Is Aggressive Saving Derailing Their Short Term Goals?

20:52Well, I...

20:53Brian Preston:They both looked at each other. He's one of five. So maybe he has a different perspective, but I don't know. I'm like two max perhaps. Yeah, two to three. We'll see how we're doing, but I feel like our finances are a big part of like, do we feel ready? Do we feel comfortable? Can we afford childcare? Our families live far away, so it's not like we can have grandma babysit during the day, unfortunately. Yeah, and we both bring in similar incomes, so if one of us were to not work, that's obviously a big hit. Are y 'all career trajectories at the same? Like if you both continue working, do you both have the same career trajectory?

21:31Brian Preston:Does one of you have a more rapid increase in income potential than the other or a higher ceiling than the other? Fairly similar. I mean, so my career goal is to one day become, to be able to provide expert testimony in like the counties surrounding the Bay Area. Yeah. So, and potentially become a partner at a firm. But you know, that's going to to take some time, require me to get more experience, but that's my goal one day. And if I get there, there would obviously be a considerable bump in pay. How about your opportunities? Yeah, I think it really depends on how the company is doing overall, but personally, I like where I'm at.

22:13My goal is to continue trying to climb that corporate ladder, use my opportunities while I can, and just try to build up a diverse set of skills, because I know research and development sometimes could be limiting depending on the area. And I think that's why we're living in the Bay Area, just because it's like a technology hub. So it's a great place for us to start our career. Yeah, I think my career, I have more flexibility in where we would end up living. But Leah, you know, a job in as a scientist or a chemist, those are more concentrated in urban areas. So not like quite as much flexibility.

22:49Well, and I don't mind asking that question because we just before I don't know how much makes it into the show. So we were just talking about y 'all couldn't believe how incredibly green and beautiful Franklin, Tennessee is. I mean, are y 'all set to staying in California? Because we already know it's a high cost of living area. I mean, since you guys are young, you're both highly educated, you're talented. You know, really, you can do anything. So that's why I feel like it's worth asking the question. Are y 'all staying in that area for a long time or is that open ended? Well, I've tried to convince Joey.

23:21She's trying to plant the seed. Yes, actually, because I got the chance to live in North Carolina for like an extended co-op, which is like a long term internship. And it was with the company that I'm at right now. But it was like as I was finishing my master's degree, like at Cal Poly at the college, you take your classes. And then the last sort of nine months of that program is either doing a thesis with like you can choose to do research at the university and work with companies to fund your research. or you can physically go do an internship for nine months and write your thesis based off of the technical work that you've been doing there.

23:54So I wanted work experience. So I thought this would be a great time to work and be in grad school, you know, like this is a great opportunity to do so. So moved to North Carolina. It was in the Raleigh, Durham area. Beautiful. The grass is green. The trees are green, not used to the hurricanes or the humidity. It reminded me of where I grew up because it's like two hours from the mountains, two hours from the beach. and I had a very bougie one-bedroom apartment for$1 ,500. Living like a king. It defies gravity, doesn't it? Yes. I'm flexible, but I totally understand. Our families are in California.

24:31He has a cabin in California.

24:35Brian Preston:Tell us about this cabin. This is the first time it's come up since the network. I want to hear about the cabin, but what are your thoughts on the moving? I want to make sure we close that loop and then talk about the cabin. He's going to say I can't because the cabin. That would actually close it. No, I am open to it. Family is here. I do love California. It is very expensive. But as long as we can afford it, I would like to stay at least for – I mean we're both aligned on staying here for at least the short-term near future, five to ten years just because we want to stay with our jobs for a while.

25:12You said one of the goals is to like own a home, but then you said, well, I want to be in a home.

25:17Brian Preston:And then you said, well, maybe in five to 10 years, we might be open to not being here. Does that, is home ownership as big of a goal or not so much now that you're going to be in a three bedroom that's affordable and that, you know, you get the homeowner, the home experience without having the home ownership. I keep going back and forth on it because again, just when you look at the cost of renting versus buying a house and what you can do with that extra money and the power of those dollars. It's just really, really hard to justify it, especially at our age. And now that we're in the home, I'm like, so why do you want to buy a house?

25:50I just like the idea of it's built into the, this is what the American dream is. This is what successful people do, right? Like put nails in the wall without the landlord. I don't have to ask the landlord. Did you watch our episode on, is it better to rent or buy currently? I did. Yeah.

26:06Brian Preston:What'd you think? It seemed like a pretty clear answer to me. I mean, I did the math for you guys and I still want to hear about the cabin. But what's funny is I took a$1 million house. I only had you put down 3 % because, you know, on a first time home buyer, we give you lots of grace. And so you only had to put down 3%, but then we financed the other$970 ,000. Public math, man, be careful. Anyway, the monthly payment, it's 6.5%,$6 ,100. And that's not property taxes. That's just the principal and interest. That's not even the property taxes. That's not the insurance. Not maintenance. And I just heard you tell me that you've got a three-bedroom house, not too far from where you are, for$2 ,900.

26:55Do you know why they can give you that house for$2 ,900? Because it's either paid off or he's got a really low. Yeah, the interest rate on that house is it's either exactly what you said, paid off, or there's probably a less than 4 % mortgage rate on there. And so that you're getting the benefit of that. Plus the purchase price was substantially lower before we had the 2021 run up in real estate where it almost doubled in that three to five year period there. Financially, it doesn't make sense to buy a house, especially with all the life stuff that y 'all just said. You just answered your own question.

27:30And that's one of the biggest things I have with Achievers is y 'all think you're on a check, you're running an internal checklist. You're like, you know what? I've been a good student, check. AP classes, check. Hard major because I want to, you know, flex this muscle I have in my brain that's, you know, can do a lot, checking. You know, I've been rewarded for every one of these decisions, but I'm here to tell you, and especially in this high-cost living area, you're running up against the internal narrative is separated from the reality of what you could do because that is twice as expensive.

28:06It's actually going to be more than that. It's going to probably be 125 % more expensive than you just renting that house that you're in right now. Yeah, that's wild. You run that by the wealth multiplier. are, I'm talking about this is at y 'all's age, changes your life in the future. It really does. I agree. I still want that to be a long-term goal for us. And it's just so hard with the current market. I know we're probably not expecting prices to increase at the rates that they have in the past five years. It's just hard to know when to jump in. And especially if we aren't completely set on staying in the Bay Area.

28:44Exactly. You know, if I buy in at the wrong time.

28:45Brian Preston:That's the biggest red flag, in our opinion. And then we decide to move. Got a Sam's Cafe pizza order up. You know the best part about this spicy Italian sausage? I voted for this topping. Yeah, just another perk of being a member. Come join us. Sam's Club. Chronic migraine, 15 or more headache days a month, each lasting four hours or more, can make me feel like a spectator in my own life. Botox, onabotulinum toxin A, prevents headaches in adults with chronic migraine. It's not for those with 14 or fewer headache days a month. It's the number one prescribed branded chronic migraine preventive treatment.

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29:59Why wait? Ask your doctor, visit BotoxChronicMigraine.com, or call 1-800-44-BOTOX to learn more. Well, you know, if prices went down, you know, you're kind of stuck. Yeah, that's the problem with levered debt is because you lose 10 % in the market of the value of the house, you know, because you have to sell it. You have to move to relocate. Yeah. You feel all about that. It can be hundreds of thousands of dollars.

30:20Brian Preston:And, you know, people often pose it as, oh, well, renting is just throwing money away, throwing money away. You just laid out the perfect case. Well, it's not throwing money away. It's buying yourself options and flexibility. I'm only committed for 12 months or 24 months, whatever your lease term is. and then I can choose to do something else if I want to. I can choose. Once you buy that house, you are sort of at the mercy of what happens with the housing market, what happens with that particular home. And if that stuff isn't set, I would be careful rushing into it, especially in a super high cost of living area like the Bay Area.

30:49Brian Preston:So even if you were going to do that, you got to save up for down payment. He said 3%, so it's$30 ,000. We already have this wedding that we're trying to save up for as well. So now we're like having these multiple goals we're stacking up. You guys said that your monthly burn rate is about$6 ,000, right? Even with this new house and there's somewhere in that ballpark. You also said that your incomes are roughly equal. So it's not like there's a wide disparity. So I would argue that in that sort of environment, a three-month emergency fund is probably prudent. It's probably not like a crazy thing to think about.

31:19Brian Preston:So you take$6 ,000 times three months, it's$18 ,000 emergency fund. So just go ahead and have a$20 ,000. So$20 ,000. So when I see your current emergency fund, the cash that you have on hand, according to your net worth statement right now, I can see that it is$27 ,000, right? So we're about seven. All right. So in my mind, I'm thinking if I'm trying to fund goals, all right, I got$7 ,000 for the wedding, right? Like I got$7 ,000 for the wedding. We've already laid out that if you just can continue this pace of teaching for the remainder of the year, that's going to be another$14 ,000,$15 ,000.

31:53Brian Preston:All right, well, now we're at like$21 ,000,$22 ,000 of this$30 ,000 goal. How are we going to bridge the last$7 ,000 to$8 ,000? So that was one of my questions on whether we can scale back on the savings, at least temporarily. One of my thoughts also was to, I think we're kind of on that borderline Roth versus traditional contribution, because California tax rates are quite high. we're looking at around 30, 31 % marginal rates. So we're kind of on that borderline. We've been contributing to Roth in the past. But if we switched to traditional, we could free up some cashflow that way. Big time. Or just dialing back the percentage that we contribute.

32:40And you're still gonna be putting money into the Roth IRA too. I mean, you could, even if we, I mean, because y 'all's structure, even if you started blowing through the income thresholds, you could start doing structured as a backdoor Roth contribution.

32:52Brian Preston:But there's a good chance you won't have to do that. Your income, you're not going to necessarily be there, but you are at the income where pre-tay, you just said 31. So you said you're putting in 20%, you're putting in 30%, right? So how much total do you have going into your 401k annually? I'm sure you probably - It's about 20 ,000. All right, so 20 ,000. 21. Between the two of you or just yours? Just mine. Just yours. 20 ,000 for you and the 30 % of your pay. I barely missed the mark on maxing out. She almost fixed it. So it's like$40 ,000 to$45 ,000 a year going in. Do you recognize if all you did was switch your contributions from Roth to pre-tax at that 31 % tax bracket, that alone would save you$12 ,000 in taxes?

33:33Brian Preston:Wow. Just doing that. That's an extra$1 ,000 a month in savings that you guys could have to still fund Roth IRAs because you're below the Roth limit or if income increase, you could do the backdoor. Or to fund some of these other goals that you guys have. It's why, and we love Roth and you guys are young and Roth makes tons of sense, but you are the case study why if I told you, hey, by clicking one button, you could potentially have an additional$12 ,000 every year. That's pretty substantial. That's pretty significant, right? Yeah. And I think that could just be, you know, a temporary thing. We don't even necessarily, with the numbers you brought up, I mean, we don't even necessarily need to dial back the percentage and we can still get to that 30 ,000-ish goal for the wedding.

34:14Brian Preston:So the wedding is a goal, and the homeowner, I don't even know if homeowner's a thing. The homeowner's a thing. I think it should be put on the shelf for a while. I think so, too. All right, so it's come up a few times, but I want to address, because when we're looking at your net worth statement, there was this cabin, this thing that showed up. You don't own a home. You don't see a lot of 24-year-olds with a cabin. I know, I know. Walk us through. What is this thing? Where did it come from? Okay, so kind of a unique situation. uh there's this cabin that's been in my family for about a hundred years really old wow so this has got a family legacy to it not this cabin but oh not this one tell me that's what you thought he was about to go oh this whole family like we can't let this cabin go so what happened was uh yeah that family's been in our uh that cabin's been in our family for a long time uh great great grandpa bought it very rustic it's uh in california near sequoia and kings canyon national parks that was a big part of my childhood going there every summer going there memorial day weekends recently it's part of this group of cabins there's like 13 of them and this is near the cabin that your childhood memories so it's in this like community of cabins where they rarely if ever come up for sale because they've been in families for you know a long long time okay and opportunity came up uh three four years ago someone was selling and they wanted to keep it within you know the group to offer it to somebody first I got approached to it ask if I was interested in purchasing it and you know I had like just started my first big job out of college didn't have a ton of money saved up but then I asked my brother hey do you want to go in on it with me because you know this might not come up in the future.

36:01And he decided to go in on it with me. We bought it for$80 ,000. It's, again, very rustic. It's more of a glorified wooden tent at the moment, built like 100 years ago. There's technically electricity, no running water. So there's a lot of work that needs to be done. So we bought it, put down$20 ,000. We're financing the rest, seller financing at, I think, 5 % interest rate. So we're paying about$650 a month total on it combined. We're spreading that over 10 years. And we're, I think, like a year and a half into the payments. Does that pay it off or does that balloon it? Does it balloon in 10 years?

36:42No, no. That is evenly amortized over the 10 years. So yeah, if we pay the$650 a month for the next eight and a half years, it'll be paid off.

36:53Brian Preston:So the idea is one day this will be a place where your kids spend time. Exactly. Yeah, and I didn't want to miss out on this opportunity that I just didn't think was going to come up again, even though it felt like a very premature move when I made it, especially when I made it, because my accounts, my Roths and everything were not funded to where they are today at that point. So it didn't hurt you, it doesn't sound like. I don't. You're obviously maxing out your Roth. It was risky, but it didn't bite you when you exactly i think there's still enough margin to you know make those payments i'm only paying for half of it and then there's uh my brother and i are aligned on you know there's a ton of things we could do to the cabin uh and right now it's more more of a campsite and you know it's still usable in its current state and it's more of a long-term thing we'll get to those i have a few quick questions yes any chance you're inheriting the family cabin it's down the street the one that's been the family for 100 years yeah um the one i thought you were telling us about The issue is it's because my great-great-grandfather bought it.

37:54So now it's split between a bunch of relatives. So there's a good chance you won't have access to go buy it. Maybe access to use it, but not exclusively. That's a solid answer. The next question is, what does your soon-to-be wife think of this? You know, I think Joey made this purchase when we were kind of freshly dating, and he was like 21, 22. And I was like, really? You're going to buy a cabin right now? but being able to go up there with the family and experience the cabin. Have you been to the cabin location? Yeah. We were just there a few weeks ago. Yes. I will say the only bad thing is the mosquitoes, but it's a gorgeous place.

38:31Brian Preston:Also, no running water sounds like a bad thing too. You said the mosquitoes are the only bad thing? The no running water sounds not great. There's a creek that runs right by it. There is literally running water by it. Definitely marry this girl. Go ahead and lock this down. I saw how important this was to him and his family, and it made more sense over time once I could actually see it for myself. But like totally like months into dating and him buying a cabin, I'm like, whoa, I got to think about it. No, I'm just kidding. And do you from a blossoming memory standpoint, does this seem like something that will be fun for you to do with y 'all's future kids as well?

39:10Absolutely. I had so many wonderful memories going to Lake Tahoe with my parents growing up. And having the privilege of a secondary space to enjoy summer is awesome. So I'm here for it. I don't think we have the cash to invest in those renovations immediately. But I'm glad that we're all on the same page. That's going to take some time. Yeah, we're not in any of that. That's the next question is, what's your brother's timeline on renovating and building this cabin up? Similar. We're both not in a rush. Okay, so you're not in a rush. Y 'all are on the same page. Do you foresee a problem? Because there will.

39:48Fast forward 10 years. You're just rocking and rolling. I mean, based upon your net worth statement. You know what? We got a few kids now. I want to start making those awesome memories. Is there going to be any drama with you and your brother when you want to start throwing money at it? Or is he going to not be able? Is it going to be weird? because he's going to be able to financially do it when you want to do it? Yeah, I mean, I hope not because we... Are you hope he will or hope not? There won't be any drama. There won't be any drama. Yeah, I mean, there hasn't been thus far. And I was a little weary about, you know, going into anything 50-50 with somebody, you know, that you're not like married to.

40:26And so that's something we'll have to approach. That's the biggest advice I could give you is go ahead while it's on the scale of life concerns. This is like at the bottom, as long as you just have the carry cost. Go ahead and have a conversation with your brother and be like, hey, when do you think? I just want to kind of, we're just trying to figure out what the next 10 years looks like. I want to make sure we don't have some weirdness down the road. Y 'all figure out the push-pull system that's going to create the action element on this. There's nothing wrong with just, because land is one of those great lock-ins of value.

40:57And then, you know, this sounds like it's going to have a scarcity of access to it anyway. way. So I see nothing wrong with it as long as you've had good communication with what the expectations are. Because you don't want to get into a weird dynamic where you want to renovate this cabin, but your brother doesn't. Exactly. Or one of us has the money to do it. So go ahead and have those conversations while it's really low on the priority scale.

41:21Brian Preston:I am curious though, because you said right now you guys are separate finances. Like you are separate finances. Yeah, I want to hear about that. What's going to happen? Fast forward to July. What happens? How does that work? What's that look like? And even I think it'd be valuable for some couples out there who are perhaps dating right now or engaged. How do you guys navigate finances now and what will change when you get married? I want to start off by saying, like, first of all, Joey really impressed me because his nature, he's a financial mutant by nature for sure. but I feel like he's always been very generous when we first started not when we only first started dating but I feel like the way you handle money and I the way you you know of course treat me and we enjoy our money but I also respect the fact that you prioritize saving and you encourage me to do the same in a respectful way and um just like learning that about you has made me feel very much comfortable with the idea of combining finances during marriage.

42:23Especially if it's like, I don't want to feel any sort of anxiety. Not that I have, I feel like we don't spend a lot on material. I think we're both aware of what we spend money on and we don't really spend on extravagant things. And haven't really had much conflict over money. There's a lot of Venmos happening. And all that stuff. Is that what you do?

42:46Brian Preston:You square up via Venmo? Yeah, I mean, just with rent and utility, like the big stuff, you know, and then. Like a meal or anything. Y 'all split everything 50-50? Is that the way it works? For the big stuff and then, you know, smaller things, it's just we pick things up here and there. But it's never, I don't want to feel anxiety if we go like, if I go buy a shirt, for example, it's like, oh, I see$40 on the account. You know, like, I feel like that's not going to be a concern going into it. Do either one of you like use some sort of like budget tracking? Like, are you using Monarch or something like that to see the transactions?

43:18No. No.

43:19Brian Preston:When you combine, will you? Like, will you see all the transactions that she has and you see all the transactions that he have? Yeah, I mean, I imagine we'll have a joint checking account and then, you know, separate credit cards that you can spend what you need to spend. Okay. How do you go pay for those credit cards? From the joint account. Okay. I think. I mean, as long as. But you just said, spend what you want to spend. What if this month I spent like$1 ,000 on mine, but you spent like$2 ,000 on yours? Most of the time it's like eating out together. I feel like that's our crutch is just food right now.

43:55But I feel like I trust you with your money. Hopefully you can say the same about me, but not too concerned about the transactions. I'm not too concerned, but I mean, it's obviously hard to say until you get there. Right, I guess. Who went to Costco for$500 last week?

44:11Brian Preston:Who did go to Costco for$500? I know. You went without me. That's how dramatic is this shit. It's right here. It's easy to do. He probably bought it. Because every time I go to Costco, I feel like I come home with some pillows, some mixed nuts. Yes. And then I end up with like a case of like some flavored drink that I didn't know I needed. Let me ask you this. So we were asking you questions about like combining. Are there questions that we could answer as two guys who've kind of gone through that threshold? Anything that you are curious about that we could speak to that might be valuable as you guys have your conversations moving forward?

44:42I guess going into marriage, do you have any advice in terms of approaching finances? Because I feel like we have a pretty stable relationship with money, similar values going into this. But, of course, like life ebbs and flows. There's going to be big expenses here and there. Of course, like there's going to be a purchase made where we're like, what the heck? Why did you do that? So would you recommend what if we have a personal savings that we can make our fund purchase on? Or how could we mitigate or prevent future conflict with money like going into marriage?

45:15Brian Preston:I'd like to speak to the what the heck question. Because my wife and I never really had conflict over finances. However, we had a very different understanding of what was justifiable expenses. Well, we're not justifiable expenses. and where I struggled early on, and sweetheart, I love you. This was on me, is I did not assign enough value to the things that she valued because I didn't value those things. So when she'd spend X number of dollars on X thing, in my mind, it was wasteful. And I'd see the transaction come through and we'd have our miscellaneous bucket or a home furnishings bucket and I'd categorize it in the app and I'd be like, hey, hey, you're blowing through.

45:55Brian Preston:Then And she's like, yeah, I'm blowing through it because I care about the shampoo that I use. I'm not going to use Suave. I care about – Not Kirkland? Right? Right? And so I think having an understanding around – because what it felt like early on in my marriage is that I began micromanaging. Hey, why are you doing this? Why did you do this at Target? Why did you buy this? Hey, why did you go buy this thing at Whole Foods when we could have gone to Walmart to get there or whatever the thing is? And we had to have like a very sincere conversation on, hey, just because you don't think this is important, just because you don't think this is valuable doesn't mean that it's not.

46:27Brian Preston:It means that that's your opinion. And if I feel differently, we need to figure out how to reconcile that. The earlier you can have those conversations, in my opinion, the more valuable. Because what happens is, at least in my case, new marriage, in love, all the wonderful stuff, you don't want to say anything. So you just let these thoughts just fester and you start making these passive-aggressive comments. And it just turns into this nasty thing that if you can communicate on the early end, I think you can avoid a ton of that. Let me give you all some homework. Bo got married on June 9th of 2012.

46:56And we've been creating content for 20 years now, if you can believe it. And it's all out there. So we're crazy. So you can hear this thing from the amateur beginning all the way through where we are now. And right around that June of 2012 period, I did a show with Bo where we interviewed him on what he thought was going to happen with his upcoming wedding. So this was either in May. And it's just probably going to be entertaining for anybody. Maybe we could even help everybody out by giving. Oh my goodness. What if we did a follow-up episode? No, we did it. We did a one-year episode. Oh, you did?

47:28We did a one-year update. Oh, we did the one-year. We did a one-year update. Go listen to the one before his marriage, and I want you to listen to the one-year-later episode. And you're going to hear a lot of growing up that went into it. Now, Beau's been married over a decade now, so he's a veteran. 14 next to us. You're hearing us at veteran-level status here on this, but I think it would be good for anybody who's struggling because I remember Bo, and I was trying to sit here. Was it$40? $40. Bo said any transaction that she spent over$40. And I can remember. That's why he brought it up is because I was like, Bo, her shampoo costs more than$40.

48:03And he was like, no, it's not. $40 will buy me three years worth of shampoo. You can tell. This was still, this had not a scab on it. It's probably got a scar on it at this point because we're old enough that it's, but that's why he brought up the whole suave thing is because I told him on that show that her shampoo is going to cost$40. And he was like, no, she can go suave just like I do or whatever else. So I think if you go listen to that, there is a growing element. Because what any couple has to do is, and y 'all have already done a great job. Y 'all have already probably graduated beyond a budgeting.

48:34I mean, y 'all don't even have to really, you just answered it. Y 'all aren't using Monarch or anything like that. Because your money is going where it's supposed to through automated savings. So you don't feel any pressure about doing budgets. Exactly. And I think that's one of the reasons why this hasn't been an issue yet. Because, I mean, we have, currently we have the margin. Y 'all been blessed that y 'all make enough money. Exactly. That money just goes where it needs to. There might be a future to where y 'all have to do when you're doing the family planning, where y 'all say, you know what, we're going to take a few years where maybe we live off one income and we got to figure out how that's going to go.

49:07I encourage you when that happens, do a budget, you know, do something where you're actually tracking, you're already kind of, you know, doing it, but there's tools that make it easier. But then once you get to that point, what I'm trying to help you do, take the power out of the money. It's because so many people, it's a struggle when you put value to what people are spending and then my money is my money, her money is her money. And it creates these weird dynamics to where you don't want to get a situation where when you'll decide one of you is going to stay home with the child for a while or children.

49:41and then just for a moment in time, you don't want the other person feeling like they're in this situation where you have to go ask the other spouse for the money because then holy cow, what a weird dynamic that is. So that's why I love that you're already planning when you cross those thresholds to become one, open the joint checking account, go ahead and redo your direct deposit forms for your employer where they're going right into that joint checking account. So that way it just seems like two became one, our household expenses are won. You know, the good news is the government's already protecting, you know, your Roth IRAs.

50:16Those aren't joint Roth IRAs. They're not joint Roth 401ks. I mean, they are individually tied to your, you know, there's already some protections on some of that stuff on what you have brought into the marriage. But I love everybody kind of setting up a joint checking account, setting up maybe a joint brokerage investment account at one of the low cost providers, and then y 'all build this thing together. So it's you two in you versus the world.

50:42Brian Preston:I'm excited about the plan we're gonna put together because I'm thinking we're gonna be able to build a plan to get you from today to the wedding. And then we're gonna show you what happens. Okay, post wedding, what does life look like at a reasonable savings rate for you guys? I do have one clarifying question. You've got 20 % going to your 401k. You said you're maxing your Roth IRA. You said you got 30 % going to your 401k. Are you also maxing your Roth IRA? Correct. Perfect. Just to clarify, the 30%, you were contributing 20, 25. Yeah. But since her teacher paychecks aren't having any investments withheld, that's why we increased it.

51:17You increased her to get her to 25 % of the gross.

51:19Brian Preston:Got it. Makes sense. I'm excited to be able to put this together. And I don't want to give away what's going to happen, but it's going to be an awesome picture. Because you guys have done a lot of really great stuff early on, and I don't see you guys stopping to do that. Brian, what a great conversation with Joey and Leah. I mean, think about this. What do you get when you get a scientist and an accountant walk into a bar? I don't know, Brian. What do you get? You get a very successful young couple named Joey and Leah. I mean, this is a great time. They got a lot of great stuff going on. And I got to tell you, I'm shocked that the problem we're going to say for them is they over-save.

51:59Brian Preston:Yeah, it's not something we often do here, right? Like we don't often talk to people that are over-saving, but they have a lot of big goals coming up. Obviously, they have a wedding coming up in July, home ownership, they're trying to figure out, is that the right move? Is it not the right move? But there's this pressure. I feel like they're putting on themselves that they are saving so much. Perhaps it's crowding out some of these other goals that they could be pursuing and could be putting resources to. Well, they are. They literally are the perfect example of why personal finance is personal.

52:30That's right. Is because you just said it, with the wedding coming up, they wanna know is homeownership something they ought to consider? Well, how can they have these goals when they're gonna be so retirement rich, but not have enough margin or leftover to even fund some of these other important things that are coming up?

52:46Brian Preston:Yeah, so when we look at their current savings, it's pretty wild. Right now, Joey's putting 20 % in his 401k and getting a 5 % match. Leah's putting 30 % into her 401k, getting a 4 % match. and they're both maxing out the Roth IRA. So with an annual savings of almost$67 ,000 a year, it puts them at a 34 % savings rate, which for two young folks at their age is a super heavy, big time savings rate that I don't think is absolutely necessary. And they also know they have a time certain wedding coming. And when you look at the funding of that, you're like, wait a minute, how are we so wealthy, but cash poor?

53:27Brian Preston:Yeah, and I think what's happened is they know that saving is a good thing. They know that Roth is a good thing. And so they're doing all these noble good things. But perhaps, and I say this lightly, maybe there is a little too much of a good thing going on for them. Because when we thought about, all right, if we were going to triage, if we were going to adjust this, what would we think about? We'd say, okay, well, what if we reverse engineered to figure out what would it take for them to be able to hit a 25 % savings rate as opposed to 34? Well, for them, what that would look like, again, if they're going to follow the financial order of operations, max out Roth IRA, 7 ,500, max out Roth IRA, 7 ,500.

54:01Brian Preston:And then we said, hey, let's back down both of their 401k contributions. Let's take Joey's down to 14 % and let's take Leah's down to 15%. And instead of just not only backing it down, we flipped the script and actually turned it into traditional. They're in a high tax situation. That's right. Even though they're young, I get it. and there's a lot of pressure when you're young, do Roth, and we love it too because you get more time for compounding growth, but at the tax rates that they're currently paying, this could actually save them over$2 ,000 a month. Yeah, that's right. Backing down those contributions plus the tax savings is gonna end up with almost an additional$25 ,000 a year, $2 ,000 a month they're gonna be able to save.

54:42Brian Preston:And what's great is the math works out wonderfully. We know that right now, they know that their cash is right about$7 ,000 into this wedding fund. And we asked them, okay, how much do you think you're going to have to spend the wedding? And they said, I don't know, maybe something like$30 ,000, somewhere in that ballpark. Well, if you just take the timeline from now until next May, June, July, and they have an extra$2 ,100 a month, if they just took that$2 ,100 and parked it in a high-yield savings account between now and then, they would get that wedding fund fully furnished up to$30 ,000. Well, is the term serendipity?

55:16Yeah, that's a term. Isn't it kind of amazing that the two, it's right around$2 ,100 a month savings they're going to have if they change this from a tax standpoint. You multiply it by the months they have until the wedding.

55:28Brian Preston:It gets them right on target. It's within like$1 ,000 or so. That's pretty magical. I almost think it's like a big wedding gift. But I know the question they're going to be asked is, okay, guys, well, if we do back this down, if we're not saving at this same clip, what does that ultimately mean long term? Are we actually going to be able to reach our financial goals? And what's amazing is they've done so much heavy lifting and hard work thus far at such a young age. At 25 years old with over a$200 ,000 portfolio, if they were to just save the 25%, not the 34 % they're currently saving, they're on track that by the time they get to 55, they could have almost a$12 million portfolio.

56:07Brian Preston:By the time they get to 60, almost for retirement age, almost$20 million. So they've done the hard work and heavy lifting where they don't have to be in this hyper-save, hyper-accumulation mode unless they have some crazy financial goal they haven't told us about, like super, super early retirement, big time fire. And what they've been able to do by building up the pot of money they've done is now they're gonna give themselves options and flexibility as they move forward in their life. Yeah, I think they're definitely on a healthy path for a great retirement. The thing that I did want to circle back on, this house.

56:44I could tell that we hit on something. I felt a little guilty because it's usually considered such a noble cause to save for a house. But when they shared what they can rent this three-bedroom house for in the Bay Area versus if they had to buy.

56:59Brian Preston:It just didn't make sense. Oh, my gosh. I mean, if we're talking about maximizing the opportunity of wealth building, there's a little bit of disconnect. So I would encourage them. look, we like homeownership, but in their specific situation, once again, personal finance is very personal. Don't get in any hurry to fund paying for that house. Again, they're just getting married. And so, yeah, homeownership may be something that they want to pursue at some point in the future. But I think that right now, they have enough slack, they have enough margin in the system. Even when they get that wedding fund fully built out and they get married, if they still stick to 25 % savings, they're going to have excess liquidity.

57:35Brian Preston:They can move towards one of these other goals, like saving for a house or like doing the family thing or like whatever that thing for them may be. I don't think they have to worry about getting all of it as much as possible into the retirement accounts. I think they're going to appreciate the liquidity. Joey, Leah, hopefully you feel like we just released the pressure valve on you because y 'all got some big life stuff going on. We want you to enjoy that. Go save for that wedding. Make beautiful memories for that. You're going to be A-OK. Okay, Beau, for those who want to come on Making a Millionaire, how do they apply?

58:08Brian Preston:Yeah, if you'd like to be a guest, you can go to moneyguide.com slash apply. Or if you want to check out any of our tools or free resources, go to moneyguide.com slash resources. I'm your host, Brian. Joined by Mr. Beau, Money Guy team. Out. The Money Guy show is hosted by Brian Preston and Beau Hanson. Brian and Beau are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities, laws, and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through Making a Millionaire.

58:43The 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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