be in the 28% total marginal, marginal tax bracket. And so they kind of fall in that gray area where they could do Roth or they could do pre-tax. It kind of depends on what their goals are. If they find the cash flow is a little tight, that might lend them towards doing pre-tax so that they free up monthly cash flow. But we do love at their ages loading Up those Roth dollars. So it's a bit of a, of a personal decision for them based on where they ultimately want to go.

• 51:51Brian Preston?

  Yeah, they're in that gray zone where I'd still probably just, this is my personal opinion, probably lean more towards the Roth. Because I think they're going to have even bigger peak earning years in the future. And there's only, so you're only in your twenties for so long, where you can really lean in heavily on that compounding growth and that wealth multiplier.

• 52:09Speaker 03

  So we've already acknowledged they're doing a lot of stuff right. So, you know, what kind of path does this put them on? What sort of trajectory does it put them on? We just had, if they continue saving at their current clip, which is a little under $44,000 a year, starting right now at an average age of 25, and they save 25% of their gross income over the next 30, 40, 50 years. The numbers get really exciting. Again, at their age, we assumed a nine and a half percent annualized rate of return. By the time that they get out to age 50, they have almost a $5.8 million portfolio. By 55, almost a $10 million portfolio. And then by 60, over $15.6 million.

• 52:51Speaker 03

  And even if you bring that back into today's dollars, they said they don't know exactly what their lifestyle needs are going to be, but they love like maybe $10,000 per month after tax. Based on what they're doing, they are well on their way to doing that, accomplishing that at some point between 50 and 55 years old.

• 53:08Brian Preston?

  Now, but we know life has a sense of humor in the way that it throws curveballs. And, you know, and we were kind of joking around about the life planning when children and other stuff. There is a chance that they could choose the, you know, path where Milet stays home. What would it do? Would it blow all this up? Or is it still look pretty rosy even if they did some family planning?

• 53:29Speaker 03

  Yeah, I think even if the side income were to go away and Milet were to stay home, I don't see a scenario where they don't save 25%. Just for this household, that is sort of a given. So even if the income dropped down to $140,000 a year and they were saving 25%, which is $35,000 a year, they're still in an unbelievable trajectory. Almost 5 million by 50, little over 8 million by 55, 13 million by age 60. Again, if they're looking for that, that magical, you know, $10,000 after tax, it's probably still happening somewhere around that magical 55. If they can just keep the good decisions they've been making up to this point, rolling forward. Future's bright for them.

• 54:12Brian Preston?

  So if you do it right early, you can do it light.

• 54:17Speaker 03

  You do it right, you do it light.

• 54:18Brian Preston?

  See, that's what I think they, that is the big takeaway from today's show. Cause I know this is gonna be one of those things where our audience is gonna say, I'm like, man, where were the warts? You get away with a lot. When you start early and do it often, lots of grace and you're great, big, beautiful tomorrow.

• 54:33Speaker 03

  But we also don't know what could change, right? Uh, kids, family, job circumstances. What I love is they've made the hard decisions to kind of put themselves a little bit ahead of the curve. Now they gotta finish the drill, but I think that because they're doing so well, so early, they're gonna be able to handle whatever life throws at them if they can continue to keep that mutant mindset moving forward.

• 54:53Brian Preston?

  So if there's other financial mutants that wanna come on Making a Millionaire, where do they need to go?

• 54:56Speaker 03

  Yeah, if you wanna be a guest on Making a Millionaire, you can go to moneyguide.com/apply. Or if you wanna check out any of our free resources or tools, you can go to moneyguide.com/resources.

• 55:06Brian Preston?

  Skylar, well, you get a gold star. Did you hear that? You rocked this thing. Thank you so much for coming on. I'm your host, Brian, joined by Mr. Bo, Money Guy team, out.

• 55:16Speaker 06

  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.

• 56:01Speaker 07

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