Her Finances Need a TOTAL Reset… | Making a Millionaire

Megan has an ultra-aggressive savings rate, yet she’s overwhelmed, losing sleep, and worried she’s doing it all wrong. We show her how to simplify her finances, build the right emergency fund, optimize taxes, and still live a rich life today. If you’ve ever wondered if you’re too focused on money, this one’s for you. ⁠⁠⁠⁠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. NordVPN.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.

• 0:01Speaker 00

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• 0:27Speaker 01

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• 0:56Speaker 02

  If we're going to show you an illustration to drop your savings rate by 20%, how does that make you feel?

• 1:00Speaker 03

  Unwell.

• 1:01Speaker 02

  Unwell, why?

• 1:02Brian Preston?

  I'd like to have a why to your percentage.

• 1:04Speaker 02

  How do you choose your investments?

• 1:06Speaker 03

  Okay, guys, I've got no idea.

• 1:08Brian Preston?

  I can't imagine what you're probably going to sleep at night. I bet your brain is going in 50 different directions because you're trying to control it all.

• 1:14Speaker 03

  Never.

• 1:15Brian Preston?

  No, you sleep great?

• 1:16Speaker 03

  No, I'm lying. Yes, 100%, I can't sleep.

• 1:20Speaker 02

  Megan, you were saving like...

• 1:26Speaker 02

  How long have you been in the States?

• 1:27Speaker 03

  Three years, but I used to live in Miami when I was young, wild and crazy.

• 1:31Speaker 02

  How old are you?

• 1:32Speaker 03

  36, turning 37.

• 1:33Speaker 02

  You said you did Miami and then you went back to South Africa? And then you came, what was that like?

• 1:37Speaker 03

  Family business, cattle rancher.

• 1:39Speaker 02

  Okay.

• 1:40Speaker 03

  And then my dad brought the wagyu cat, I don't know if you've...

• 1:42Speaker 02

  Oh, yeah, I know.

• 1:43Speaker 03

  Into South Africa. So it went from like five animals up to a herd. And now we're like, oh, let's process beef. So there's a difference between a cattle rancher and AKA a butcher.

• 1:53Speaker 02

  Okay.

• 1:54Speaker 03

  Beef production, food safety. So I went and did that. So I went from Miami, the boats. I was a yachty, so...

• 2:01Speaker 02

  What's a yachty?

• 2:02Speaker 03

  Oh, oh, it is...

• 2:04Speaker 02

  Do you know what a yachty is?

• 2:05Speaker 03

  It's a glorified... Cocktail waitress, cleaner, photographer, you name it.

• 2:10Brian Preston?

  This guy's never seen below, nobody on the country team.

• 2:13Speaker 03

  Below deck.

• 2:13Brian Preston?

  That's what he said. And when I saw the notes, I was like, of course, because South Africans seem like if you watch any Below Deck, they all.

• 2:21Speaker 03

  Their stuff is on there, yeah.

• 2:22Brian Preston?

  They typically.

• 2:23Speaker 02

  So that's what you did, like in your early twenties. That sounds like an amazing, sounds like a super fun job, right? Like you get to be on a yacht.

• 2:29Brian Preston?

  It's a lot of work though.

• 2:30Speaker 03

  Mate, so, oh, he watches the show clearly.

• 2:34Speaker 02

  He knew, yeah, he knew it.

• 2:36Speaker 03

  So, no, I had to finish uni and convince mom and dad that I was like, I'm gonna do nothing but work and travel the world. So glorified, made if you want to call it that, just go to Italy, do the Caribbean, you name it, we've been there, the craziest little island, been there. You're so tired because you just came up from either doing laundry or changing someone's bed or making, I don't know, coffee, lighting your cigar with a cognac for you, but we're like in the Maldives coast.

• 3:03Speaker 02

  So you're in awesome places, but you're not like getting to enjoy it. You're like working, grinding.

• 3:07Speaker 03

  Oh mate, so hard.

• 3:09Brian Preston?

  Did you come out of that experience, this is a little off top, liking wealthy people more or being more disappointed in people with resources and money?

• 3:16Speaker 03

  Everyone's different.

• 3:17Speaker 02

  Oh.

• 3:18Speaker 03

  Everyone's different, some born into it. So this is the 1%, 1%.

• 3:23Speaker 02

  Sure, yeah, yeah.

• 3:24Speaker 03

  They can afford.

• 3:25Speaker 02

  Yeah, these are yacht people, right? These are yacht people.

• 3:27Speaker 03

  Yeah, most people are kind.

• 3:28Brian Preston?

  Yeah.

• 3:29Speaker 02

  Okay.

• 3:30Speaker 03

  When their friends get together, they jerks. Can I say that? Sorry.

• 3:36Brian Preston?

  You say whatever you want.

• 3:37Speaker 03

  Okay, sorry, sorry.

• 3:39Brian Preston?

  You didn't really cuss.

• 3:40Speaker 02

  Jerk is okay, that's acceptable money guy language. That's okay, that's wonderful. All right, so, okay, so you did that, but you're not still a yachtie, right?

• 3:49Speaker 03

  Oh no.

• 3:49Speaker 02

  What do you do, what do you do now? What's your vocation now?

• 3:52Speaker 03

  I'm in the protein industry, I manage a beef team.

• 3:55Speaker 02

  Okay, oh, so you've been in, you've been in cows for your whole life, from like back, back in South Africa all the way till now, like that's what you do.

• 4:01Speaker 03

  Yeah, I've been brainwashed since very young. I have, all I know. Ask me beef questions, ask me about the cattle cycle, don't ask me the weather. No idea.

• 4:10Speaker 02

  Okay, great. So that's what you do now. You work in the beef industry. And so obviously, you've had all these like wild experiences, right? Like dealing with super wealthy yacht people. It sounds like your family were like small business owners. What was your history with money? Like, did y'all talk about money a lot? Did you know a lot about money? Did you kind of start out like, oh, I know how this stuff works? Give me the background there.

• 4:32Speaker 03

  Didn't really talk about money, but I saw what money could do.

• 4:35Speaker 02

  Okay.

• 4:36Speaker 03

  And I also saw what it couldn't do, like when there wasn't money. So, you know, like if you're a rancher or a farmer, money does this based on weather, cattle cycles, or crops, and all that good stuff. So there was money, and then there wasn't money. Then there was money, then there wasn't. But everything was handled by others. So it was never spoken about.

• 4:56Speaker 02

  Okay. So it was never like front and center for you?

• 4:59Speaker 03

  No, no idea. So that's why I'm trying to learn. I'm like, whoa, okay, taxes, what else? Balance sheets, all that good stuff. And, you know, to be independent, you need to learn and study and grow. And I know nothing, so please help.

• 5:15Speaker 02

  Well, hold on, you can't say you know nothing, because you're in a great spot.

• 5:18Brian Preston?

  Yeah, I was impressed.

• 5:19Speaker 02

  You sent us a net worth statement, right? We were able to look and see where you are today. And it's, it's pretty wild. So you were 36 going on 37. And as you can see right now, as the 36 going on 37, your total net worth is nearly a quarter of a million dollars. And you have a huge income, right? Make almost $200,000 a year. You have over $220,000 in net worth. So you must know something. Like, you must have something figured out, right?

• 5:42Speaker 03

  Safe.

• 5:43Speaker 02

  Safe.

• 5:43Brian Preston?

  So that's the question I also have, Mike. When did you start? Because you're acting like you had this life. So this is all really within three years.

• 5:50Speaker 03

  I didn't have a teaspoon. You'll bring me to tears. I didn't have a teaspoon.

• 5:53Brian Preston?

  That's incredible.

• 5:54Speaker 03

  Sorry, I'm a crier.

• 5:55Brian Preston?

  No, you're going to, but this shows.

• 5:57Speaker 02

  If you cried at the beginning, holy cow.

• 6:00Brian Preston?

  Three years, living expenses and everything, you're crushing it. I'm worried. And look, are you those tears of excitement or exasperation of what you've had to go through? See, that's what I think today, my biggest goal is for you to leave and feel like you've had a big exhale. You're that duck floating in the pond, your exterior and you look on your balance sheet or net worth statement and you see your income and you're like, holy cow, this person's got it all figured out. Meanwhile, under the surface, you just go on to town. I mean, you just can tell that you were just rolling through it. And I think you're putting so much type A pressure on yourself that you don't even, you can't even enjoy what you're creating. And I think we can fix that. I really do.

• 6:42Speaker 03

  I think Tanner's smiling in the wings.

• 6:45Speaker 02

  All right. So you heard our goal is we want to have a big exhale. What's your goal? Like you obviously came on making a millionaire. You obviously came here to do something. What is it you're hoping to get out of this today?

• 6:53Speaker 03

  Am I doing the right things? Is there a more efficient way to do it? But my actual question is Tanner and I have a goal or a bet.

• 7:04Brian Preston?

  A contest.

• 7:05Speaker 03

  A contest. And I thrive under pressure. And who can get to a million first? So please help me win.

• 7:13Speaker 02

  Okay.

• 7:14Speaker 03

  I want to get there first, but I think I'm doing it the hard way, not the smart way. And then obviously beyond that, look at retirement, starting businesses. We're about to start the mercy middle. So short-term saving, long-term saving. And then I don't know how to do the taxes. I just feel like I'm sprinkled everywhere. How do I have a clear strategy and that will help my decision-making? Please, and let me win. I'm gonna win.

• 7:42Speaker 02

  I love it. So clear strategy and help you beat Tanner. Got it. Two goals that we have. So all right, when it comes to like, you said, I really just started taking this serious three years ago. From like cash flow management standpoint, or budgeting, or like money in, money out. Tell us how it works. Like, how's it work in your household, in your purse, in your wallet? Like, how do you think about money in, money out?

• 8:01Speaker 03

  Okay, so get paid twice a month. So every two weeks we get, I get a paycheck. And most deductibles are immediately taken out. So the best, you know, if someone says, how do you do it? Automation. Get all of that taken care of. And then I run a pretty strict budget on, you know, whether it's food, utilities.

• 8:22Speaker 03

  You know, travel, fun, health, beauty. I have buckets for everything. And try and play within that. Every month is different. And I know I need, I have an idea that I need to do that, but I don't necessarily stick to it. And I'm, when I'm frugal, I'm extremely frugal. But I'm also extremely lavish. Like, I'm like, Tan, let's go get a chateau in Cape Town for Buddy Moon. Like, I'm unwell. I live a life here, but I'm actually, in reality, trying to budget down here.

• 8:52Speaker 02

  So you have a, you have a big income. So do you feel like there's excess cash flow on a paycheck to paycheck cycle or on a month to month cycle? Or do you feel super tight and super strapped?

• 9:03Speaker 03

  Tight.

• 9:04Speaker 02

  What do you spend? So where's your money go?

• 9:06Speaker 03

  Well, you get like after everything's taken out, I've got $2,600 left.

• 9:11Speaker 02

  Hold on, when you say after everything's taken out, so that means like you're talking about after your like taxes and automated savings and all the money goes.

• 9:18Speaker 03

  Yeah.

• 9:19Speaker 02

  There's $2,600 left.

• 9:21Speaker 03

  Mm hmm.

• 9:21Speaker 02

  Every pay cycle.

• 9:22Speaker 03

  Every two, yeah.

• 9:23Speaker 02

  Every two weeks. So that's about $5,000 a month, right?

• 9:26Speaker 03

  Yeah.

• 9:27Speaker 02

  So I'm thinking through this. Uh, all right, $5,000 a month. I don't do public math, but 12 months in a year, $60,000 a year that you have to spend. Your gross income is nearly $200,000. That means $140,000 is going somewhere else. Where is that $140,000 going?

• 9:46Speaker 03

  Saving, I think.

• 9:49Speaker 02

  Saving. So 140, we got some taxes, right? But it sounds like if you're saving all the additional amount of the money, what would you, where do you think your savings rate is? How much do you think you save?

• 10:00Speaker 03

  More than the 25%.

• 10:01Speaker 02

  More than the 25%. Out of curiosity, how much more than the 25%?

• 10:08Speaker 03

  2930?

• 10:09Speaker 02

  2930%. Okay, that's a great guess. That's a great guess.

• 10:12Brian Preston?

  We've actually calculated the math. We know where it is.

• 10:15Speaker 03

  Okay.

• 10:15Brian Preston?

  And the way, Megan, you manage your money is, I, I want to make sure I got this right. Um, and Bo can get into the details on it. Your 401K. We found some very peculiar things going on in your 401k. And we were like, what? Surely this has to be a typo or misprint. Cause we saw like a big after-tax account.

• 10:39Speaker 03

  I know.

• 10:40Brian Preston?

  And we were like, well, typically this is first, first of all, kudos to your employer for having after taxes even an option. Cause most employers don't even have that. Now, what that does is it sets up what's called mega backdoor Roth conversion opportunities. I see your eyes light up because you're like, I don't even know what that is. But yet you have this huge bucket of what's called after-tax savings. And Bo can get into the details of what that means, but I just want to know how we got here. Our Megan on the content team shared and I was like, that's how that ended up? So how did, how did you get to this, this account?

• 11:11Speaker 03

  Literally very simple. I knew I had to save and there's little on our platform that we've got, it's got little bars.

• 11:21Brian Preston?

  They gamify your saving by putting the savings bars.

• 11:24Speaker 03

  And then I had to save for down payment on a house. So then I brought that all the way back down. I was like, oh, this thing's growing so slowly and I'm competitive. Then after I got a little down payment on the house, I just, I'm like, whoop.

• 11:36Brian Preston?

  So you just slid the bar all the way over.

• 11:38Speaker 03

  And then just left it.

• 11:39Brian Preston?

  As high as you could put it.

• 11:40Speaker 03

  High as I could put it. I have nothing. I had to like save. I had to do it. Like no one's going to do it for me.

• 11:47Brian Preston?

  Let me make sure I fill in the gaps for, because we will have people watch this is. So essentially you are overloading your 401k where you're filling up the bucket for what the government kind of allows in, in pre-tax or Roth accounts. And then the spillover is just automatically filling up this after-tax account. But you, but we're missing out and we'll talk about the strategy of what you need to do with that. But what I don't love is that I wanted to ask you, happiness wise, do you feel like you're enjoying your 30s right now? When you came in, you talked about Miami, like it was kind of wild. It was fun. And then when you were, did you say a yachtie? That I could see your eyes light up on that. I can tell you love your job because even the way you were talking about the cows and, and the background.

• 12:29Brian Preston?

  But what I can't tell is are you feel like you're living your best life in your 30s right now though?

• 12:35Speaker 03

  Yes or no? I'm so proud of where I am. I like the person I am. Um, there's so much more room and growth. No.

• 12:44Brian Preston?

  Yeah.

• 12:45Speaker 03

  It's hard.

• 12:46Brian Preston?

  Yeah.

• 12:46Speaker 03

  I don't feel so far.

• 12:47Brian Preston?

  Tears coming again, because you feel the pressure you're putting on yourself.

• 12:50Speaker 03

  There's so much pressure.

• 12:52Brian Preston?

  Yeah.

• 12:52Speaker 03

  I just need to survive. And I, I've made a promise to myself. I was never gonna ask mom and dad for anything. No one is gonna, no one's gonna help you. We're adults. I came on my own. Survival mode.

• 13:05Brian Preston?

  You're not, you're not only surviving, you're thriving. I mean, you really are. And we're gonna show you these numbers. I mean, and, and Bo, I hope it's okay if I just share this. You just told us you think you're saving 29%, 30%?

• 13:17Speaker 03

  Mm-hmm.

• 13:18Brian Preston?

  We backed into it. Megan, you were saving like 60 plus percent right now. I mean. Which is great, but like. But you're putting pressure on yourself that you don't have to. I don't, it, it, it puts me in despair to know that you have so, I see so much potential. And we're gonna show you how this thing's going to explode and all the things. And you're focusing on all the things you really, you're getting busy, what we call getting busy doing nothing. And the fact that, and look, I've been there myself. I think all of us type A personalities, we feel like, hey, if I'm trying to conquer something, the more I do, the better I will be. But that's not the case. You're actually doing a lot of activities that are generating zero benefit for you. They're just stressing you out, creating anxiety,

• 14:01Brian Preston?

  making you feel like you're not living your best life. We've got to streamline so that you actually know what you're doing with your money, because right now you just feel like you're that duck. And, and I'll even throw in another analogy you hear all the time is that, you know, if you tried to eat an elephant all at once, you would overwhelm yourself. Whereas you, you just take little parts of your life, one bite at a time, and you can process. Maybe I should have said cow, because it's much more appropriate to eat a cow. But if you, as one person, tried to, to tackle eating a cow all at once, you'd be overwhelmed by the process. But if you just thought about, no, I'm gonna have a steak tonight. I'm gonna do this. And you actually know the three to five measurable goals, your life will be changed, elevated, and I think you'll have that exhale that we talked about briefly at the beginning, too.

• 14:46Speaker 02

  Well, you know, one of the reasons why we talk about saving 25% of your gross income is we want to like, give people the freedom to be able to spend. And so a lot of times, people have to like budget and begin tracking so that they can find how to get to that 25%. You're kind of on this other wild end of the spectrum where you said, hey, I budget and I track and I have all the stuff. We can talk about your cash flow, but saving is not an issue for you. You're saving 60% of your gross income every single pay cycle or every single month or every single year. And so one of the things that I would hope we could figure out is, okay, well, how much should you be saving? And does adjusting that now give you some freedom to get to live the life that you want to live? Not just in the future, building for the future, but also today.

• 15:31Speaker 02

  Can I begin to do the things a day that I actually want to do? Because is $2,600 net every pay period enough for you to do all the things you want to do? Or does it actually feel tight?

• 15:41Speaker 03

  It feels tight. I would like a little bit of leeway there. I need a comfort blanket and I just put a number on it and I'm like, once I get there, then I can breathe and then I can figure out, I've got more, so many goals and that's why I have to save for them.

• 15:55Speaker 02

  Sure.

• 15:56Speaker 03

  But I'm not doing it in the right way.

• 15:58Brian Preston?

  Yeah, you're bringing yourself to tears, literally bringing yourself to tears.

• 16:01Speaker 03

  Hard work.

• 16:02Brian Preston?

  I know, but, but you don't have to make it so hard because it's not sustainable. If it brings you to tears, it is not sustainable. You are putting yourself under such obligations, you'll eventually break. Whereas if we could teach you sustainable goals and how to look at this from an executive summary standpoint, instead of feeling like you have to tackle everything. We can delegate some of this as well as give you better dashboard tools. So then you can focus on what really matters and then own your time too. Because that's the thing I don't love is that I can't imagine what you're probably going to sleep at night. You probably, I bet your brain is going in 50 different directions because you're trying to control it all.

• 16:40Speaker 03

  Never.

• 16:41Brian Preston?

  No, you sleep great?

• 16:42Speaker 03

  No, I'm lying. Yes, 100%. I can't sleep.

• 16:46Brian Preston?

  Yeah.

• 16:47Speaker 03

  There's so much pressure.

• 16:48Brian Preston?

  We gotta get, and by the way, this doesn't get better with age. I can go ahead and tell you as a type A type personally, personality in my 50s. If we don't get this under control now, this will manifest in weird ways later. So it's better if we can give you those moments so you can do this in a healthier way, but also a happier and much more fulfilling way, too.

• 17:08Speaker 02

  When it comes to finances, a lot of times we make things a lot more complicated than it ultimately has to be. And what's interesting is, again, you were so kind to share all your stuff. We got to look at all your statements and got to look at all your spreadsheets and your cash flow. It seems to me, well, a common theme that I noticed is there are a lot of things that you're doing, perhaps a little more complicated than they should be, even when it comes like cash flow management. Because like you shared some spreadsheets with a showing like where your inflows come in, and then you have these expenses going out, then you have these debt payments going out. And like even when we think about like your income, right? So you said, uh, your total income in the month of March was $21,300, according to your spreadsheet.

• 17:47Speaker 03

  Oh, yeah.

• 17:48Speaker 02

  But the way that you calculated that was you considered your starting checking account balance as part of your income, because there was like $6,000 at the beginning of the month when you started, and you called that income. And then you actually had your paycheck come in, that's that little over 5,000. But then you had this other income that you also accounted for. Some of it was boyfriend, now fiance, who helps with some of the bills. Some of it was like reimbursements for work and some of it was your tax refund. When we look at all of these things, those are not all income sources. So when we think about what your true income, it's, it's really that middle line. It's really that 5,000, like that's the part that we ought to be thinking about.

• 18:24Brian Preston?

  That's your net income, by the way, too, after the 60% withholding for savings.

• 18:29Speaker 03

  Yeah.

• 18:29Speaker 02

  And so when we looked at your budgeting, we noticed what seemed to be a lot of double counting. Like I'd have an expense go out for... I'm gonna say hair care, because you mentioned that, for like, beauty stuff, right? And it went on the credit card, but then there was another expense went off for the credit card payment, and you sort of double counted those things. I think that you could much more simplify, and our content team did a great job. We've built out some spreadsheets that we want to give you, after this recording, to help you better track what you're doing. So that really what you can focus on is, okay, what do I actually have coming in? What's my paycheck? What are my expenses? That's the tracking that you do. And then using your credit card is just a whole different thing. It's just a conduit by which you pay your bills. Do you feel like you have a solid grasp? Because we could pull up some of the illustrations of what's going on on your spreadsheet,

• 19:12Speaker 02

  and it, for two spreadsheet guys, it was just...

• 19:15Speaker 03

  Too much.

• 19:16Brian Preston?

  Well, where did you get those spreadsheets? And don't give the source, but you bought them? You bought a template?

• 19:21Speaker 03

  Yeah, I've bought multiple templates.

• 19:23Brian Preston?

  So, the thing, you have to always, and this is what I always remind people, be careful who you let into your financial life, is because, and I don't want you to share who it was, because they were, as an accountant, it made my skin crawl a little bit. Because, well, here's the problem. It was mixing, I see how you've gotten yourself in this bundle of anxiety, is because it wasn't good feedback, is because they were including net worth, AKA balance sheet items, with cash flow slash income statement items, so it really muddied the waters. Exactly what Beau's showing here is that, when you're putting your beginning balance from what's in your checking account, and that's included in the cash flow element,

• 20:05Brian Preston?

  or even double counting in credit cards, and when you're not, you're not running credit card balances, are you? You're paying them off every month.

• 20:11Speaker 03

  Yeah, and those are those...

• 20:13Brian Preston?

  So why treat it as, like, you have these huge debt payments, but you're also then tracking the one-off, one-transaction expenses in your cash flow? It's maddening. I was like, this is the craziest thing I've ever seen. It was very pretty, I mean visually stimulating, it was nice to look at it, but from the actual output being efficient and effective for you, you got a snow job here. Somebody sold you a very attractive spreadsheet, but really, the data was worthless from an executive summary of you trying to know how to navigate this. So, I think the first thing, when we looked at this, I was like... Do you realize how much more peace of mind you'll have if you just know, don't track all this stuff. You don't have to. You're already doing all this automated saving and investing.

• 20:58Brian Preston?

  Money knows where it's supposed to go. You don't have to keep now putting envelopes, or as you called it, or methods, because it's unnecessary. One of the biggest things that when we were looking at this is, why not just keep one month of expenses, above one month of expenses in the checking account? So you never, because you're getting caught up in the, I get paid twice a month. How much of each paycheck should I put into this? And I'm like, well, no, no, don't zoom out of that and just say, what do I need this month? So that I know I can't bounce a check. And then we'll just tidy that up at the end of each month with one transaction on, because you'll either have money left over, or we'll have to transfer it from savings. But instead of you hyper focusing on all these different

• 21:41Brian Preston?

  transactions and going places, you could do this by just having a certain lump sum in there that you know will ensure you never bounce a check. And then you will be okay. This gets so much more simplified. It really does.

• 21:52Speaker 03

  Work smart, not hard.

• 21:53Speaker 02

  If I asked you what your burn rate is, how much does it cost you to live the life that you live every month? Do you have any idea what that number is?

• 21:59Speaker 03

  I think it's around about $7,000.

• 22:01Speaker 02

  Seven, perfect. So let's just say, in theory, if it was seven, that at all times, you just kept $8,000 in your checking. And maybe let's go, maybe even go $10,000, because you're in a great spot. If you just start with $10,000 in your checking account, and then you just have all your bills come in, and all your paycheck come in, and then your bills go out, you'll never have to worry about what's happening inside your checking account. You'll know what's going on. So then, all you gotta do is, you could use a software like YNAB. Have you ever used any like YNAB or Mint or any apps like that?

• 22:31Brian Preston?

  Do you like doing spreadsheets? Because I like when the things are automated.

• 22:34Speaker 03

  Very much. I love them and I hate them.

• 22:38Brian Preston?

  Okay, so you do, you find it cathartic to go in there and track the expenses and put it in there?

• 22:43Speaker 03

  Yeah, like a good habit. Like my Sundays, I'm in the office for hours doing this hard work, and sorting the bills out, like $3 here, $3 there.

• 22:51Brian Preston?

  What's the part of, let me ask the why part, is because I do think, look, in the beginning of your investment and saving journey, if you focus on Doing this so much, it's taking time away. And I like it in the beginning because you're basically creating the habits. You're affirming the good behavior. But there does come a point, especially since now you have a fiance. What I don't want is y'all to have these hyper-focused things that they create weird dynamics in the relationship. Are they also taking excess time from you? But if it's therapeutic in the beginning and affirming your behavior, I think that's okay. But you have to just figure out when you are graduating beyond the healthy habit.

• 23:33Brian Preston?

  And now this is hyper focusing for the sake of just being busy, even though you're not really creating additional benefits. So where are you at in that? Are you still at the beginning where you need the reinforcement and the habit? Or is this now a hyper focusing for just the sake of doing busy work?

• 23:48Speaker 03

  No, I definitely don't want to be taking on more busy work. But I like the habit of like knowing where my money's going and if it's growing. That's the why. Is it growing? Can I save for another car? All these emergencies or whatever that may be. Just so just keeping an eye that I know I'm okay.

• 24:08Speaker 02

  I used to do the same thing and I was a spreadsheet person and every single transaction would go on a spreadsheet. But then I sort of graduated and I started letting technology be a resource for me. So that now if I link my credit card and I link my checking account to one of these online softwares, it automatically pulled the expenses. So instead of me like having to put stuff on the spreadsheet and moving around, all I gotta do is say, okay, Chick-fil-A, that was a restaurant. And I click the button. Oh, okay, Shell station, that was gas. And I click the button. And it's much easier and I can do that in the morning in like 10 minutes while I'm sipping my coffee. Instead of spend three hours on a Sunday going through it all. And I think if you were able to simplify and automate your life like that, you may have a... What you're going to recognize is you're actually going to understand your situation better.

• 24:51Speaker 02

  By spending less time in it and focusing less on the very minutia of it, you'll be able to zoom out and see the big picture and actually see, okay, my stuff is moving in the direction that I want it to be moving. It is growing. My money is going where I want it to be going. I think you could make it a whole lot easier.

• 25:08Speaker 03

  Please.

• 25:09Speaker 02

  A whole lot more.

• 25:10Brian Preston?

  Well, answer this question. What's more effective? Three hours of you data inputting? Or 20 minutes of you actually reviewing the actual output report of how you spent your money last month?

• 25:20Speaker 03

  The output report.

• 25:22Brian Preston?

  Since you know that that's probably the more valuable activity. I have to ask you, because you're telling us you're spending these Sundays inputting all these transactions. Are you then taking 20 minutes to run the report and compare it to last month to see the executive summary?

• 25:35Speaker 03

  Yeah.

• 25:35Brian Preston?

  So you are doing at least that part. Do you? An hour to three hours and 20 minutes.

• 25:39Speaker 03

  That's why I knew something was up. There's got to be a better way. There's got to be a more efficient way. And why is it not happening as quick as I wanted to? And it got, I don't know which one of you were saying, it got so convoluted. I'm like, what is the clear strategy? By doing less on, you know, your 20 minutes?

• 25:56Brian Preston?

  If you can automate out of doing the busy work. I think it will help some of this anxiety as well. It'll relieve the pressure that you feel like you have to be doing more and more. And plus, life is going to get busy. You said y'all are about to enter the messy middle. And then you've got, you know, you're getting married. I mean, all these things are going to create dynamics that if we can release the pressure on that, it saves you more time. Because life's going to steal that time from you. And I don't want you feeling the anxiety from lack of time, not feeling like you're doing everything financially. We can mitigate a lot of that stuff just by working smarter, not harder, even as you just said.

• 26:33Speaker 03

  Yeah. And I think a clear trajectory, just knowing that, okay, I've fixed this all now after today. And that it's going to hit the goals quicker will probably make me a better individual.

• 26:45Speaker 02

  And so I think the theme, the goal is going to be simplification, right? So we just talked about your cash flow management, how you're thinking about budgeting. We can simplify that. Less spreadsheet work. I also think from a savings perspective, once you simplify the cash flow piece, then it makes saving a whole lot easier. Because remember, if we look at your saving over the last three months and how you've actually done it, it's a bit sporadic. So, okay, we have money going to our emergency fund. We'll talk about that in a moment. $600 a month each month. But, okay, some months we have HSA dollars going in, and we have these big chunks. And then in January, we had a Roth IRA contribution happen, but then in February, we switched over and now we're doing traditional. What happened there? Walk us through what's going on.

• 27:25Speaker 03

  So simply, started listening to the Money Guys. I'm like, oh. Roth this, oh, you don't want to, one of you guys said, you don't want to run a file or do do on your Roth. I was like, oh, I don't know if I can do Roth, so stop the Roth. And then, okay, HSA, you got to get that on the steps. Let's start doing that. But I just started because I didn't have the money to save in the HSA before. So then I got a tax refund. I was like, okay, HSA 2024, let's now start contributing to the 2025 one. So I stopped the Roth one because I, I don't, I don't think I can do it.

• 27:57Speaker 02

  Did you already, did you already undo that contribution, that Roth contribution?

• 28:02Speaker 03

  Yep.

• 28:02Speaker 02

  Okay, so you've already undone that.

• 28:04Speaker 03

  No more, no more since January, no payments.

• 28:06Speaker 02

  But did that 875, like you put it in, did you pull it back out?

• 28:09Speaker 03

  No, I put it in, I opened Fidelity account and put it in the market, which has been interesting.

• 28:14Speaker 02

  It's still inside a Roth IRA?

• 28:16Speaker 03

  No.

• 28:17Speaker 02

  So you put it in the.

• 28:18Speaker 03

  A traditional IRA.

• 28:19Speaker 02

  Okay, so you re-characterize that contribution from Roth to traditional.

• 28:22Speaker 03

  Yes.

• 28:23Speaker 02

  Excellent, perfect. You just want to make, because anytime somebody overfunds a Roth and they weren't eligible to, you have to make sure you do that process of either undoing the contribution or re-characterizing it to a traditional.

• 28:32Speaker 03

  I just stopped, but then I paid $10 when I did my tax refund because I ran, I did too much.

• 28:37Speaker 02

  Because you had to pull it out and any earnings applicable were taxable. Got it, makes sense. Okay, so, awesome, you've done that. And then now we have your 401k contribution, and it looks like, I'm assuming that's just, this is the one where it's percentage, you just drug that percentage all the way to the end.

• 28:51Speaker 03

  Yeah.

• 28:51Speaker 02

  And as it stands right now, I mean, we can do the math on this, in January you had almost $5,800, you had $4,100 going in February, $4,100 going in March. That's like $50,000 a year going into your 401k, which is awesome if, if that's what you want to be happening. But for most people, when they go to max out their 401k, they just max it out at $23,500 a year. So if you were doing like, normal 401k contributions, you'd be maxing out your 401k at like $1,958 a month.

• 29:25Speaker 02

  Instead of 4150, I'm not saying you need to do that, but I'm just, you are aggressively over saving. And so one of the things that we'd want to answer is, why are you saving the amount that you're saving? And is that moving you towards the goal you want to be moving towards? Or is it too, I feel bad saying too much, because saving too much isn't something we normally talk about. But are you saving too much? Are there ways you could better think about this? And then you also have this deferred compensation plan that's happening in the background, other retirement assets that are going on. And so when we add all this up and compare it to your gross income, in January, your savings rate was 68%. In February, your savings rate was 54%. In March, your savings rate was 60%. That's pretty wild.

• 30:08Speaker 03

  I, yeah, I didn't know it was that much.

• 30:11Brian Preston?

  I know, because you're just letting it happen. And that's why I have to ask, where are you in the financial order of operations? Which step do you think you are?

• 30:17Speaker 03

  Roth, five. But I also have high interest debt. I have a house.

• 30:21Speaker 02

  That doesn't count as high interest debt.

• 30:24Speaker 03

  So five.

• 30:24Brian Preston?

  But here's the thing I have to ask you, as Bo just showed you, you're beyond, you're saving $50,000, $60,000 into the 401k, because you have that spillover into the after-tax bucket. We'll talk about what that means. What about four? I mean, what do you, what do you need in emergency reserves?

• 30:40Speaker 02

  Yeah, let's look at the net worth statement again. That's a great question, because right now, you have $22,700 a month in cash on hand. What did you say your monthly burn rate was?

• 30:50Speaker 03

  Seven.

• 30:51Speaker 02

  Seven thousand. So if you need about six months of living expenses in readily available cash, $7,000, six months should be $42,000 in cash.

• 31:01Speaker 03

  Mm-hmm.

• 31:02Speaker 02

  You're, you're at $22,000 in cash.

• 31:05Speaker 03

  Yeah.

• 31:06Brian Preston?

  Did you just lean it up to three months? Because you thought three to six months?

• 31:09Speaker 03

  Oh, no, I want, I want six. That's why I'm still saving.

• 31:12Brian Preston?

  Okay.

• 31:13Speaker 03

  Yeah. But then that deferred comp you're looking at, that's, I'm counting as my emergency fund, because that's the spillover, because... I think that's what I need to do. So that's my emergency fund. I can pull that out.

• 31:25Speaker 02

  Oh, the deferred compensation?

• 31:26Speaker 03

  Yeah. I don't know what the, it was extra savings. So I was like, let me do that.

• 31:31Brian Preston?

  But typically deferred comp is not what you would consider emergency reserves because it's a deal that you're making with your employer. Where they're saying, look, so you don't have to pay taxes on this right now. We will just with keep a portion of your paycheck and let you invest it. But we're going to keep it on our balance sheet as a company because it's going to be an obligation we owe you at some point in the future. And the win for, for you is that you get to minimize your, lower your income because you're in a high income type, type situation. I've worked with a lot of deferred comp clients, clients, never, ever, ever have we looked at and said, you know what? That probably is a great way to have a break glass in emergency, emergency reserves. I think you'd be woefully, most deferred comps, you have to leave employment to get access to the money anyway.

• 32:15Brian Preston?

  Or have the, the point that it's supposed to start paying out.

• 32:17Speaker 02

  And I imagine when you started participating in that plan, they probably asked you, hey, you have to choose your distribution options, right? So what did you select for that deferred comp as your distribution option?

• 32:26Speaker 03

  Twenty and now it's ten.

• 32:28Speaker 02

  Well, that's how much you're deferring into it. That's how much you're putting into it. But normally for deferred comps, it's okay. You're going to put this much in today. When do you want to start receiving it? And some of the common ways that they define that is okay, at termination, I want to lump some. Or when I leave this employment, I want an even distribution over five years or over 10 years. So it's very much a retirement asset, not an emergency fund asset.

• 32:50Speaker 03

  Well, I don't have extra money to put into this, the cash piece that I'm trying to save.

• 32:54Brian Preston?

  Exactly. And this is the thing, you have, you have automated your way out of even filling up your emergency reserves.

• 33:00Speaker 03

  Yeah. Yeah. I need to get that. I need to get that up. I know. I want at least six months.

• 33:05Speaker 02

  Okay. So that's one of the things that we would say is if we were going to write the foo for you and put you where you should be. One of the immediate things before we even start talking about building or investing or any of that kind of stuff is getting step four filled up. So one of the things we need to do is adjust your savings rates to the other buckets to get you to that $42,000 in step four. Before you do anything else, because right now you are very much at risk if you had some unknown, unknown thing happen. You've only got a $22,000 safety net and it really should be closer to $40,000 to $50,000 based on where you are.

• 33:37Speaker 03

  So does that mean just stopping some of the other buckets of money going into these other?

• 33:43Brian Preston?

  Yeah.

• 33:43Speaker 03

  And then just stop immediately, convert to this, fill this up?

• 33:47Brian Preston?

  And I'd like to have a why to your percentage is because right now you're just, it feels like you're just like slot it over as far as it can. Y'all just take whatever you want. Leave me the breadcrumbs at the end of the month. I'll make it work.

• 33:59Speaker 03

  Yeah.

• 34:00Brian Preston?

  It's very noble from what you've built in three years because it's pretty amazing. But from a life standpoint, it's less than ideal. I would much rather have the why. And we're going to show you if you save at the rate, we even dialed it down. We were like, let's give Meghan back some money. So, so her and Tanner can live their best life. So you don't look back when you're my age and go, why did we do our 30s this way? Because that's what I don't want you to have is regrets because you only get this time on earth before you move on to what's after, you know, life on this planet, but it's, but we got to maximize this moment. We want to spark it up as much as possible. And that's why I talk about in Millionaire Mission, bedazzle your basic life, do the traveling. I love spending money on memories. So when you and Tanner are

• 34:44Brian Preston?

  talking about going to Cape Town, as long as that's budgeted, that's fine. What I don't like is you creating this artificial tightness to where you feel so poor and restricted and you're living in this abundance that's just money is literally spilling over into huge retirement accounts. We've got to get this all fine tuned.

• 35:03Speaker 00

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• 35:30Speaker 01

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• 35:57Speaker 02

  So the theme, right, is simplification. So we need to simplify your cash flow management, like how you're budgeting and tracking. We need to simplify your saving strategy. Hey, what percent should I be saving and what buckets should it be going into? Another area where we think there makes a lot of sense to simplify is your investing strategy. So right now, when it comes to how you invest and how you think about that, how do you choose your investments?

• 36:23Speaker 03

  Okay, guys, I've got no idea. As you can see before, like the strategy on like the saving, no idea. I know I need to do it, invest. I know I need to do it. So I listen to you guys, I listen to a couple of other people. I'm like, okay, now oil is a thing, or, you know.

• 36:38Brian Preston?

  You didn't hear that from us.

• 36:40Speaker 03

  No, no, no, no, no. So, lack of knowledge, that's why I need some help. I know it's something that needs to be done, there's just lack of knowledge, so ignorance.

• 36:51Brian Preston?

  What I think is interesting is that I've already made the analogy that you're this duck that looks all cool and collected, but under the water, we just see it's all all heck's going loose.

• 36:59Speaker 03

  You're reading me.

• 37:00Brian Preston?

  Now, look at your Roth IRA, and I see that $4,000 in a Roth IRA. Now, $4,000, that's, that's, that's money, it's even a good start, but it's not what I would consider a critical mass point that we need so much asset allocation, diversification, that we need 17 funds on $4,000. I mean, most of these holdings, the average value per fund is $83. I mean, you had to try really hard to go in here and go, I guess I'll put 2% here, I guess I'll do 2%. This one, this one says growth.

• 37:40Speaker 02

  Oh, somebody said oil was good. I'll go buy some of that.

• 37:42Brian Preston?

  I mean, what the heck is going on here? You know, half the thing we talk about on the show for brand new investors, it's not what you're investing in, it's how much your savings rate is greater than what you're putting it into. Why not just go the simplest path possible and just buy one index fund or one index target retirement fund? Why?

• 38:03Speaker 02

  I didn't know I had 17. So that's just in that one account. If we look at your HSA, you have six different holdings across that $2,000. In your traditional IRA, you have six different holdings across that $4,000. In your 401K, you have 16 different holdings across the $119,000.

• 38:19Brian Preston?

  It's just cray. It really is. I mean, not to use a 2020 word.

• 38:23Speaker 02

  Did you say cray?

• 38:23Brian Preston?

  Yeah, I know. But it is, it's one of those things where I was like, this is just disconnected from being productive.

• 38:30Speaker 02

  Yeah, got no idea. And so I think one of the things we love, he already said it, a target retirement index fund. Now, you can buy these in your HSA, you can buy them in your traditional, you can buy them in your Roth, and there's a chance you have them in your 401K, where all you have to do is answer in terms of which one to pick, one question. One question in terms of which one to, two questions normally, but one question is, hey, when do I think I'm going to need this money? Hey, if I'm 36 years old and I think I'm going to need this money in 30 years, then I'm going to choose a target retirement fund that's 30 years in the future. So maybe I choose the 2055 fund, right? The index retirement 255. And that's it. And that's one holding, and it will diversify all your assets across equity investments and fixed income investments, international, and you don't have to decide,

• 39:15Speaker 02

  do I need this company or that company or this or that? And you can focus on the thing that actually impacts your financial life, which is saving, saving, saving, which is what you do. So when I look at your whole portfolio, we really think it could be really distilled down into maybe three or four total holdings across all of your accounts. How much better does that sound? How much easier does that sound to navigate?

• 39:35Speaker 03

  Guys, just everything you're saying, I'm like, I already feel karma because they's they, yeah, I know you're shaking your head.

• 39:41Brian Preston?

  So busy.

• 39:42Speaker 03

  Yeah. Why did I do this to myself? I was stressed.

• 39:45Brian Preston?

  And it's education, though. But look, I want to give you, I think people, because this is something we're combating all the time with high net worth clients, too, is that they think that when you reach a certain level, you have to get more complicated because this is what rich people do. And I'm like, no, your goal in life should be make your finances as simple as possible because you are the executive, you're the field general, and if you can't track and know what's going on with your army of dollars, you'll never get ahead of this. And that's what I hate when people create clutter or extra busy work, because it's going to take away from your ability to actually do this well. And for you, it's creating the unnecessary anxiety and stress that the not even healthy, that's a whole different version beyond just not being efficient.

• 40:29Speaker 02

  Again, theme is simplify. Want to simplify our budgeting, want to simplify our saving, we can simplify our investment strategy. We even think there's some opportunities to simplify your account structure.

• 40:39Brian Preston?

  For sure.

• 40:40Speaker 02

  Because when we look at all of the different accounts you house, we even think that we could consolidate some of those because right now, like you have these two cash accounts. You have a high yield account and a CD, but you don't have a ton of cash. You've only got 22,000 and our goal is for you to have 42,000. Well, when we think about like cash management, it seems incredibly reasonable to us that you could just have a single high yield savings account that holds all your cash. So you have your checking account and you have a high yield savings account. And that's where all your merchant funds, that 42,000, you don't have to go find different CDs and try to stretch it out and have one be one year and one be five. You could just all dump it in a high yield account. And right now, high yield accounts are paying like three to 4%. Again, set it, forget it, and let it sit there.

• 41:19Speaker 03

  Okay.

• 41:20Speaker 02

  So then you have your HSA and you have your Roth IRA, you have your traditional IRA, you have your pre-tax 401k, you have your after-tax 401k. Well, one of the things that you've already said to us is that you started doing a Roth because you heard how much we love Roth. And then you make too much money for a Roth, so you started doing a traditional. Well, one of the things that makes traditionals wonderful for high income individuals is it does open up an opportunity to do what's called a backdoor Roth contribution where you put money in your traditional IRA, you do not take a deduction for it, and then you can go ahead and convert those dollars to Roth completely tax-free. So every year, there's a way for you to do a backdoor Roth contribution of $7,000. So when we looked at your account structure and you had that $4,000 in that traditional IRA, and now you're starting to put money in there every

• 42:04Speaker 02

  month, one of the things that we might recommend is, hey, go ahead and convert that $4,000 to Roth today. You're going to pay income tax on it because that's pre-tax money, but with all the new contributions in there, tell your accountant, or when you do your taxes, say these are non-deductible contributions. And so every year, at the end of the year, once you've fully funded that $7,000, you can convert it to Roth, and in future years, it will be completely tax-free. Does that make sense?

• 42:29Speaker 03

  Beautiful.

• 42:30Speaker 02

  So when you do that, you're going to essentially turn your Roth IRA and your traditional IRA into one singular Roth IRA, right? So now we've consolidated those two accounts down to one.

• 42:39Brian Preston?

  Less accounts.

• 42:40Speaker 02

  Less accounts. You're tracking. I say the goal is to simplify. This one is a little more complicated, but you're going to love us. Like, you're going to, like, we're going to tell you this.

• 42:49Brian Preston?

  The result in tax-free millionaire opportunity is just huge. You just stumbled into this by accident by just swiping that thing over.

• 42:57Speaker 02

  So you've been funding your 401K aggressively, right, for the last couple of years. And most people can only put $23,500 into their 401K, but you have been putting in like $50,000, $60,000 into yours. So you fill up the salary deferral bucket, and you've had all these dollars flowing into after-tax. So when we look at your 401K right now, of that $120,000 you have, like $80,000 of it is in this after-tax bucket. Do you know how the after-tax bucket works inside your 401K?

• 43:27Speaker 03

  No.

• 43:28Speaker 02

  Okay, so here's what happens. You put money in, you do not get a tax deduction, so you still pay income tax on that money. All those investments get invested, and the money grows tax-deferred. And then when you go to pull that money out in retirement, you pay taxes on the earnings, but you get the money that you put in back tax-free, right? So like, you only have to pay on the earnings. What you actually can do, and there's a little bit of homework on here, we're going to write this down for you. You need to reach out to your 401k provider and ask them two questions. Say, "Hey, I have this after-tax 401k chunk of money. Do you guys allow for either in-service rollovers where I can pull money out of my 401k even though I'm still working?

• 44:08Speaker 02

  Or do you allow in-service Roth conversions where I can convert that after-tax bucket into Roth? Because what happens, what happened is of the $83,000 you have in your after-tax, I'm willing to bet something like $70,000, $75,000 of that is money that you've put in. Right? So that's your contribution in. If your plan allows for in-service Roth conversions or in-service distributions, there's a good chance that right now today, or when you leave and go back to the hotel room, you can call your 401k provider and you're going to say, "Hey, I've got $75,000 of after-tax contributions. I want to do an in-service distribution and pull all $75,000 of that and put it in my Roth IRA.

• 44:47Speaker 02

  Or I want to do a conversion inside the 401k and convert it so that all $75,000 of that turns into Roth dollars. If I do that, that $75,000, not only will it be tax-free like it already was, but now all those earnings, all the money that it's going to make from now until you retire will be completely tax-free."

• 45:04Speaker 03

  Beauty.

• 45:05Brian Preston?

  Oh, it's massive.

• 45:06Speaker 02

  It's like making an $80,000 Roth contribution right now, today.

• 45:10Brian Preston?

  Now, the thing that I would encourage you going forward, and we'll put this in the homework notes too, whatever portion we decide is appropriate on after-tax funding, because if you have a hyper-saving and, you know, and we get the emergency reserves fixed and we still chose to put some of this into this after-tax account, you do need to make a practice or a habit of converting it annually. Because it's back to the key point that Beau made is that once it's converted, all the earnings are tax-free.

• 45:36Speaker 02

  That's right.

• 45:37Brian Preston?

  But right now, you're just, you're only doing part of the, yeah, you're only doing part of the drill. You're using this very powerful tool, you're funding it, but because it's getting invested and you never did the conversion part, all the earnings that those, that account has made, that $80,000, that's why we've got to figure out how much is your contribution versus how much of is earnings also, is we have to separate those. Because right now, all the earnings are going to be taxable to you if we Converted that the sooner you can convert it after contributions, the less time there is for it to grow and make money. So then all that that that earnings is tax free. They gave you the quick start guide with that slide rule, but they didn't give you the instruction manuals on how you actually optimize this to use this in the most efficient and appropriate way possible.

• 46:21Brian Preston?

  We've got to go back and kind of clean that up. But then you've got to now have a new habit so that you can do this well in the future, too.

• 46:28Speaker 03

  And is there a good time, bad time? We'll just put that A-type calendar reminder.

• 46:32Speaker 02

  I would do it sooner rather than later. I would go ahead and get that knocked down. That's right. So it doesn't keep going because the sooner you do it, the lower the tax bill will be.

• 46:39Brian Preston?

  You and Tanner have this crazy competition to see who can get to a million dollars. How about who can get to be a tax-free millionaire? That's even cooler than us.

• 46:47Speaker 02

  This this one decision, this single decision to convert that $89,000 of after-tax assets into Roth could result in a million dollars by the time that you retire. It's gonna be a million-dollar tax-free decision for you.

• 47:03Speaker 03

  That's cool.

• 47:04Brian Preston?

  That's really cool.

• 47:04Speaker 02

  With a phone call, right? We've laid out a bunch of like, okay, we're gonna consolidate the account structure. Let's talk about what we would recommend from a savings standpoint for you. Now, we're gonna assume you're gonna still be a very aggressive saver, right? But I wanted it to be easier for you to think about on like a month-by-month basis. So that way you don't actually have to think about it. You can literally set it and forget it. Annually, we want you maxing out your HSA, right? So you can be right now, you're doing big chunks. That's fine. But overall, we want $4,300 to go in there. We're going to have you continue to fund your traditional IRA every month, and that's going to be $7,000 a year. And then you're going to convert that every year so that it is completely tax-free, right? It's gonna be a completely tax-free backdoor Roth

• 47:43Speaker 02

  conversion. In your pre-tax 401k, we want you to think about in my 401k, I'm gonna do $23,500. That's step one. Then the next step is if I want to continue saving more, if I want to continue participating in the 401k, I can do this mega backdoor thing. If I have made all the other decisions, if I've gotten my emergency fund up to speed, if I've done all the other things I'm supposed to do, and we said, okay, what if we just want to land at a 40% savings rate? Because you said, hey, I'm 36 years old, I'm behind, I want to make up time. So 25% might not be enough. But is there some room between 25%, which we say for most people who start out, you know, in their early 30s or in their 20s versus the 60% that you're doing today?

• 48:27Speaker 02

  And we say, okay, well, let's look at what's it look like if it was 40%? When we say, hey, if we're going to show you an illustration to drop your savings rate by 20%, how does that make you feel?

• 48:36Speaker 03

  Unwell.

• 48:37Speaker 02

  Unwell, why?

• 48:38Speaker 03

  You got to save. What if something, no, get there quicker, live a beautiful life like you were saying, quicker.

• 48:45Brian Preston?

  But in your eyes, should you not have your best life now? You think you have to wait until you're 50, 55 years old to live your best life?

• 48:52Speaker 03

  I've got a pretty good life right now. I'm not gonna lie. I'm like, I, I'm aggressive like this, but I'm also very aggressive. Like, you need to bring me back to reality. Like, I have a good life. I believe I do.

• 49:05Brian Preston?

  But you just told me, when you and Tanner were talking about going to Cape Town, you, you were feeling some pressure about that.

• 49:10Speaker 03

  You're gonna save for that.

• 49:12Brian Preston?

  Yeah, but, but you were feeling, but it didn't seem like it was guilt-free or string-free.

• 49:17Speaker 03

  Oh, yeah.

• 49:20Brian Preston?

  What if we could give you-

• 49:21Speaker 03

  I feel guilty all the time.

• 49:22Brian Preston?

  You shouldn't feel guilty. If you are doing, if you're managing this money well, that's what I consider living in abundance, is if you're doing, if you're creating all these healthy habits automatically, then you get to, like I said, deep breath, exhale and go, man, I am living my best life, the best version of myself. Whereas right now, you're doing all the hard work and I, I think your 50-year-old self is gonna love you. But I'm worried you're gonna have, look back, that 50-year-old self is also gonna look back at your 30 and 40-something-year-old self and go, what were we doing? Why? I mean, why were we trying so hard? It's kind of, you know, if you're passing, studying for a test, do you have to make 100? I mean, what's wrong with making a 93? Then you got to go out with your friends and have dinner with family and all that.

• 50:05Brian Preston?

  If you just study, study, study, or save, save, save, you're not really giving your loved ones, you're not giving yourself the best version of yourself. You're giving some isolated, restricted version for no reason, no reason.

• 50:16Speaker 03

  Guys, some powerful words spoken. It's true. Everything you're saying is true.

• 50:22Brian Preston?

  So I ask you again, are you living your best life right now though? Because you just, you just said, I'm living a great life right now, which kind of shocked me because then you got, you're crying about, you have anxiety. So, so I'm asking, give us clarification on, you're not living your best life right now, are you?

• 50:36Speaker 03

  No, no, survival mode, paycheck to paycheck, save. I know my emergency fund isn't where it needs to be. So slowly getting that up. Just all these stresses in life. I'm in survival mode.

• 50:48Brian Preston?

  No, you're not.

• 50:49Speaker 03

  I don't know how you get out of it.

• 50:50Brian Preston?

  You're in abundance mode. Start living like it. I mean, you really are. I mean, we're going, I'll go ahead and prepare you. You have some trolls in the comments about what is this person complaining about? They have made 200 grand a year. They already have a quarter million dollars and they just started saving three years ago. Just be prepared. There will be people that will just, you know, not love. But I understand all the anxiety, the stress. You've got to unwind this self so that you, like I said, 40, 50 something version of yourself goes, "Well done, Megan. Well done." And right now, you're not doing it.

• 51:25Speaker 03

  Tanner's smiling. Everything you're saying is like, that's why we're so opposite, but we're so good. He tells me the things I need to hear and it's very similar to what you guys are saying. Absolutely. It's hard to uncouple from all of that.

• 51:39Brian Preston?

  You are the perfect person on why taking a relationship to the next level with a financial advisor is, because you need a coach. You need somebody to just basically pat you on the back and say, "Megan, you're crushing it, but you need it. Let's fine tune this." And give you small, little incremental decisions so that you're not overwhelmed with the process. You are the perfect, coachable person out there because you have all the resources. You have the income. You have the desire. But, you know, and I know financial planners, we get a lot of flack because people go, "Man, but you charge all these fees." But you getting busy doing nothing is not the best life. You do need somebody who's in your life on a relationship,

• 52:20Brian Preston?

  not a transactional side, but a relationship to let you kind of be free, to delegate this away. Because you're the CEO. You're, as Bo just said, you'll be a CEO of a tax-free millionaire account. You'll be a CEO. I can't wait to see what this is going to turn into over the long term. We might as well start treating it like that and give it the respect and nurturing it so that you can actually make your best decisions too.

• 52:43Speaker 03

  Hundred percent. Speak to me like it's business. Let's do it. Let's delegate. Let's simplify.

• 52:48Speaker 02

  It's one of our favorite things we get to do at Abound Wealth is we get to sit across from someone and say, "Hey, if you implement this, if you begin..." To release yourself of the burden you've put on yourself, let's show you how the plan actually plays out. And so if you were to implement this sort of saving strategy and you were going to start saving 40% based on the way that we've laid this out, let us show you what it looks like. When you begin doing this and as you start moving forward on your financial journey, you can see that from where you are today, total net worth of about $222 million.

• 53:18Brian Preston?

  222,000.

• 53:19Speaker 02

  I mean, 222,000.

• 53:20Brian Preston?

  I love 222 million. We can make you the biggest client of our friends.

• 53:24Speaker 02

  222,000, no, sorry. Do you realize that even at that 40% savings rate, you will cross into millionaire status in five years and nine months? So in terms of who's going to win between you and Tanner, at 40%, we think you're going to hit that in a little over five and a half years. Is that fast enough?

• 53:45Speaker 03

  No.

• 53:46Speaker 02

  No, how fast do you need to do it?

• 53:47Speaker 03

  By 40, we have goals, but by 40, I want to do this, this, and this, and one of those things is that.

• 53:52Brian Preston?

  Can I ask you, because y'all have this contest, what's the why on the contest? Because y'all are about to be married, there's a big difference between financial mutants and what we call financial misers. Financial mutants are optimizers, but they also, once again, look back at their 30, 40 year old versions when they're older and go, well done. Misers go more. So what is the purpose? What's the why? I love competition, I love the things, but the why has to also intersect.

• 54:18Speaker 03

  Well, my data is my house, pay off the house, I want a veggie garden, I want to start other businesses, and the business I want to start is cost a lot, so there's, you need to have resources and first get this stuff right before you can do that. So there's a why. Take that and then make it bigger and spread the love. That's why.

• 54:39Brian Preston?

  I mean, I'll give you credit. If you wanted to go, because we just arbitrarily chose 40%, because it would, you know, when we have our, if you go to moneyguy.com/resources, we have what saving, you know, we have, how much did you save? And it's, based upon when you start, it increases. Because if you're a late starter, you do have to save beyond 25%. But we did arbitrarily just pull this. I'm not going to fight you if you and Tanner sat down and you said, maybe I should be saving 50, maybe I should be saving 52%, but it doesn't, I think, I would encourage you, don't just default to as much as possible. Actually make sure the why intersects with that. Now, because I still feel like it's too nebulous to say. I should just have more, you know, in there for these other goals.

• 55:22Speaker 02

  Well, and you're the one who picked the million dollar threshold, right? What I think is really interesting is when it comes to like long-term financial planning, we're going to focus on the long-term. Because if you were to actually apply this savings rate, let's show what your portfolio path actually looks like over the remainder of your working career. So, right now, your total investable portfolio, we just said, is about $189,000. Even just saving 40%, yeah, it might take you five years to hit millionaire status, but the bigger the numbers get, the bigger the numbers get. And you can see by 45, just your investment portfolio is at a million and a half dollars. By 50, two and a half million. By 55, nearly four and a half million. By 60, nearly $7 million investment portfolio.

• 56:08Speaker 02

  This is without having to save 60%, 70%, so on. And even if you wanted to be aggressive and you said, okay, all right, I'm saving 60 and you guys are saying 40, what if we settle in at 50? Even if you save 50%, you can see how the numbers change. Okay, by 45, now you're at like $1.7 million portfolio. By 50, over $3 million. And then by the time you get out to 60, like normal-ish early retirement age, you're rapidly approaching deck of millionaire status. You're at over 8 million dollars. And this just assumes a conservative 8% rate of return. Obviously, if you save more and, and one of the things just to keep in mind, you're about to be married, you're about to combine with someone else, at least in terms of strategy and goals, this is just your part.

• 56:54Speaker 02

  If you've got nearly $10 million and he's got nearly $10 million, life looks pretty good then, right?

• 57:02Speaker 03

  Yeah.

• 57:03Brian Preston?

  As long as the why intersects with, because more is not necessarily better if the why isn't in the background of doing all this stuff. Because that's the only thing, when I hear you and Tanner having this really intense competition about it. I just want to make sure I'm like, okay, that's, that's all right. But it's just make sure it's, it's for a healthy mental state and emotional state for the relationship.

• 57:27Speaker 03

  Yeah, I'm, I'm the intense one. He's not, he's like just even kill and.

• 57:32Speaker 02

  So you're gonna beat him pretty easily is what it sounds like.

• 57:35Speaker 03

  Hundred percent.

• 57:35Speaker 02

  Okay.

• 57:36Speaker 03

  Yeah, before I'm forty. So there is a why and yes, slowly take the stepping stones. But um, he just says, be happy and the money will come. That's all like when we first got to know each other, what do you want? Like, what are the biggest things? And I was like, oh, all the, all these things. As you can imagine, he just had one, he's like, to be happy.

• 57:59Speaker 03

  I love you so much.

• 58:00Brian Preston?

  This is why y'all will be a good counterweight for each other. The yin and the yang.

• 58:03Speaker 03

  Yeah.

• 58:04Brian Preston?

  Is because you probably need somebody whispering that in your ear.

• 58:07Speaker 03

  Oh, yeah.

• 58:07Brian Preston?

  You really do.

• 58:08Speaker 03

  Yeah, words of like affirmation, you're gonna be okay, you're doing, good job, sweetie. I need that all the time.

• 58:14Speaker 02

  Do you at least feel like you now have an idea of the things that you want to adjust to hopefully remove some of the chaos from your financial situation?

• 58:22Speaker 03

  Yes, I feel much better. And like when I look at these numbers, I'm like, does that really mean?

• 58:29Speaker 02

  That's really, that really could be you. That really could be you.

• 58:32Speaker 03

  If I make the right decisions.

• 58:34Brian Preston?

  Conservative assumptions we put in there.

• 58:35Speaker 03

  If I make some good decisions now, and that's why I obviously wanted to see you guys. By financial advisors like do this, Megan, it can tweak it this way. So I'm all about that. I've got another question. So I've got my house. And that's at six point nine nine percent. So I want to bash that out, but I also want to start a new business. And that is going to be a lot of money. So I know there's short term savings goals, which need to go in a high yield savings account. Anyone zero to five years, high yield savings account. Then I've got this big business, we want to take on all that risk. It's like anywhere between, it's a big difference, probably twelve to fifteen million dollars undertaking.

• 59:14Speaker 02

  Okay.

• 59:15Speaker 03

  Any, any, any.

• 59:16Speaker 02

  If that's a goal that you desire to save for, uh, one of the things that we would do, if we go back to the saving strategy that we had recommended for you. We said, hey, once you've funded all your other stuff, you could look at this after tax 401k saving function. Maybe what you do is instead of actually taking advantage of the mega backdoor Roth and doing the $43,000 into your after tax account, you start dumping that money into just a regular brokerage account. Because the beauty of a regular brokerage account is you can use that for intermediate term goals. Maybe you want to start this business seven, eight, 10, 12 years in the future, but not all the way into retirement. When you're in your 60s, the best place to fund those types of things would be in a regular brokerage account, a regular taxable brokerage account.

• 1:00:00Speaker 02

  So as you think about like prioritizing your savings, maybe you do need to cut your 401k off at just 23.5 and anything above and beyond that, you start sending to that after tax, to the taxable brokerage account.

• 1:00:11Speaker 03

  Okay.

• 1:00:12Brian Preston?

  First of all, do the other things, the homework that Bo's going to give you after we disclose all that to you, just to clear your mind out, to have the peace of mind. And then, but after you come back, maybe, you know, two to three months in the future, you still could begin with the end in mind. If you know this thing's going to have a $10 million, $12 million goal, probably some of that's going to be leverage, just because if you're doing that big of a project, some of that is going to be, you know, a business deal. You might even have business partners who are doing those type of, because I've heard kind of loosely what your, what your ideas are. I don't think it's going to be all on your shoulders. There's a lot of moving parts there, but you could still begin with the end in mind. If you know it's, what is your portion of this 10 to 12 million dollar project?

• 1:00:56Brian Preston?

  You're going to need to at least come up with the 30, 40% down payment on it. And how do we build that into your plan? So that maybe your number is you're saving 45% or 55% because we back into how much needs to go towards your financial order of operations type plan. But then you, I'm trying to get you to step eight as fast as possible, because that's where you're now going to start loading up for this big plan in the background. But you've got to get the foundation first. No reason to even think about this until we get the foundation fixed. And then you can begin with the end in mind and build the plan around all the variables. But I wouldn't even focus on that until I got my, my base level assets figured out and tied down and organized.

• 1:01:40Speaker 03

  Okay, good. I have one more question. So when I, I'm saving and, you know, the usual question, should I? I'm doing both. I'm getting like my 13th check to pay my house off and then I'm saving aggressively. Do I maintain that or do I just try and put a little bit more on get that that's house cleared off my name?

• 1:02:01Speaker 02

  Well, you're so young, right? 36 going on 37 is just not old at all. Uh, and six, what'd you say your mortgage rate was?

• 1:02:08Speaker 03

  699.

• 1:02:09Speaker 02

  6.99. Uh, my opinion, you can write this in pencil, is that there's probably going to be a chance at some point in the future for you to refinance. I mean, rates have already come down from that right now. A lot of people are seeing mortgage rates right around 6% now for new home purchases. So there might be an opportunity in the next year, two, three years where you could even refinance your mortgage from 6.99% down to something much more reasonable like five, five and a half, 5.75 towards not quite as high in interest. When I think about your dollars working for you and where your wealth multiplier is right now, I don't know that prepaying the mortgage or trying to satisfy even that 6.99% interest is the best use of those dollars. Cause I think your dollars likely could work much harder for you

• 1:02:53Speaker 02

  somewhere else in your financial picture than prepaying the mortgage. You agree with that? You want to fight about it?

• 1:02:57Brian Preston?

  No, I, I do agree because of your age. Now, if you were my age with a 6.99, I would, I would be aggressively paying that down, but you're in a completely different place. And then it's also, it's back to everything we've talked to you about. In some ways, if you have these big financial goals, you need to be building your access to resources, bridge as well as possible. That's why I love what Bo talked about doing a brokerage account versus that after tax. Because you need access to these resources. If you've got these big goals, one of the worst things you can do is put it into pay down in this house because it's just, that's more cash you will not have access to. Is because the only way you can get access to your home equity is either to refinance or cash out, which is a harder transaction,

• 1:03:38Brian Preston?

  or sell the, the real estate, which these are typically use assets that you don't even want to have to make those type of hard decisions. So I would, I would bring it back, begin with the end in mind and paying down mortgages seems disconnected with all the other huge goals you have. It's very noble, but there's going to be a time and place. I always tell people, you have to kind of. Make your wealth before you have to worry about the maintain wealth decisions and you're still in that catch up make wealth phase. I would strongly encourage you if you're not going to hire a financial advisor, at least go read millionaire mission dive deeper into the financial order of operations because this is exactly what we're trying to do is tell you what to do with your next dollar. So you don't get busy spending resources locking up resources

• 1:04:22Brian Preston?

  that just don't even tie into your overall plan. You're just trying to do it all. So you just instead of doing the next dollar, you're just saying, I'll just do all non steps at once. That's not how it works.

• 1:04:33Speaker 02

  All right. You ready for your homework? Yes, please. All right, here's your homework. Number one, do better budgeting. We think you can simplify. Perhaps you can even use some technology to do it even better than you have been. You don't have to get so into the minutia. You can zoom out and have a bigger idea of what your spending categories and how they play out month of month.

• 1:04:51Brian Preston?

  Work smarter, not harder.

• 1:04:53Speaker 02

  Number two, have more consistent savings. You need to figure out what your saving strategy is. Is it 60%? Is it 50%? Is it 40%? And then what buckets should that go through? We sort of laid out a recommendation of what we would recommend. And one of the things you need to think through is, is a taxable brokerage account, one of the things I really need to be funding so that I can have that future opportunity for starting that small business. Before you do any of that saving and investing, though, we got to get your emergency funds trued up. So step, one of the early things I want you to do, get your emergency fund up to $42,000 in cash. That'll cover six months of your living expenses at $7,000. Now, we think that you could revisit

• 1:05:34Speaker 02

  your investing strategy and rather than having four million holdings across $400, you could potentially use something like a target retirement index fund or some low cost index and really simplify that. We also think that you should potentially consider converting your traditional IRA to Roth. So that way you don't have any IRA balances and you can do backdoor Roth contributions every year. In addition to that, you ought to call your 401k provider and say, hey, does my plan allow for in-service rollovers or in-service Roth conversions? Can I turn those after-tax dollars in my 401k to Roth dollars? And the last thing I wrote on here is you really ought to define your why.

• 1:06:18Speaker 02

  Why am I doing the things that I'm doing? And does it make sense? Am I balancing living for today, but also living for that great, big, beautiful tomorrow? And we think you have the opportunity and the capability to do both.

• 1:06:32Speaker 03

  I love it. Yes, I will work on all of that.

• 1:06:35Brian Preston?

  And I think you still, I mean, you keep rocking and rolling, you're going to need, you're going to need a coach in your corner. Take the relationship to the next level and just find somebody that will give you those affirmations, but also give you the efficiencies. So you get to live this life as full as you possibly can, both financially, but also from just nurturing you as a person to where you're happy, fulfilled, and have zero regrets.

• 1:07:02Speaker 03

  Yeah, love it. Lots to work on. Thank you so, so, so much.

• 1:07:07Brian Preston?

  Megan, you've been a blast. Bo, if somebody wants to come on Making a Millionaire, what do they need to do?

• 1:07:12Speaker 02

  That's right. If you'd like to be a guest on Making a Millionaire, you can go to moneyguy.com/apply. Or if you want to check out any of the resources we talked about, you can go to moneyguy.com/resources.

• 1:07:23Brian Preston?

  Guys, we covered it so much today, but there really is a better way to do money. So it's up to you to kind of lean into all of that and build your great, big, beautiful tomorrow. I'm your host, Brian, joined by Bo and Megan. Money Guy team, out.

• 1:07:39Speaker 02

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

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