Her Coast FIRE Plan Has Some MAJOR Holes | Making a Millionaire

Danielle is a 33-year-old self-employed sign language interpreter earning $110,000 annually in the DC area. After building an impressive $181,000 net worth in just four years, she's experiencing severe savings whiplash, dropping from a 60% savings rate during COVID down to just 8% today. Inspired by the book Die with Zero and the Coast FIRE movement, Danielle wants to work less by age 37 and fully retire by 60 without leaving a large inheritance since she doesn't plan to have children. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠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

  So so far, we've seen you operating in two realms.

• 0:02Brian Preston?

  Yeah, 3,000, 750.

• 0:04Speaker 00

  Maximum capacity, or now, I mean, if you do 9,000 into 110, that's an 8% savings rate. So going from like killing the savings rate, like 30, 40% to 8%, it seems, just as a casual bystander, there might be some middle ground.

• 0:19Speaker 02

  Yeah, that's too much.

• 0:21Speaker 00

  That might be more sustainable and more fruitful over the long term.

• 0:30Speaker 00

  What is it you do professionally?

• 0:32Speaker 02

  I'm a sign language interpreter. So I do a lot of the business, corporate. It is actually mostly federal government, more than private business. Because I, you know, it's the DMV, the DC, Maryland, Virginia area. So all of the federal agencies are right there. And they hire a lot of deaf people and they have interpreters all day, every day. I do a lot of work for one agency. It's, you know, eight hours of work. I have an hourly rate. So I do a lot of that. I do some medical and then some other just random.

• 1:01Speaker 00

  Are you employed by the agency or are you like a contractor?

• 1:03Speaker 02

  I'm self-employed. So when I say agency, I mean like the federal agency. But there are interpreting agencies. When you are an interpreter, you just reach out to them and say, hey, I'm an interpreter. They either just like, yeah, we'll add you to our list to get emails with work, or here's the portal to sign into to look for work. Or they want to screen you and they record you interpreting to make sure you're good enough.

• 1:24Speaker 00

  And there's just a list and you can just like opt it like, hey, I'm available this day.

• 1:27Speaker 02

  Yeah, I probably get like 200 emails a day of just work.

• 1:30Speaker 00

  Oh, wow.

• 1:31Speaker 02

  Like available work.

• 1:32Brian Preston?

  This is because I realized in my own journey, I was a finance major. And I was like, man, after I took my first class and I was like, there's not going to be a job in this because it's too easy. Everybody can do this. That's why I switched to accounting because you're pretty much guaranteed a job. Is this just a hack, a job hack? If you have the skill set to do this, there is more demand than there are people who can do this skill?

• 1:53Speaker 02

  I do think it's a very niche field. So not a lot of people get into it compared to your accountants or teachers or nurses. The language, it was only actually recognized as a true language in the 60s. So it's almost still evolving in a sense. So it's not, I think, as easy as like a Spanish interpreting because I feel like that's pretty, you know.

• 2:15Speaker 00

  It's not still balling.

• 2:16Speaker 02

  The word for dog is the word for dog. But in ASL, there's so many different ways to sign a sentence. And each person might sign it differently. You have sign, like one sign can have five different meanings. So like you have to use context to know, you know, which meaning you're gonna pick. And, um, you know, all that is happening within like seconds of just like pure brain processing.

• 2:37Speaker 00

  Is there a degree or certification? Like, like, how do you?

• 2:41Speaker 02

  Yeah.

• 2:41Speaker 00

  So you have an accounting degree, right? Did you have to get another degree or separate certification to be able to do this?

• 2:46Speaker 02

  So I didn't, as far as the degree, they have changed. There's the Registry of Interpreters for the Deaf, RID. And they hold the, they sponsor the national certification. So they've had a new rule change in, I think, five years ago where you have to have a bachelor's degree, but it can be in anything that you want.

• 3:05Speaker 00

  Okay.

• 3:05Speaker 02

  I had the bachelor's in accounting. I actually have an associate's in business administration too. Cause I did like the community college and then transferred into the public.

• 3:13Speaker 00

  Mm hmm.

• 3:13Speaker 02

  School.

• 3:14Speaker 00

  Financial meeting style. I love that.

• 3:16Brian Preston?

  I want to get into the financial stuff because you have some goals and we want to cover that.

• 3:19Speaker 02

  Yeah.

• 3:19Brian Preston?

  But I did have one more question.

• 3:20Speaker 02

  Mm hmm.

• 3:21Brian Preston?

  Is there any type of accountability or auditing of interpreters so that they can ensure you're not like doing Run DMC lyrics to tricky instead of actually doing? And obviously when you're working one-on-one as the interpreter, if the communication doesn't work, but in other things, is there any type of auditing or accountability? Or is that just?

• 3:41Speaker 00

  Everyone has their own like flavor and flair.

• 3:43Brian Preston?

  Cause you said something very interesting there where it's like, you know, there's five different ways to say this. How does that work? And then I promise we'll get right on track.

• 3:51Speaker 02

  Oh, yeah.

• 3:51Brian Preston?

  Just out of curiosity.

• 3:52Speaker 02

  A lot of people are, have a lot of questions.

• 3:54Speaker 00

  It's so fascinating.

• 3:55Brian Preston?

  No, this is, you have a cool, you have a cool, unique job. And then I assumed when I was doing prep for the show today, I was like, we're gonna find out there's some intersection point with a family story or a loved one or something. Cause it's just, how do you land in this? And then to find out. Didn't have you going through an accounting program either.

• 4:10Speaker 02

  Yeah.

• 4:11Brian Preston?

  So it's just, it's interesting to me.

• 4:12Speaker 02

  Yeah.

• 4:12Brian Preston?

  Is there any accountability?

• 4:14Speaker 02

  Oh, that's me. Okay.

• 4:15Brian Preston?

  How do they make sure that people are doing good work? Like when I'm at T-PAC or other things, watching these interpreters? How do they know if somebody's doing good work?

• 4:24Speaker 02

  Yeah. Um, so the, the deaf people is one, cause there is something, it's called DNS, do not send. So if I interpret for a deaf person and they didn't like me, they didn't like how I signed, I wasn't getting them. Um, there's a, you know, deaf people that are engineers, technical, I'm not, I can't, you know, I'm not good enough to do that type of thing. They can tell the agency, like, hey, don't send that interpreter.

• 4:48Brian Preston?

  Okay.

• 4:48Speaker 02

  So it's not, nothing happens to me. I just can't work with that person. Yeah, potentially, like, if they're the only deaf person in that business, then I just mean, I can't work there anymore.

• 4:59Brian Preston?

  Sure.

• 4:59Speaker 02

  Um, but I mean, deaf people can sue you, just, you know, like a doctor or, you know, if you're really that, like, I have, uh, liability insurance. And I think there's complaints that can be made to RID. I'm sure your certification can get, uh, taken away and stuff like that. So we put ourselves in positions that we know will do okay. I live right by Johns Hopkins University, so there's a lot of sciency stuff that goes on over there with work, and it would be great, cause it's 15 minutes from my house, but I wouldn't touch that.

• 5:29Speaker 00

  Not your jam, sciency stuff.

• 5:30Speaker 02

  Yeah.

• 5:31Brian Preston?

  I can understand that.

• 5:31Speaker 02

  I just started dipping my toe in legal.

• 5:33Speaker 00

  Okay.

• 5:33Speaker 02

  Cause that's a little scary, but I'm just doing like jury duty right now, so it's not, not too bad.

• 5:38Speaker 00

  It's wild, even inside this very niche industry, you can even develop niches inside the niche, right?

• 5:43Speaker 02

  Yeah, definitely.

• 5:44Speaker 00

  You can be the science person or the, or the legal person.

• 5:46Speaker 02

  Yeah, medical.

• 5:47Speaker 00

  Fascinating.

• 5:47Speaker 02

  Yeah. And the reason, just to point out, with the money aspect, I don't think you can make this kind of money anywhere else in the country.

• 5:54Speaker 00

  Oh, so this is unique to that area that you live.

• 5:56Brian Preston?

  You live in the, you're the unicorn, you live in the right intersection, place of where the need is and your skill set matches.

• 6:03Speaker 00

  Well, and that's, let's, let's catch everyone else up, right? Cause you were so kind, you shared a net worth statement. And did you say how old you were yet? How, how old are you?

• 6:09Speaker 02

  I'm 33.

• 6:10Speaker 00

  33 years old. And it's remarkable, as we sit here today, you have a total net worth of about $181,000. And when we look at the shovel, the income that you make, doing this very niche position that you said you found, uh, what was the word you used? Uh, uh, circ, what was the word she used?

• 6:27Brian Preston?

  Oh no, she used an SAT word. So there's no way I'm

• 6:30Speaker 00

  Circuits.

• 6:31Speaker 02

  Circuits.

• 6:32Speaker 00

  Circuits.

• 6:33Speaker 02

  Circuits route.

• 6:34Speaker 00

  It was wild. And here you are. You make over a hundred thousand dollars, a hundred and five to a hundred and twenty thousand dollars a year doing this. At age thirty three, that is awesome. For what we know so far, it looks like you're in a fantastic financial position. Would you agree with that assessment? Do you feel like you're in a wonderful spot?

• 6:52Speaker 02

  I do. Sometimes I don't, though. I feel like even making that, I mean, one twenty is definitely. I have to work a lot, like weekends, overnights to make that that much. So if it's a little closer to like the one ten area, I do feel a little bit of the financial squeeze these days with just

• 7:12Speaker 00

  High cost of living.

• 7:13Speaker 02

  Going up. Yeah, I'm glad I started investing because I had a lot of, I really didn't start until twenty twenty one. Like I had maybe five thousand dollars.

• 7:22Brian Preston?

  Wow, so you did all this.

• 7:23Speaker 00

  You've built a hundred and sixty five thousand dollars of investments since twenty twenty one?

• 7:27Speaker 02

  Yeah.

• 7:28Brian Preston?

  That's awesome.

• 7:28Speaker 02

  Because it was, it was, I mean, covid obviously was terrible, but covid, you know, I was working from home. You can, you do video interpreting, just like on Teams or Zoom. And I couldn't really spend my money on anything because nothing was happening. Yeah, like I like to go out to restaurants and travel, you know, big things that I spend my money on, but nothing was happening. So I was putting aside like over, investing over like thirty thousand a year. And then I think the the stock market probably helped a little bit just with, yeah.

• 7:58Brian Preston?

  I was trying to figure out this morning when I was looking at this, you already seem pretty disciplined. I know you said you spend going out, but when we looked at the the budget numbers, you're not, you're not crazy. I mean, to making nine to ten thousand dollars a month gross. You you spend less than four thousand dollars a month.

• 8:17Speaker 02

  Yeah, most of the time.

• 8:18Brian Preston?

  What's your take home? Because I mean, I'm sure you're, since you're self-employed, you have to reserve some money for taxes and other things. So what what do you, what do you typically think our budget is coming in each month?

• 8:27Speaker 02

  I set aside a lot in taxes. So it's usually like thirty six percent is put aside for taxes.

• 8:33Brian Preston?

  Because you have FICA and our social security and Medicare, and then you've also got the income tax. That's actually pretty reasonable.

• 8:41Speaker 02

  The self-employment tax.

• 8:42Brian Preston?

  Yeah, that's the Medicare and social security side of it. Because you pay the employer and the employee side.

• 8:48Speaker 02

  Yeah. So yeah, it's a lot because I'm just a sole proprietorship.

• 8:52Speaker 00

  And so what's your savings look like? Is you, I mean, obviously if you're, you've spent four years saving and you have 165,000. Walk us through how you think about saving on a monthly basis. Like where's your money going that you're not spending or not putting into taxes?

• 9:04Speaker 02

  So I usually have goals for the month. I think I said it like, look at the beginning of the year, like in January, I'll be like, okay, what's going on this year? You know, what do I think I could reasonably do? So I kind of set a goal with investments and cash as well. Like how much I want to set aside in cash and how much to invest. So during COVID, it was a lot more.

• 9:27Speaker 00

  Let's talk about now. What are your goals right now in terms of saving?

• 9:30Speaker 02

  I've backed down a lot just because I think I've gotten past that point of where you're doing a lot of cash and not getting a lot of the, the interest yet. So right now it's like 750 to investing. It used to be 3,000 a month I was doing. And then about 600 to cash. I'm not doing that right now. I had my first year of like all the adult things happening to you. You know, like I needed new tires on my car. I did that. And then a week later, something skidded out, you know, the city skidded out on the road and just destroyed two of my tires again. And then there's like, you know, health stuff, insurance wouldn't cover. That was, you know, like a few thousand dollars. And then my dog is really old. So there's vet stuff.

• 10:11Speaker 02

  It all just happened this year. So I need to build back my emergency fund and then I will need a new car probably soon. My car's like 10 years old and has like 160,000 miles on it. I think I really want to have a good, I think you guys say 20%. I think I'm shooting for maybe 30%.

• 10:29Speaker 00

  You said how many miles does it have?

• 10:31Speaker 02

  160.

• 10:32Speaker 00

  160. When you buy new cars, what kind of cars do you buy? Like what, give me a, like what's the price?

• 10:38Speaker 02

  A used car.

• 10:39Speaker 00

  So what price point that you're going to spend on a car, you think?

• 10:41Speaker 02

  I've just been looking. I think I'm just going to get the same car I have now, just newer because I'm not really into cars and it's reliable. So used ones that are like two years old with like 30,000 miles. So I can have it for a long time. It looks like 28,000. Yeah. So I'm aiming for 10,000 saved, which is. A little closer to 30%. I think 9,000, I guess, is 30%.

• 11:03Speaker 00

  What's your emergency reserve? Would you like to have? I know you said you're a little short right now. What do you think your emergency reserves need to be?

• 11:09Speaker 02

  They're actually back up to what I had them at. I was usually 10,000, but then I was watching your show a lot more.

• 11:16Speaker 00

  I was gonna say, how'd you come up with 10,000?

• 11:17Speaker 02

  That doesn't seem like maybe that's enough. I actually used to be more cash heavy and my dad was like, you shouldn't be that cash heavy. Like you're single, you're young, you don't have anything to worry about. Listening to your shows, like maybe I should have closer to like the 15 mark.

• 11:31Speaker 00

  And what's your, from a spending standpoint, to pay rent, utility, gas, all that kind of stuff? How much do you spend a month?

• 11:39Speaker 02

  You mean without like the optional stuff? Like if I lost my job and I'm not gonna go out to eat?

• 11:44Speaker 00

  That's right. Yeah. What would that burn rate be?

• 11:46Speaker 02

  Probably closer to the 3,000.

• 11:48Speaker 00

  3,000?

• 11:49Speaker 02

  Yeah, 28 to 3,000. I have a lot of insurance stuff that, you know, being self-employed, I have to pay for.

• 11:55Speaker 00

  Well, so if we're thinking through, okay, if your monthly burn rate's 3,000, you're a single individual, single income coming in. I would say the six months of living expenses is probably appropriate. So for you, I would think it'd be somewhere around that $18,000. Would be like the goal that I would shoot for.

• 12:09Brian Preston?

  But I'm gonna pick on Daniel a little bit, and the fact that you did what people always do to me when I say, what is your spend rate? They always give me the bare bones of what, and you said three, but we know when, you know, what you submitted to kind of the producers, and we have this up on the screen. If you really are taking into account, because we all have subscriptions, now, yeah, you could gut it.

• 12:29Speaker 02

  Yeah.

• 12:29Brian Preston?

  You, we all eat out a little bit. We all have miscellaneous stuff. You're actually closer to 4,000 probably. So that's why I think, Beau, you're spot on, and I'm not picking on you too hard, because 18 to 24,000 is probably your sweet spot. And we'll probably go, in a minute, we'll talk about, because you have goals of this car. That will kind of need to be like a sinking fund thing that will kind of expand out this emergency reserves a little bit. We just had to figure out how we integrate that with other goals that you have, because

• 12:57Speaker 02

  Yeah.

• 12:58Brian Preston?

  we haven't gotten into the, what are you saving for?

• 13:01Speaker 00

  Yeah, what are, that's a great question. What are your goals? Like what, what's the reason? What's the purpose for us sitting down here today?

• 13:07Speaker 02

  Um, so I think I I am trying to do a not very traditional route, you know, where you work for 40 years and then you retire and whatnot.

• 13:20Brian Preston?

  You don't want to do that route?

• 13:21Speaker 02

  No, I guess.

• 13:22Brian Preston?

  What do you want to do?

• 13:23Speaker 02

  I want to do kind of like, you guys are, I'm sure you're familiar with like Coast Fire, but it's

• 13:28Brian Preston?

  Sorry, I never heard of that. What's that?

• 13:31Speaker 02

  But it's not exactly Coast Fire either. One, because I do think I want to invest throughout the life of the market instead of just stopping at, you know, I could maybe stop at 40 or something and then just never invest again. I would like to keep investing just to get the full market. But I also, I don't, I don't plan on having kids. And I think that makes a little bit of a difference. So I've kind of added in, there's a book called Die With Zero. And it's this concept of, a lot of times when people die, they're actually left with more money than what they started with. And I just don't feel the need to do that. If I don't have, if I had kids, it'd be a very different story. But I don't plan, I have some nieces and nephew, my brother has three, but they're both engineers, you know, they'll be set up.

• 14:14Brian Preston?

  Sure.

• 14:15Speaker 02

  So yeah, I think I would just rather spend more time when I'm younger, just not having to work as much.

• 14:23Brian Preston?

  I want to, because I want to come back to a few things you just said, but I do need to know some basics because you've given us a lot there. When do you think you want to kind of, you still want to keep saving and investing, but when do you think you want to at least have the option of that you don't have to work anymore? What's the age on that?

• 14:39Speaker 02

  Well, I guess full retirement is about 60. It's not. Because, but I think what I want to do is work less because I'm self-employed.

• 14:47Brian Preston?

  Yeah, but with coast, you want to be able to kind of control how you're using your time to a degree. So there's an age that you'd like behind you to be big enough that you get options.

• 14:57Speaker 02

  I would say by 37 to 40, I would like to do

• 15:01Brian Preston?

  Which is 37 or 40? People, when people, because look, this is important stuff.

• 15:06Speaker 02

  Yeah, yeah.

• 15:06Brian Preston?

  Because there's a big difference between a 35 year old and a 40 year old.

• 15:08Speaker 02

  That's true.

• 15:09Brian Preston?

  When you're doing fire slash fine type things.

• 15:12Speaker 02

  I, I'll say 37. To at least be able to have one day, like every single week, I'm, I'm only working a four day week. And then maybe 10 years later, I can just do three days a week and ride that out until I fully retire.

• 15:26Speaker 00

  Because I want to understand the language you're like, something like coast fire and then you would like to work, you said you're 33 right now.

• 15:33Speaker 02

  Mm hmm.

• 15:33Speaker 00

  You'd like to work at your current pace and capacity for the next four years. And then have the freedom, freedom and ability to back down a day. Basically, cut down your workload for four days down to three days.

• 15:44Speaker 02

  Well, five days down to four days.

• 15:46Speaker 00

  I'm sorry, five days down to four days. And, but still going to save and like build.

• 15:49Speaker 02

  Yeah.

• 15:50Speaker 00

  So it's not like at 37, you want to be financially independent. You, you want to put your gas, put the foot on the gas as much as you can between now and 37. So that 37, you could potentially take the foot off the gas a little bit.

• 16:02Speaker 02

  Yeah.

• 16:02Speaker 00

  Am I describing that correctly?

• 16:03Brian Preston?

  But you still want to save even, so maybe instead of saving 20, 25%, you'd like to save like 10% or something like that.

• 16:09Speaker 02

  So this was the first year I kind of implemented that I'm investing $750 a month, which is, you know, $9,000 a year. And that's way less than what I had been doing. So I kind of want to do that for the rest of my time is just add $9,000 a year until I fully retire and then.

• 16:30Speaker 00

  Okay. So walk me through the, I want to understand the mindset there, right? I have this desire that four years from now, I want to be able to take my foot off the gas. But it sounds like what you just said is you've already taken your foot off the gas. You went from investing like $3,000 a month to 750 a month and.

• 16:44Speaker 02

  Yeah.

• 16:44Speaker 00

  It sounds like you're already, I'm, I'm, I'm.

• 16:46Brian Preston?

  We're already coasting.

• 16:46Speaker 00

  I'm going to use the word coast, but we're going to call this a financial mutant fine. You're already financial mutant fining. But that's not like a future day. You've already made the decision to do that today. Walk us through that. Normally people say, hey, I need to get to this threshold first and then I can back down. But you've already backed down.

• 17:03Speaker 02

  I think the, the biggest thing is I'm probably going to need to reduce my living expenses.

• 17:11Speaker 02

  A little bit in order to do it. I'd say the reason I backed down, one, I was a little burned out, if I'm being totally honest. And if I kind of look at my numbers, I think I sent you guys a spreadsheet I was kind of using to figure all this out. And when I plug in like $9,000 starting this year at 7% and doing 9,000 until I'm 60, I think it put me at 1.7% and that's at the 7%. And then because it's that die with zero mentality, I'm definitely going to be withdrawing more than 4%. So I will be technically losing money every year. And then I think I had it

• 17:50Speaker 02

  out to age 90 and I would still have like 300 to 400,000 dollars left. But in those last few years, my withdrawal rate is like 20%, you know, because my nest egg has decreased.

• 18:04Speaker 00

  And so you're gonna die at 90. I just want to make sure.

• 18:06Speaker 02

  Yep, that's it.

• 18:09Speaker 00

  Because dying at zeros is a wonderful concept if you know when your exit is.

• 18:13Speaker 02

  Yeah, exactly.

• 18:14Speaker 00

  The unfortunate part is none of us really know a lot about when our exit is. And we don't know exactly all the variables between now and whenever that exit does exist.

• 18:22Speaker 02

  Exactly.

• 18:23Speaker 00

  And what lifestyle and expenses would. And so one of the things that, I'm just gonna be honest, that makes me a little bit nervous, is you're young, which is a wonderful, wonderful thing. But you are making some decisions, hey, I projected this out. And if I do this and everything works this way, then this is what the outcome's gonna be. But that's pretty early on. And this is the analogy I always said, I'm not a big runner. But I have some friends that are runners. When they set out to go run a half marathon or a marathon, it's a very, very long race.

• 18:49Speaker 02

  Yeah.

• 18:50Speaker 00

  If you come out of the gate and you say, man, I'm running a six-minute mile pace, like I'm blazing, that does not mean that when you finish that race, that your pace will have been six minutes. You know what I mean?

• 19:03Speaker 02

  Right.

• 19:03Speaker 00

  Just because you start that way, and just because you say, oh, well, I've done this for the last mile, surely the next 25 miles, I'm gonna be able to, you know,

• 19:11Speaker 02

  Do the same thing.

• 19:12Speaker 00

  Exactly. That's one of the reasons why we understand, because of the wealth multiplier, because of the way compounding interest works, the more that you can get in early, the more powerful it can be. We love the idea of like, taking your foot off the gas and backing down and doing that. But once you've reached the threshold that makes sense to do that, what I'm curious about is have you actually reached the threshold where it makes sense to do that just yet?

• 19:37Brian Preston?

  Can I give some color to this? Now, you gave, because you gave me a very valuable piece of nugget of information that I don't know if it works for your situation, but at least lets me make an example or give you some perspective or context. You said that you've done some quick math and projections and 1.7 million when you're 60, right? So I said, well, okay, 1.7 million, let's bring that back to today's dollars, the purchasing power of today, and I just use 3%. Who knows what inflation's gonna be? You know, we've had some years where it stretches where it's 2%. We just came through a stretch where it was as high as 7%, but I use 3%. That 1.7 million brought back into today's dollars is $757,000.

• 20:22Brian Preston?

  So then I applied the 4% withdrawal rate to that. That's $30,000 a year. You divide that by 12, you are setting yourself up to basically live off of, in today's dollars, $2,500 a month. Now, you said you only spend 3,000, so maybe that's okay, but I know when we actually look at your real budget, where you actually get to go eat out, you know, have subscriptions so you can watch stuff and other things, it was closer to $4,000. There's a thing I have learned as I've gotten older, and I'm going to give you some thoughts on Die With Zero. I actually like the book and the concept, but there's some assumptions that go into it, and that's what Bo was alluding to, because you have three phases of your life. There's the make wealth phase, there's the maintain wealth phase, and then there's the

• 21:06Brian Preston?

  multiply where you get to say, hey, money's not a thing. I want to go enrich people. I want to go share, you know, what all these resources I have. The author who wrote Die With Zero, if you go look at his trajectory, he was like an investment bro, you know, he made gazillions of dollars whenever he started working.

• 21:26Brian Preston?

  And I think some people, Bo and I probably could do that too. Cause I mean, I just, I'm in a high income type situation. I don't know that everybody can replicate that. And that's the thing I have is because when I created as a content creator, I'm always like, I want to make sure when I'm giving guidance to people that I'm spreading the net out so far that I don't give people false hope, but also to give them enough optimism that this is, they can, this can be replicated thousands, if not millions of times over and nobody's disappointed. I worry, you were, you've just, this unicorn situation you've set yourself up with is that there's way more demand. You get 200 emails, you say a day of people saying, hey, can you come do this

• 22:09Brian Preston?

  interpretive signing here and there? And you're like, this is so great. I've got all this opportunity coming in. You know, but you know what? Even though I'm 33, Bo, if you think you're burned out at 33, wait until you get to be 52. I mean, because I, Bo, I just had this conversation with another, one of my old business guys that were in the same field. He makes a great living. He's like, I just don't want to do this anymore. And all my CPA buddies, yeah, my bill rate is 500, $600 an hour. I don't care. I don't want to do it. So if you think at 33, you're burned out, this is going to get worse. I'm just going to go ahead and tell you. It's just the reality of life.

• 22:44Speaker 02

  It's a, I think it's a temporary burnout.

• 22:46Brian Preston?

  Okay.

• 22:47Speaker 02

  I think I need, like, I needed this year to recover a little bit because I was doing so much work and saving so much from, you know, late 2020, all the way up until the end of 2024. So I think that's what I feel like I just got a little bit burnt out from.

• 23:03Speaker 00

  You were at red line. You were operating at maximum capacity.

• 23:06Speaker 02

  I'm not saying that's going to continue, just that I needed a little break this year.

• 23:10Speaker 00

  Okay. So there's, so so far we've seen you operating in two realms.

• 23:13Brian Preston?

  Yeah. 3,000, 750.

• 23:15Speaker 00

  Maximum capacity or now, I mean, if you do, if you do 9,000 into 110, that's an 8% savings rate. So going from like killing the savings rate, like 30, 40%, right? To 8%, it seems, just as a casual bystander, there might be some middle ground.

• 23:32Speaker 02

  Yeah.

• 23:32Speaker 00

  That might be, that might be more sustainable.

• 23:35Speaker 02

  Mm-hmm.

• 23:36Speaker 00

  And more fruitful over the long term. That might give you more options and flexibility.

• 23:40Brian Preston?

  And, and I want to bring it back, because I like us to be, we're nerds. We, we do the analytical stuff too. But I also try to do the Die With Zero stuff, where I'm trying to tell you to make sure you, you maximize your twenties, your thirties.

• 23:53Speaker 00

  That part of the book we do love.

• 23:54Brian Preston?

  Yeah, I mean, that's why, I mean, that's why in Millionaire Mission, I talk about bedazzle your basic life. I don't want people to be misers. I don't want people to, but there is a balance. And then sometimes I, I worry that we pull the needle too far the other way, when it's kind of that Epicurean type of like, go, go seize the day. I'm like, but probably more likely, you're going to live to be a ripe old age. You know, so you gotta, you gotta, you gotta put a little ounce, you know, spoonful of sugar of deferred gratification to make sure that we're going to have a life well-lived. And you can do that when you're 33. What I worry is somebody reads Die With Zero and just assume forever, they can, you know, they do some extrapolating like you did.

• 24:35Brian Preston?

  Then they get to be 46 or 43, any times, and they realize, oh my gosh, the most powerful thing I have, which is compounding growth and the wealth multiplier, I was wrong. I, I wish I would kind of, yeah, I went too far into the Epicurean side of trying to maximize versus taking a spoonful or a little bit of deferred gratification to ensure that I, it was a life well-lived all the way through.

• 24:59Speaker 02

  Yeah.

• 25:00Brian Preston?

  Now, if you can tell me you're going to make $400,000, $500,000 a year in your 40s and 50s, we can go live the hog life. I mean, just go for it. I mean, but I don't know that you can promise me that you can do that.

• 25:11Speaker 02

  No, I definitely can't. I guess my one question, so, um, and this was kind of a big push for me to apply on the show, because I started watching Making a Millionaire. And, you know, you would say, okay, you're going to end up with $2 million. That means you have $40,000 to spend. And I was like, oh, that's really different than what I have. But I thought the spreadsheet, so I I'm using a spreadsheet that's from like a financial influencer, I guess, um, Money Flamingo, they're like over in Australia, but they read Die with Zero and they created this spreadsheet. So I thought that the the dollar amounts were inflation adjusted. I think that's what it says on the spreadsheet so that I'm not actually gonna end up, it's like 1.7 million of whatever that's worth in

• 25:56Speaker 00

  Well, it depends on rate of return assumptions, right? So if you're using, if you, if 7% was the rate that they used as that, I would guess most likely that that was a nominal rate of return, meaning you'd have to adjust for inflation. Now, if that was an inflation adjusted rate of return, what they're actually saying is that they believe inside your portfolio, you can achieve a 10% rate of return, right? And they're showing you a net of inflation, 7%. I would argue, especially for a young person, while I think there is a, there's a real chance that you could earn 10%, I would not base my retirement well-being on that. I'd rather be much more conservative in my estimations.

• 26:29Speaker 02

  Okay.

• 26:29Speaker 00

  So that's why, we were just using the math, if you said 7, we're gonna apply a 3% inflation rate to bring it back to today's times.

• 26:35Speaker 02

  Gotcha, okay.

• 26:36Speaker 00

  Does that make sense?

• 26:36Speaker 02

  Yeah, that, and that is a rate I picked.

• 26:39Speaker 00

  Okay.

• 26:39Speaker 02

  Yeah, I I put in that information. I actually had it much more conservative at 5%, but then I was watching your show and you guys use like 7.5 and maybe I misunderstood, maybe that's not inflation adjusted.

• 26:50Speaker 00

  Well, if you were using 5%, right, then you add a 3% inflation, that'd be like an 8% rate of return. Now we are kind of aligned, right? Like that is more in the ballpark. The fact of the matter is, we also, we just don't know what the market's going to do. I mean, we have the historical of what the market's done, but there are seasons where the market does not perform as well as other seasons.

• 27:10Speaker 02

  Yeah.

• 27:10Speaker 00

  And you don't get to control that necessarily. Now, fortunately, you are young, so you have a long enough timeline, odds are the market's gonna do pretty good for you. But in the Die with Zero vein, if we told you, hey, in our opinion, 8% is not, is not the savings rate you ought to be shooting for now, it ought to be something higher. Are there life sacrifices that you would be making? Are there things that you would not be able to do that you're able to do now? That that would cause some friction? Cause I wanna make sure we're being like sensitive to that, right? Like, are you able to still enjoy your 30s and do the things you wanna do, even if you had, maybe not the 40% savings rate, but some savings rate higher than 8%?

• 27:45Speaker 02

  I think so. I mean, I might have to I don't not eat out as much, or I don't, you know, whatever the case may be. Maybe I can't get that nice Airbnb as, you know, I have to do a little bit less. But I don't think it, I don't think it would too much.

• 28:01Speaker 00

  Okay.

• 28:02Speaker 02

  I would rather play it safe. Like, I'm a relatively risk averse person. But, um, yeah, I was just kind of going by that spreadsheet. So at 1.7, I was withdrawing 132,000 a year. And that got me to like the 300, 400.

• 28:17Brian Preston?

  And that's why I would, if I had that data, because I'm curious to know if that was already inflation adjusted? Or if that's just in nominal dollars, what it was at that point in time? Because then that brings it back because 132,000 dollars brought back to inflation is a much less. Because things are just going to cost a lot more than they do today.

• 28:38Speaker 02

  Definitely.

• 28:39Speaker 00

  And help me understand the mathematics here, right? So you, let's say you make 110,000, right? And you said you have a 36% holdback for taxes, right? So 110,000, we're going to hold back 36. That means we're going to net about 70,000. So then you have a burn rate of 4,000, right? That's what you showed us on your budget, 4,000 a month. So 70,000 minus a 4,000 monthly burn rate. It's going to be what, 48,000? We're going to have 22,000 left over. Is my math, my math maths on that, right?

• 29:06Speaker 02

  Yeah.

• 29:06Speaker 00

  In theory, that 22,000, this is after your living expenses and after your taxes. That would be what I would assume goes to savings. But you said you're saving 9,000. So we have like a pretty big.

• 29:19Speaker 02

  Yeah, that's the.

• 29:19Brian Preston?

  But you're thinking it's going to go to cars, it might go to other goals. So that's what you're thinking.

• 29:23Speaker 02

  Yeah, I also have like 600 for cash to save every month as well.

• 29:27Speaker 00

  Okay.

• 29:27Speaker 02

  So like my total savings.

• 29:29Speaker 00

  But that's for like the sinking fund for the car and for the house, right?

• 29:32Speaker 02

  Yes, yeah, they're pretty much all, I mean, except well, an emergency fund, I guess, a little bit of a sinking fund. But yeah, I'd like to buy a house at some point. And I have like a travel fund because when I don't work, I don't get paid. So if I, this year I went to Croatia, which was really fun for like nine or 10 days. I usually do like a big trip like that every year. And so I don't get paid for a third of the month. So I do have a travel sinking fund to just help out during that time. So I can kind of. Use that as income a little bit.

• 30:04Speaker 00

  This is one of the reasons why I love the Financial Order of Operations, right? Because it's this nine-step process we put together to help us kind of figure out where to put our dollars.

• 30:13Speaker 02

  Yeah.

• 30:14Speaker 00

  When you think about this saving, you already said you've got 600 going to cash. So let's move away from that for a moment.

• 30:18Speaker 02

  Mm-hmm.

• 30:19Speaker 00

  The 750 that you're investing on a monthly basis. Now walk us through how you're doing that. Because we saw you have a Roth IRA. We saw you have a solo 401K. How are you divvying out your dollars? Because I'm wondering if, what I don't know is what's the appropriate savings rate for you? Well, I wonder if just doing some of the Financial Order of Operations stuff would begin to answer that question for us. So walk us through, on that 750, where does it go every month?

• 30:43Speaker 02

  Well, now that it's down to 750, most of it goes just into the Roth IRA.

• 30:47Speaker 00

  Okay.

• 30:48Speaker 02

  To max that out. And then the rest of it goes into the Roth portion of my solo 401K. And I will admit, I feel like I kind of dance around the Financial Order of Operations. I think I go through them. You know, where I was probably at 5, I was maxing out both of those. I mean, not fully, because solo 401K, you can set aside like 60-something thousand. I don't make enough.

• 31:12Speaker 00

  Seventy-two in 2026.

• 31:13Speaker 02

  That's true. I can't do that. But you know, now I'm kind of back to like, oh, my emergency reserves. I have to go back to, you know, to number four and go back to that. And so I feel like I kind of dance around to the different steps. And I don't know if that's the best.

• 31:27Brian Preston?

  No, but that is the way it works.

• 31:29Speaker 00

  It's boo-ish.

• 31:30Speaker 02

  Okay.

• 31:30Speaker 00

  It's boo-ish.

• 31:31Speaker 02

  Yeah.

• 31:31Speaker 00

  Okay, so you max out your Roth IRA, that's 7,000. So then you have about $2,000 roughly going into your solo 401K. Going into the Roth portion of your solo 401K.

• 31:40Speaker 02

  Yeah. And when I was saving a lot more, it's like a 60%, I think, savings rate. It was maxing out the Roth IRA, maxing out the employee Roth portion.

• 31:51Brian Preston?

  Salary to full.

• 31:52Speaker 02

  Yeah, which is the same limit as just a regular 401K. And then anything extra, I would either put it into that profit-sharing employer part.

• 32:00Brian Preston?

  Wow, so you were doing over 20,000 dollars a month.

• 32:02Speaker 00

  She said she was doing 60%. That's what, you gotta help me understand. We were at 60% savings rate, now we're at 8%. Or if we, I guess if we include the 600 to cash, we're at like 15%? Off the top of my head, I could be wrong. Sixty down to fifteen. How'd you, just how'd you arrive? How'd you?

• 32:20Brian Preston?

  Is that your personality, though? Are you just hot or cold?

• 32:22Speaker 02

  Um, maybe a little bit. Like I said, I think I just got a little tired. You know, and I developed like a lot of anxiety around it. Like, am I not gonna have enough? But am I also just not doing anything in my life?

• 32:37Brian Preston?

  But hyper-focused, is that a thing of yours? I mean, even to do what you do for a living. I gotta think to, to watch YouTube videos and be like, I could do this. I mean, there's something there with your personality is that you're either in love or hyper into something, or you're just not, right?

• 32:51Speaker 02

  Yeah, I would say that, especially like my hobbies. I used to rock climb all the time. And then I got introduced to pickleball. And like, I can't have more than one hobby at one time.

• 33:00Brian Preston?

  I mean, I'm seeing a trend here, is that you're kind of, and that's what, what I would love to do is, because it seems like investing became a hobby. And that's why you got up to sixty percent. But you're like, oh, my gosh, this doesn't leave anything for life. And I'm a miser. So what I would love is, at the end of the day today, is that you leave knowing, you know what? There needs to be a base level. It's more than eight percent. But it doesn't have to be hog wild sixty percent either. I want to leave some margin for life and just know that about yourself. I mean, we all have, I was just out talking to Carter, who's our third in command here, that one of the things is, as I've gotten older, I've realized some of the quirky things about my own personality is my blessing, but it's also a curse. And that thing is, if you have hyper-focus, that's a blessing, is because you're in this

• 33:44Brian Preston?

  unique skill set that you wouldn't be able to do if you're just the typical person that walks down the street. But it can be the curse in the fact that you get distracted and go in a completely different place. And doing that at thirty-three with your savings and investing

• 33:57Speaker 02

  Yeah.

• 33:57Brian Preston?

  could be bad down the road if we don't get the math right. To make sure you're saving to not have regrets later.

• 34:04Speaker 02

  Yeah. Yeah, I agree. And I think too, when I was really saving a lot, you know, like, I- I used to be engaged.

• 34:13Speaker 00

  Okay.

• 34:13Speaker 02

  And then I'm not. But so, you know, living together for quite a while, which really brought down living expenses.

• 34:20Speaker 00

  Sure.

• 34:20Speaker 02

  And I did save up a lot of money to buy a house. Dave Ramsey is gonna hate me. Bought a house, you know, a few months before we were supposed to get married and then, you know. So I lost a lot of money in that. So I think, I think that's a big part of the break too, because that happened in the beginning of 2024.

• 34:39Speaker 00

  Okay.

• 34:39Speaker 02

  Yeah. So I think that's why I just got, I was like, just a little tired.

• 34:45Brian Preston?

  I get it.

• 34:46Speaker 02

  Of doing it all.

• 34:47Speaker 00

  You were trying to do a whole lot.

• 34:48Brian Preston?

  Achiever mentality, just throwing it all in there.

• 34:51Speaker 02

  And there was a big income disparity. So I had, I was doing a lot of the,

• 34:56Speaker 00

  A lot of heavy lifting.

• 34:57Speaker 02

  A lot of, yeah, that kind of stuff. So.

• 35:00Speaker 00

  On this, you mentioned earlier that you have this 36% holdback for taxes. When you actually file your tax return every year, is all that 30, are you actually paying 36% effective tax rate?

• 35:12Speaker 02

  This is the first year. So basically, of course, my mom is my accountant in a way. She works under CPA. So technically, he looks over all the tax stuff before it's submitted. But every year, it's basically just been my tax rate has increased. So when I started out, it was like 23%. Covid hit. I made like $30,000 that year. It was a bad time to start a new career. And then it went up to 30. And then, you know, so this was the first year of 36. I think last year was 30. And I did owe more than I had, you know, I pay the quarterly estimated taxes and then usually I have some leftover. So if I owe, I've already got that set aside. So I don't feel like I'm actually spending my money. But last year, I actually owed more than what I had.

• 35:57Speaker 00

  More than you had set aside.

• 35:58Speaker 02

  Set aside, yeah.

• 35:59Brian Preston?

  And it kind of, I mean, I'm looking at the tax tables right now, and this is 2025's tax tables. As a single individual, you cross into the 22% bracket.

• 36:07Speaker 02

  I do.

• 36:08Brian Preston?

  Around $48,000. So that means, that's why you can go a little less than that. But a lot of your income is subject to that marginal rate of 22%. What's the state income tax where you live? Is it 5, 5% or 6%?

• 36:21Speaker 02

  I don't know.

• 36:22Brian Preston?

  That's why I bet when you, when you add a state income tax to your marginal, when you bring it back that 20, that's where the 21% and then social security and Medicare, the self employment tax is 15.3%. I can see you've got good counsel.

• 36:37Speaker 02

  Yeah.

• 36:37Brian Preston?

  And I mean, this is the hard part. I think when people realize what they pay in taxes and you, because most people don't realize when you're a W2 employee, you get wages, your employer is paying 7.65% on your behalf.

• 36:50Speaker 02

  Yeah.

• 36:50Brian Preston?

  It is this thing that nobody realizes. That's why it doesn't seem like that big of a deal, but your employer is paying.

• 36:56Speaker 02

  Yeah, like insurance and the matching.

• 36:58Brian Preston?

  Yeah.

• 36:58Speaker 02

  All of that I don't get, you know, I'm paying.

• 37:00Brian Preston?

  It's on you.

• 37:01Speaker 02

  $440, I think, starting next year for my health insurance. And yeah, there's no match. So all of that investment is just.

• 37:07Brian Preston?

  Now, we just boohooed a little bit, but here's the good news. Even with the boohooing of the 36% reserve rate, you're going to, we're going to show you, you got, you got this.

• 37:16Speaker 00

  Well, and I was even going to a different place hearing as, and this is true for a lot of single filers and especially entrepreneurs. One of the single best way to offer some reprieve on your tax return is to do that via a qualified retirement plan. So I love hearing that you have a solo 401k that you're taking advantage of, but you're doing the Roth portion of the solo 401k.

• 37:38Speaker 02

  Yeah.

• 37:38Speaker 00

  And we love Roth, like we think Roth is amazing, but with you being in that tax situation, it might be an interesting thing to ask either your mom or the person overseeing the taxes. Hey, what if I shifted my Roth contribution, my Roth solo to pre-tax? And in doing that, does that actually create a mechanism for me to save more money?

• 38:00Speaker 02

  Yeah.

• 38:00Speaker 00

  If you just think about 2026, it's going to go to $24,500 that you can salary deferral into a solo 401k. And I'm going to, we're going to call it 30% is your marginal tax rate. Once you do all in, that would save you like $7,300 in taxes. So walk me through this. If you could just max out your solo, you will save enough in taxes that you could then fund your Roth IRA. Well, in just doing those two things, you just saved $30,000 a year. Now, I'm not suggesting that's where it needs to be.

• 38:32Speaker 02

  Yeah.

• 38:32Speaker 00

  But I am wondering, are you even saving in the most efficient way?

• 38:36Speaker 02

  Yeah.

• 38:36Speaker 00

  For the strategy that you're trying to implement.

• 38:38Speaker 02

  Yeah, because that seems more like I don't really even have to do anything except click a different button in order to do that because my solo 401k for the salary deferral, I can do both Roth and traditional. I get to pick and then for the profit sharing, it's only traditional.

• 38:53Speaker 00

  There's always going to be pre-tax.

• 38:54Speaker 02

  Yeah.

• 38:54Speaker 00

  But I think that if you're able to fund, max out the Roth IRA, which you are, you may be reaching that threshold. This is hard for a lot of young people where Roth 401k might not make the most sense.

• 39:03Speaker 02

  Yeah.

• 39:03Speaker 00

  Pre-tax may be the one that makes the most sense. And by shifting that, you decrease what you're paying to the taxes, you increase what you're actually saving, you increase what you get to keep in your back pocket.

• 39:11Speaker 02

  Yeah. I thought the, um, the financial advice that was common was once you get to the 24% bracket is when you do more traditional. And if you're below that, then you focus on the Roth. So I was kind of going with that.

• 39:25Brian Preston?

  It depends on what you, because you have, I bet, I'm, I'm pretty, I need to, I mean, I don't have a phone in front. I do that on purpose. I don't get distracted, but I think there's a state income tax in Maryland, isn't there?

• 39:34Speaker 02

  There definitely is.

• 39:35Speaker 00

  Yeah, there is.

• 39:35Speaker 02

  And it's probably pretty high.

• 39:36Brian Preston?

  So that's what you're, you're already, your marginal rate, if you add those two, if you add your state and your federal, you're probably getting close to 30% right there.

• 39:44Speaker 02

  Yeah.

• 39:45Brian Preston?

  And that's the part you're missing.

• 39:46Speaker 02

  You do pay county tax there too on top of that.

• 39:47Brian Preston?

  And see, there's another, so you see how this stacks.

• 39:50Speaker 02

  Yeah. And I'm in, I'm in city limits. So it's probably more than, you know, two minutes down the road is literally the county. So.

• 39:56Speaker 00

  So you have to make a, okay, if your goal is, hey, I want to do this coast thing. Uh, I have these two options. I can either pay myself money and build my coffers or I can pay it to the government through taxes.

• 40:07Speaker 02

  Yeah.

• 40:07Speaker 00

  I would imagine you'd rather pay yourself and do that. So that even might be a mechanism because I just.

• 40:12Speaker 02

  An interest free loan to the government, right?

• 40:14Speaker 00

  Right.

• 40:14Speaker 02

  That's what they say.

• 40:15Speaker 00

  You're at 8% savings or I don't, you are one of those people we talk about all the time. If you go to moneyguide.com/resources, we have, uh, this deliverables that how much could you save? And we, this, we talk about 25%, 25% or 20%.

• 40:27Speaker 02

  Yeah.

• 40:27Speaker 00

  You may very well be one of those cases where 25% may not be the right number for you, right? That may not be what's required, but it might be 15% or at least, uh, give yourself options so that you can reach that tipping points. You can reach that boiling points. You can reach that time where then it actually does make sense to take your foot off the gas.

• 40:48Speaker 02

  Yeah.

• 40:49Speaker 00

  I just think you've done it, in my opinion, a little prematurely.

• 40:52Speaker 02

  Too early. Yeah.

• 40:52Speaker 00

  That's right.

• 40:53Speaker 02

  Yeah. I would agree with that.

• 40:54Brian Preston?

  Well, no, let me, let me put some, some color with this is that it's back to the whole mindset issue. You told us, was it 2021? You've done all of this.

• 41:05Speaker 02

  Yeah, maybe late 2020.

• 41:08Brian Preston?

  So you went pretty crazy in a good way, in a good way. 60% savings. In a good way. But now there was probably some scars from that. I'm just, for sure. I mean, because you've already shared with us some of the struggles from that. What I'm just trying to make sure is that we're closing out when we record this. You know, it's go, we're, you're only four years into this journey of saving and investing.

• 41:30Speaker 02

  Yeah.

• 41:31Brian Preston?

  To say, and it's back to Bo's analogy of a marathon runner. If you sprinted, you know, on a 26.2 marathon and you sprinted like it was a 100 yard dash.

• 41:42Speaker 02

  Yeah.

• 41:42Brian Preston?

  It makes sense that you burned out and you're over there holding your side going, maybe I just didn't eat enough bananas. No, you're running, you just ran wide open for the first, you know, you acted like this was a 100 yard dash versus 26.2 miles. I still say with you only doing this for four years on a, on a, on a 30 to 40 year journey of building these assets so they can be an army of dollar bills to work for you. You're closer to the frontline, to the, to the starting point than you are to midpoint, to the ending. That's where I get worried from a mentality standpoint, when people tell me they're coasting. Four years, because we, we have financial mutants all the time that are in their twenties, making a great living, crushing it.

• 42:23Brian Preston?

  And because they had a great living and they, they're still, they should be in the make wealth phase.

• 42:29Speaker 02

  Yeah.

• 42:29Brian Preston?

  You've got to get to exactly what Bo said. We call it the bowling point, the tipping point, whatever you can do where now the assets, that's why we have the people say, why did you even come up with this know your number course? We did the know your number course, so you know if you're ahead of the curve, behind the curve, or right where you're supposed to be. And you tried to do that with this spreadsheet. We'd have to, after the show, we'll, we'll figure that out. But it's, it is one of those things where I think you're so close to the starting line. I don't know that I think you're ahead of the curve yet. You, you are in this moment in time, because we want you to have one times your income by age 30. Here you are at 33, with your well beyond one times. But does that mean you get to now take your foot off the, you need to be doing more than 8%?

• 43:09Speaker 02

  Yeah. Maybe a little bit because I was like pedal all the way down, nowhere else.

• 43:12Speaker 00

  Right.

• 43:13Brian Preston?

  You're running the 100 yard dash.

• 43:15Speaker 02

  Yeah, and now I'm going like 20 miles an hour.

• 43:17Speaker 00

  Yeah, I don't think, you started walking, right? And you're at the place where you don't have to sprint anymore because of the hard work you did for the last four or five years.

• 43:24Speaker 02

  Yeah.

• 43:24Speaker 00

  But also, walking probably would not serve you well. And so what I'm excited is we're gonna, we're gonna be able to show you, hey, here's what it looks like if maybe you change that a little bit.

• 43:32Speaker 02

  Yeah.

• 43:32Speaker 00

  Hey, what if instead of doing this, we did this? And what are the outcomes? And what you do is the earlier you make those decisions, especially when you're young, the more flexibility you give yourself to really get to make fun decisions in the future.

• 43:44Speaker 02

  Yeah.

• 43:45Speaker 00

  Because you may decide at 40, hey, I want to work two days a week, or hey, I want to take six months off, or I want to, whatever that thing is. And we'd rather you have more margin in the system to be able to do that than, uh oh, I was a little too aggressive in my assumptions.

• 43:58Brian Preston?

  What I want to know, Beau, is so we can make sure that we share with Danielle some of our thoughts, because you and I are gonna huddle up on this. Do we have enough assumptions about what her dream expenses are for the future? What we currently have so that we can kind of do some, some, some research on our own?

• 44:15Speaker 00

  Yeah, the only thing that's not incredibly clear to me, that I'd like to have a better beat on to be able to really crank through some numbers. You said that right now, hey, my living expenses right now are about four grand. And at four grand, I can do the things I want, the way I want, when I want. But one day, I'm not gonna be working five days a week. Even when I'm working four days a week, I'm gonna have one extra day that I'm able to go do something.

• 44:35Speaker 02

  Mm-hmm.

• 44:35Speaker 00

  And I wonder if that something might actually involve consumption, right?

• 44:38Brian Preston?

  Is that gonna cost?

• 44:40Speaker 02

  Yeah, I mean, it's probably pickleball.

• 44:41Speaker 00

  If, yeah, right? So we gotta get the really good paddles, and we gotta get the, you know. So my question for you would be, when we think about the, and this is another really hard thing to project when you're 33 years old. When you think about in that time where I'm either working less or not working at all, what would it cost in today's dollars for me to live the life that I want to live? That means go on travel, and be able to replace the car, and be able to play pickleball, and be able to eat out, and be able to, all those things.

• 45:09Speaker 02

  Yeah, donate.

• 45:10Speaker 00

  Because I guess it would be more than 4,000. But you have to tell me, maybe 4,000 satisfies all that.

• 45:16Speaker 02

  Mm-hmm.

• 45:16Speaker 00

  What is that number for you to be able to really live the life that you want to live?

• 45:22Speaker 02

  I guess, I'm assuming this is in today's dollars.

• 45:24Speaker 00

  Yeah, in today's dollars.

• 45:25Speaker 02

  Okay, because I think I'm of the mindset that I'd rather do a lot of the traveling and stuff now. And I probably won't do that as much in retirement.

• 45:35Speaker 00

  Okay.

• 45:36Speaker 02

  Because I already have terrible knees. I can't imagine when I'm 60, what they're gonna be like. So, um, I don't, I don't think I'm gonna be doing anything super luxurious, but I don't know. I guess if I didn't have to say like, because I guess you get to the point where you're not investing anymore. So when you retire, you stop investing.

• 45:54Speaker 00

  You go from an accumulator to a decumulator.

• 45:56Speaker 02

  And maybe just cash for, you know, cars and the house, the AC brakes, whatever. So, um, I would probably say like my current income right now, like if I didn't have to set aside as much money for investing, I think, you know, whatever that is in, in future dollars, like 110.

• 46:15Speaker 00

  Yeah. So 110 minus your, minus your tax burn, right? Because taxes will still be an issue. So I had you like $70,000 would be your net of tax number that's coming in.

• 46:24Speaker 02

  Yeah.

• 46:25Speaker 00

  Is that the magic number? Hey, if I had that coming in, I have to think about saving. Cover the taxes, $70,000 a year.

• 46:30Speaker 02

  What's that a month?

• 46:31Speaker 00

  About 5,800.

• 46:33Speaker 02

  Yeah, I, I definitely think that that would be.

• 46:35Speaker 00

  All right. So now we have a target. Now we have a target to shoot for.

• 46:39Speaker 02

  And I do hope at some point I'll, I'll be a dual income, you know?

• 46:42Speaker 00

  Sure.

• 46:43Speaker 02

  Like I would like to get married at some point.

• 46:44Speaker 00

  Another reason why there are so many variables that can change between now and the time that you get to 37 and between the time you get to 60 and then by the time you've already told us you're gonna die at 90, by the time you die at 90, that could change the circumstances. So all you can control right now is your behavior.

• 47:02Speaker 02

  Yeah.

• 47:02Speaker 00

  And so what we'd rather you do is while you can, whatever cliche you want, strike while the iron is hot or take it whatever, do that now. So that way, as some of these other variables do change, you'll be in an even better position to make that adjustment and to make that.

• 47:16Speaker 02

  Yeah.

• 47:17Brian Preston?

  And when we figure out it's, it's not gonna be 60%, it's gonna be more than 8%, but whatever the number percentage we find out. What I like and what gets me excited is it leaves enough margin for you still to live a life. Because I think that's the problem. You, you made this into a all in, you know, you had two speeds wide open and then. Snail's pace.

• 47:36Speaker 00

  Yeah.

• 47:37Brian Preston?

  And that's what there's, there's so much before there that we could, we could get you in as healthy place, but then it gives you the freedom to say unlock and say, I'm going to automatically make it automatic for the people, set it, forget it. And then after that, I can go enjoy my life and do the die with zero thing. So I feel like I'm getting the mindset of enjoying the moment without sacrificing what the wealth multiplier and compound growth can do for you.

• 48:01Speaker 00

  Yeah. Hey, this has been great. I'm excited. You're going to be in a great spot and I'm excited we can do a little bit, a little bit of number crunching. Yeah. And show you how there might be a better way. Yeah. To do money for you. Okay. Brian, how awesome was Danielle? I think she holds a special place in my heart because I feel like the conversation we had with her is the same conversation I've had with a number of my friends over the years.

• 48:24Brian Preston?

  But, but what's wild about Danielle is that she had, it's like, she had like two gears. It was like, she's like wide open, saving over 50% of her income to now she's like, hey, it's gotta be do something different. To the point that she's bringing it all the way down to 8%. And that breaks my heart because I feel like there has to be an in-between. It's noble what she wants to do, but I'm worried she's gone too far the other way.

• 48:45Speaker 00

  And remember, this was her mindset. Hey, I want to do this and I want to, I'm taking my foot off the gas and I want to take my foot even far further off the gas. And so we said, okay, let's figure out what that actually looks like for her. And remember, she said her goal in financial independence was to be able to spend $6,000 a month in today's dollars. And she wanted to operate under this sort of coast fire mentality. I'm going to save now and then at 37, I'm going to back it down. So we said, okay, we need $6,000 a month per, per month in retirement. We're going to assume a 3% annual inflation, 3% annual salary increase. And we're just going to use her current pay of right at about $120,000 a year. And we said, okay, let's assume because she is young, she can earn 8.7% annualized. And we know that she already has 165,000.

• 49:30Speaker 00

  So we said, all right, let's problem solve for her right now. If she's backing down her savings, what does it need to be from now until 37, from 37 on to be able to reach financial independence?

• 49:40Brian Preston?

  I remember, you know, when you and I started brainstorming this on where the solution was, we're like, okay, 8%. Seems like she's gone way too far with it, but so let's do something a little, you know, we always talk about 25%. Maybe a good in between starting place was 15%.

• 49:55Speaker 00

  Well, and this is what we found. If she just saves 15% from now until 37, when she gets to 37, she'll have about $326,000 saved up. But then if she were to reduce that, she's going to take her foot off the gas. How much would she have to stay saved to still be able to reach financial independence? The number was 12 and a half.

• 50:15Brian Preston?

  Yeah, that's see, that that doesn't seem as exciting to me. Now, look, we're solving to try to get to, because it looks like we need to get her as close to $4 million as possible. And I like where our mindset was with this 15%, but nobody, when we tell her, hey, guess what? Congratulations. You get to lower. Once you get to this point, instead of doing 15%, we're going to let you do 12 and a half. It's gonna be a wah wah wah.

• 50:37Speaker 00

  Rather, what we tell folks, and we say this all the time, is hey, we want you saving 25%, 25%. The reason we tell people that is if you can do it early and often, you give yourself flexibility, you give yourself freedom in the future, and Danielle's no different. Now, she was saving some crazy number like 60%. We said, look, I don't think that's necessary. But what does it look like if you actually follow the Money Guy rules? What's it look like if you do save 25% of your gross income?

• 51:02Brian Preston?

  Just for a little longer.

• 51:03Speaker 00

  Just for a little, let's, and let's not, let's not pick 37. Let's say for, what does it look like if you can save 25% from right now at age 33, out until 40?

• 51:11Brian Preston?

  That doesn't seem that tough. I think we can do it. And it ties into our rules. It's very financial mutant-esque.

• 51:18Speaker 00

  And so this is what we found. If she can do that, just save 25% from now until 40, she's able to turn $165,000 into $624,000.

• 51:27Brian Preston?

  Now we're getting somewhere.

• 51:28Speaker 00

  Okay, so we're at 624 by 40, and our goal is to get to around 4 million. How much could she then take her foot off the gas? How much could she back off if she did it then? It's wild that she could reduce her savings rate to 4.6%. That is coast fire.

• 51:42Brian Preston?

  That's gonna get a reaction.

• 51:43Speaker 00

  It's not exactly coast fire, but it's close to coast fire. I think that's what she's looking for. She was just trying to do it way too early. She was trying to pull her foot off the gas before she had actually reached the critical mass, reached the boiling point, reached the place where Dollars could actually work.

• 51:56Brian Preston?

  Well, and I know, you know, I envision Danielle seeing this information and saying, okay, I can stretch, do a stretch goal of 25%. That's half of what I was doing when I was doing crazy beyond 50%. But then we get to tell her she gets to save less than 5% the rest of the way? That seems like coasting to me and I think that's a win.

• 52:15Speaker 00

  And what's great is we even told her because she was a self-employed individual, said, hey, we even think that there are some ways that you could think about how you're saving. Maybe doing the Roth solo 401k doesn't make sense. Maybe you should do the pre-tax solo 401k. And maybe you should really follow the financial order of operations. What I think is beautiful is if she were to do that, and we just assume that she follows the foo to a tee. When she gets to financial independence, when she gets out to age 60, we actually look at her three tax buckets. You can see that just by doing it that she'll have about 1.3 million dollars in tax-deferred assets.

• 52:48Brian Preston?

  Right.

• 52:49Speaker 00

  2.3 million in tax-free assets and another 340,000 in after-tax. She will then at that point be able to pick and choose what her tax rate is because she saved and built in a super efficient manner.

• 53:02Brian Preston?

  I love how this is all laid out. Now, I want to play devil's advocate and try to pick this thing apart a little bit. Cause she talked about die with zero a number of times. And so she might be willing to say, hey, this is great, but remember I'm not trying to leave a legacy. I'm not trying to leave a lot of money. What do you say about that?

• 53:17Speaker 00

  Well, what I would tell her is this assumes that you work all the way till 60. You wait till 60 for financial independence and this is assuming a 4% withdrawal rate. In reality, if she can save at this clip and she can build the assets early on, what's most likely going to happen is she's going to give herself freedom and flexibility to potentially decide on a more quick timeframe. Maybe I want to be financially independent at 58, 55, 53. I don't know what the number is. She'll be able to define that, but only if she does the hard work now to set her future up, self up to make that decision.

• 53:47Brian Preston?

  And I also think, you know, the problem with tell me you don't want to leave a legacy. You have to tell me what day you plan on dying.

• 53:53Speaker 00

  Oh yeah, when are you going to check out?

• 53:54Brian Preston?

  That's the thing is you still have to get to some level of critical mass so that just in case you live to a ripe old age, that this thing doesn't completely fall apart around you.

• 54:03Speaker 00

  She has all the tools. She has. Everything necessary to be successful, but I think she does need to adjust the mindset. I think she went through some life stuff. She was a little burnt out, but if she can kind of recalibrate, re-center, redefine what her goals are, I think she's going to be in a great place to still be able to control her entire financial future.

• 54:22Brian Preston?

  So let's go ahead and kind of recapping, what homework would you give to Danielle? So she can go ahead and start working on this, this order and this plan tomorrow.

• 54:31Speaker 00

  Number one, I said she needs to beef up her emergency fund. Uh, she has $10,000 in reserves right now, but we said, based on her living expenses, she should probably be closer to 18 to 24,000.

• 54:41Brian Preston?

  Okay.

• 54:41Speaker 00

  We also said she probably ought to consider increasing her savings rate. Our recommendation, instead of 8% right now.

• 54:47Brian Preston?

  I don't know what she was thinking.

• 54:48Speaker 00

  We would rather her go to 25%. If she can do that, she's going to give her 40-year-old self a lot of flexibility, a lot of options. We also said inside of her 401K, she may want to shift from doing Roth contributions to pre-tax contributions because being a self-employed individual, she does have a more cumbersome tax scenario. So switching to pre-tax would likely free up cash flow and allow her to have additional savings.

• 55:11Brian Preston?

  So she could do those Roth contributions?

• 55:13Speaker 00

  That's right. If she could do the pre-tax solo, then she could then fund her Roth. She's going to be able to build her three distinct tax buckets and control her financial.

• 55:20Brian Preston?

  Now, I know this is going to have her saving a little longer than she initially planned, but when we show, I wish I could see her face when we say, hey, look, you just do this for a little bit longer at this reasonable level, and now you can coast only saving less than 5%? I think she's going to be pretty excited.

• 55:37Speaker 00

  I think she, again, she has all the tools, all the ability to be able to do it. I think that she has a beautiful financial future if she can make some of these decisions today.

• 55:47Brian Preston?

  Danielle, thank you for coming on the show. We had an absolute blast creating this type of content with you, and I see so much opportunity. Go on this journey, please. 25% just a little bit longer. Hold on just a little bit longer and awesome stuff is coming your way.

• 56:02Speaker 00

  If you would like to be a guest on Making a Millionaire, you can go to moneyguide.com/apply. Or if you want to check out any of our free resources, go to moneyguide.com/resources.

• 56:12Brian Preston?

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

• 56:18Speaker 00

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