The $75K Lesson That Changed Their Financial Future | Making a Millionaire

5:39Caroline:That wasn't what it was. No, of course not. We have it more. We should get Goose. The rest of the world. Don't use that that was our purpose. Everyone's going to be Iceman. We got the whole, we'll have the whole group covered. That's awesome. I did not want the name Maverick initially, but Caroline had a little boy in her class that was Maverick. Sweetest thing ever. And I just fell in love with the name. I love that. He's like, baby, they're going to be made fun of. It's like, we can't. No.

6:02Money Guy Show Host:It's better than Sue. It's much better than Sue. That's the name that gets you made fun of. Yeah.

6:07Jonah:So they're 18 months old. So you stay home with the children right now. Awesome. Awesome. Awesome. So airline pilot and stay at home. right now, 29 years old, two kids, and you guys are doing pretty good, right? You were kind enough to share with us a net worth statement. So to kind of level set, right now, as it stands at 29 years old, you guys have a total net worth of just under about$300 ,000, but you got a really big shovel, right? Right now, occasionally, you guys are making like$420 ,000.

6:39Money Guy Show Host:Did you start making that like last month or how long have you been making this type of money?

6:42Caroline:From the beginning, my very first airline job was like$40 ,000 a year. So over the course of starting in 2018, so 2019 was my first full year. It was, I think with everything included, it was just over$40 ,000. I was hustling. I was working really hard to try to get as many hours as I could because there's an hour requirement to upgrade to captain. That's when you can start feeling a little bit comfortable and spending a hundred thousand dollars on school going to uh making forty thousand is is a pain rough yeah um but when you upgrade to captain you're looking at now at the time was like 90 90 thousand or so okay so i was working really hard to to get my thousand hours of flight time that was required to upgrade to captain and in that process covid happened and so uh we actually moved back to texas we were living in Washington.

7:39Caroline:We moved back to Texas because we just weren't sure with what the industry was doing. And when we moved back, I was thinking like maybe move jobs, which in airlines, when you move jobs, you reset. Start back at the beginning. Start back at the beginning. It doesn't matter your experience. When you get hired, you start from ground zero. When COVID happened, I thought I had the whole goal starting flight school that at 25 years old, I wanted to be at a major. It was a goal because it was supposed to be a little bit far-fetched. And at 25, coming into COVID and whatnot, I was like, if I make it to a major by the time I'm 30, that'll be good.

8:23Caroline:Well, after COVID, they did a whole bunch of early retirements. So then the airlines needed people really, really bad.

8:29Jonah:So you make captain in December 20th. That's like comp around 90 ,000. So start at 40, get to captain comp at 90. Yeah. Okay. Get us from 90 now to over 400. Yeah.

8:40Caroline:So again, they needed people really bad. So they were hiring, hiring, hiring. I got hired by my current airline June of 22. And I only spent a year and a half as a first officer before I was able to upgrade to captain. Wow. That's nearly unheard of. It just happened. I just put my bid in to upgrade to captain in Seattle where we live. I didn't want to take any other base because I didn't want to commute, and I didn't want to be stuck in a position where I'm commuting for a long time when the music stops. And I was surprised. I'll be honest with you. I was surprised when it happened. It just got down to my seniority, and they said, you're going to class, and here I was.

9:27Caroline:Yeah, it was like back-to-back. And then we found out we were pregnant, which was huge because it's like, that's a lot. It's just like all these things just started falling into place.

9:37Money Guy Show Host:So how long have you been over 250 ,000? Was it really the last two and a half years, three years?

9:42Caroline:Pretty much 24. 24, January of 24.

9:47Money Guy Show Host:So 18, we're still within the first two years of making over. Yeah, that's incredible.

9:54Jonah:So as we sit here today, obviously 29 years old, you guys are in a great spot. What are the questions you have? Or what are the things that you're trying to think through as you navigate path forward? What brought you on Making Money today?

10:07Caroline:Like mainly having a plan.

10:09Jonah:Yeah. So do you feel like you have a plan currently? What is your plan currently?

10:13Caroline:That's where we have like an action. Like we were talking about it earlier. It's like we're putting money in places. But it's like what are we? I used the analogy this morning while we were at breakfast that I feel like if we were to set out of, Franklin and fly or start walking west, we're eventually going to get to California. But there's

10:34Jonah:maybe not, that's not the most efficient way to get there.

10:39Caroline:And we're really fortunate. Our 401k contribution is insane, but I feel like - Oh, we're familiar.

10:48Money Guy Show Host:We have quite a few clients that work for this aerolem too. Yeah.

10:53Caroline:We feel so fortunate. And I'm told nearly daily when I'm flying with guys, I've flown in my career, I've flown with two people younger than me in the entire time that I've been doing it. And so every guy that I'm flying with, usually not always, but 40 % of the times military guys. And they're like, man, you're set up. Like you're going to be so good in retirement. And going back to the analogy of going west, Eventually, we'll make it to California. But there's got to be planning along the way. And I feel like we don't have a plan, really. And so we have these automated functions of the retirement.

11:36Caroline:And then I put in some. And everybody says, you're going to be good. You're going to be good. And I feel that. I see that. And I do the numbers and whatnot. It's like, yeah, that looks good. But I still don't know. I don't have a plan.

11:49Jonah:So I want to hear a little bit about, because you said, hey, we're putting money in places. In a moment, I want to know about the places that you are putting your money currently. But I do have some questions on the net worth, because there are some things that we saw in there that were a little unique to us. You know, obviously, you bought a home, and like a lot of homeowners, interest rates are not the same now that they were a number of years ago. So your mortgage is at 7.125%, which historically is fairly high, right? Like, it's not ideal. But then I see some other stuff on here, and I see a line on here that I can't make make sense with what I know about you so far.

12:26Money Guy Show Host:Well, it's almost like you're like, okay, let's just go on a tour of debt. I want to make sure that we turn over every rock that we possibly can. The student loans, okay, I can get that. I understand where that came from.

12:39Jonah:And 4.2 to 4.8 at 29 does not frighten me, does not concern me.

12:43Money Guy Show Host:Medical, I mean, we're going to get to the bottom of that. I don't know why y 'all didn't pay it off, but I see it's 0%. So, okay, there's probably some financial mutant, bad, foo-ish type mentality that, hey, we should just keep this because it's 0%. But then the one, it's almost like you're walking down the street on this journey. You said if you walk west, so on your journey, there was a hole, and it was titled 401k loan, and you happened to step into it. and you're like, oh my gosh, I fell into a 401k loan.

13:15Caroline:Yeah.

13:15Money Guy Show Host:Seriously, how did you end up with a 401k loan?

13:18Caroline:In 23, we bought our first house.

13:20Money Guy Show Host:Okay.

13:22Caroline:And we bought this house in a beautiful neighborhood. It was just over 1 ,500 square feet. It was our half of the duplex. And -

13:32Money Guy Show Host:A little house hacking.

13:33Caroline:Realist, well, I wish, but we only bought our side of the duplex. Okay.

13:37Jonah:You bought half of the duplex.

13:38Caroline:Correct. Most people who buy duplexes buy the whole thing. I just want to make sure that we're, okay. I think they called them townhouses. He heard us say house hack, buy a duplex. He was like, I did, I bought. I bought my house. I bought my, okay. We closed on that house September of 23. Found out that I got the upgrade to captain November of 23. This house was a good house within our means then. And I always go back to it. It's like I know people have done more kids in smaller places, but we were feeling when the kids started crawling and whatnot, we were like, man, we feel really cramped here.

14:24Money Guy Show Host:You said it was 1 ,500 square feet.

14:26Caroline:1 ,500 square feet, and there was no yard. So we were in the process of, okay, we need to list this house. Problem is we bought it in 23. with a 7.625 interest rate and probably more than what it was worth. So when we went to sell it, it just sat there and sat there.

14:49Money Guy Show Host:We had - That's because people typically want to buy the whole duplex. They don't want to buy half of the duplex.

14:54Caroline:Right.

14:58Caroline:So we started, we shouldn't have, but we started looking at other houses. And, of course, we'd go from our 1 ,500 square foot and we'd go look at these other houses. And we were like, we can stretch our elbows. And there's a backyard. There's swing sets for the kids. There's a yard. There's room to grow. It's a family home. Right. And I know they say that, like, just wait longer and there's going to be another perfect fit. But this house just spoke to us. So we bought that one without selling the old one. and I didn't know how long that was going to take to sell the old one. So the 401k loan came out because my mentality was cash was king at the time.

15:41Caroline:So just liquid cash to be able to weather the storm between buying this new house and selling the old one in case we had to go rent it, which would not have worked out because our mortgage was like$4 ,600 with all things included and comps for—

15:58Jonah:$4 ,600 for half a duplex. For half a duplex.

16:01Caroline:Wow. And we bought it for$530. We ended up selling it for -

16:06Money Guy Show Host:For 1 ,500 square feet.

16:07Caroline:Yeah. Wow. We ended up selling it for$497. Okay. So we took a pretty big hit.

16:13Jonah:So you didn't actually need the money from the 401k loan? You took it out as a mechanism to have liquidity? Yeah. And this was in 23?

16:21Caroline:We bought that first house in 23, and we bought our current house in September last year.

16:27Jonah:Okay. so September of 25. And so that's when you originated this 401k loan. Yeah. It makes sense. Cause I think you probably borrowed$50 ,000. And yet here we are a number of months past that. And you still owe about 49 ,000 on this. Can we, cause I just,

16:44Money Guy Show Host:when did you discover our content?

16:46Caroline:About that time.

16:47Money Guy Show Host:Okay. Cause, cause where I'm looking, I always try to, you know, look and figure out where, where, where things gone awry. Sure. If you go to moneyguy.com slash resources, we have our home buying checklist. And the first thing, because look, housing is a hot mess right now. And that's why one of the first questions is, can you be in this house for the next five to seven years? Because that's going to give you the ability to process. If you overpaid for the house, that's okay. Because time will heal all wounds and make it better. and it doesn't get you in this weird situation where exactly what happened to you guys, life changes.

17:28Money Guy Show Host:And you're like, oh my God, this house doesn't fit our needs. So that's the only thing. We're going to pick up, believe me, I told Bo before we came in here, I can't wait to kind of, in a fun way, ask y 'all some questions about some stuff I saw. But that's one that I just, I didn't plan on that being something, but it was just like, man, how much heartache would it have saved you if you'd have just not bought that first house because you would have thought with a five to seven year mindset and quickly realized, hey, maybe 1 ,500 square feet with two kids, this isn't going to work for five years.

18:04Money Guy Show Host:So we better, maybe we should just rent. It sucks to rent, but let's do it.

18:08Caroline:Buying the first house when we were going into it, that was obviously the first place we ever bought. And so we were renting a house at the time. We're like, okay, should we eat rice and beans and save? Like, you know, but then that convo comes into play. So it's like, okay, but can we do this right now? Are we going to be okay doing this right now? And I think that's where we struggle. It's like even though we have the means exactly to do it, does that mean we should?

18:32Money Guy Show Host:And achievers. I pick on achievers. My financial mutants are definitely achievers. You guys, I mean, I already can see all the hallmarks of somebody who's trying to just do the things. Like you've set goals for yourself. By this, I want to be 25 and so forth. When you force these decisions because it's what you perceive what success is asking of you, it creates, you know, it's errors. It really is. It's unforced errors that really sets you back from your long term of when you discover and get the wisdom from going through life. And that's the thing I just want to make people, because I don't want the next person who watches this making a millionaire, because we have been, and brainwash is too strong of a word, but we've definitely been influenced to say, go buy a house as fast as you possibly can, because that's what successful people do.

19:22Money Guy Show Host:That's what the American dream is. But y 'all are proof that if you just not made that error, it doesn't get into 401k loans. It doesn't because then you guys are gonna be fine. I'm just picking on you only because I know we'll be able to get you a solution on this. But it is a great educational moment for the next achiever that comes behind you that doesn't fall into that mental trap of let me get through all these life things as fast as possible.

19:47Caroline:Absolutely. And that's what I thought. I thought, you know, a lot of my friends from flight school moved to other parts of the country and they were buying houses. But they were buying$200 ,000 houses.

19:59Money Guy Show Host:Right.

19:59Caroline:And I was just under the impression growing up and like, you know, you've made it when you bought a house. Yeah. And Caroline and I have talked about that so many times. And I did the number one time and about threw up because of how much money we lost on that house. I mean, probably like$75 ,000 altogether between money that we had to—

20:23Jonah:In your mid-20s, right? Yeah. There's a substantial cost, you think, with a long-term opportunity cost of that. Absolutely. On your 401k right now, you have it listed at$192 ,000. I'm assuming that's inclusive of the 401k loan. So of that$192 ,000,$49 ,000 of that's represented by the 401k loan? No.

20:43Caroline:So it would be up, I think right now it's like$208 ,000. And so when I pay back that 401k loan, it'll push it up to$50 ,000 essentially. Got it. So it doesn't include. It's netted out. Perfect.

20:56Jonah:Okay, great. So you said, hey, we're putting our money in some places. Why don't you walk us through, here's what we're currently putting our money in. I want to talk about from a savings standpoint first, and then we'll talk about from a spending standpoint. Fair? Yeah. Awesome. Walk us through how you're saving presently. And then tell us a little bit about, you said the company matches or the company contribution is super generous. For those that don't know, kind of walk us through what that looks like.

21:19Caroline:So pretty much with all airlines, all major airlines, our contracts are about the same, and they put in a non-elective 18%.

21:29Money Guy Show Host:Y 'all heard that right. I knew the number already, but I was waiting for 18 % non-elective, meaning no matter what you do, 18%. Now, you said you've been following our stuff. Your income's over$250 ,000. Are y 'all supposed to count that as part of your savings rate? No. Okay, we'll get to that in a minute. I just want to put a bookmark, though, because that's amazing. Nobody, I mean, 18%. And by the way, it's not like they're paying you small wages. I mean, that's pretty powerful stuff.

22:03Caroline:Yeah, so 18 % of that goes into the 401k. And then when it gets maxed out between, I put in 7%. So in total, they're 25%. That reaches the maximum of 70, well, this year, 72 ,000. And then recently, they started that market-based cash balance for us. So once you reach the maximum, then they start contributing the rest of it to the market base. Cash balance.

22:43Money Guy Show Host:Pretty sweet.

22:44Caroline:Very much. I didn't even, I didn't know until I was putting together the documents. I never looked at that number and I was surprised that there was already 22 ,000.

22:54Jonah:Oh, there was even more to it. It's wild, but keep going.

22:57Caroline:Yeah.

22:58Jonah:So. So 7 % to your 401k. 7 % to the 401k. Pre-tax contributions, I'm assuming.

23:05Caroline:Pre-tax, yeah. pre-tax. Then we max out our HSA. And then really, it's just been putting money into the emergency fund. And there's been so much cash movement over the last six months. Right before we bought the second house, there was a little over$80 ,000 in there. I'm going to repeat to you what I heard you say.

23:28Jonah:Put 7 % in my 401k and I max out my HSA. Right? So I got 24.5 going into my 401k. Another, was it 87.50? Is that the number this year? Something like that going into the HSA. Yeah. Right? Let me ask you this question. If we were to ask you, where are you in the – both of y 'all listen to the show? Both of y 'all familiar with our stuff that we talk about? I've watched some.

23:52Caroline:You're a huge fan is what I'm hearing. I'm a huge fan. I'm a big fan.

23:55Jonah:We have this framework called the Financial Order of Operations. It's this idea of where should your next dollar go?

24:02Money Guy Show Host:There's literally a book that details it. That really walks through it.

24:06Jonah:If we were to ask you where you think you are in the financial order of operations, what would your answer be? High interest step three. Okay, awesome. You're in step three. Because one of the things I think is interesting, you have a bunch of cash sitting on the sidelines right now. I'm assuming you said that's the nomenclature you use is putting that towards the emergency fund. Yeah. Walk us through from the four of you guys, what does it cost to keep the household running every month? Like what's your month over month burn rate? We have not been good about budgeting. Yeah, we're not.

24:37Caroline:I mean, like I feel embarrassed to say like even you asked me that. It's like crickets because I don't. I know it's not a good thing, but I truly don't. But it's like I know we're in a good spot, but I know enough to recognize like what we spend over time.

24:51Money Guy Show Host:When I saw this, I felt like these numbers that showed up on this budget. I was like, this felt like somebody was asked, like the IRS audited you, and you're quickly trying to backdate receipts and try to figure out how you can make the numbers show up. Because it was just, it didn't look like somebody who's actually tracking expenses. So how did these numbers come to be?

25:14Caroline:So I use Rocket Money.

25:17Money Guy Show Host:Okay.

25:17Caroline:When I'm going through there, it fluctuates so drastically through the months. And so I went through and I looked at like, for example, groceries, and I saw$1 ,800 a month for groceries. And then other months, it's$1 ,000. Right. And so I went to the higher end because - I like that. As far as groceries go, like our babies eat just loads of berries and berries get expensive. But, you know, it's so I'm looking at the - I mean, when I looked at that groceries - $1 ,200 of berries is a lot of berries.

25:54Money Guy Show Host:1 ,800 of berries. I was like, when I looked at that.

25:57Jonah:1 ,800 of berries. That's a lot of berries.

26:00Money Guy Show Host:Talk to me about, because there's a few things on here that stood out. I mean, the dining out to, give me how that number came to be. Is that also just rocket money?

26:09Caroline:A lot of that has, yeah, it's rocket money. A lot of that has to do with when I'm out on trips, I don't package my meals to go with me. And then we kind of get on to the Uber Eats realm. DoorDash and Uber Eats, huh?

26:24Money Guy Show Host:And how about the personal care and entertainment?

26:28Caroline:Personal care, a lot of, well, not a lot of, but therapies, counseling. Yeah. For Caroline. And then I kind of just mix together that with like getting Caroline's hair done or my hair is pretty cheap. But that – and then I think also Caroline likes to use like books or buy books on her phone. So we budgeted I think$300 or$400,$450 a month on buying books online. Are you reading all these books? Yeah. Okay.

27:14Money Guy Show Host:Did you just buy them? Well, no. I mean I just think of all the –

27:18Caroline:Now being a stay-at-home mom, I'm like, ooh, what other things do I have that I can do?

27:23Money Guy Show Host:It's a lot of books. Yeah.

27:25Caroline:When you want your spring break to feel like... And your kid's pool day to feel like... And your hotel bed to feel like... Ooh, and room service to feel like... Because at Hilton, hospitality feels like...

27:44Jonah:Your cabana's ready. Would you like fresh towels?

27:46Caroline:It matters where you stay.

27:50Jonah:Book now at Hilton.com. Hilton, for this day.

28:18Jonah:$75 sponsored job credit at indeed.com slash podcast. Terms and conditions apply. Here's the cold water. There's nothing wrong with spending money. I think a lot of people expect when they sit down with financial advisors, it's going to be don't spend, don't spend, don't spend, don't spend. Our goal is never to tell someone, hey, don't spend money. If you want to spend$1 ,800 a month on berries, that's totally fine. If you want to spend money on books or hair care. We're never going to fight someone on what they spend money on or even how much they spend. I mean, a lot of people are going to watch this, but like, oh my gosh, they spend$15 ,000 a month.

28:56Jonah:That's okay. So long as you're not doing that first and not taking care of the stuff that you should be taking care of first.

29:03Money Guy Show Host:Exactly. You got to pay yourself first.

29:06Jonah:Because right now, you guys are at an 8 % savings rate, right? That's the math I did. 24, 5 plus HSA based on your income, you have all of the opportunity in the world, right? Like you, you, you were literally at the front of your journey where what you're going to be able to accomplish financially is going to be amazing. If you do the things that you have to do early on to set yourself up for that, you guys have been in the unique position. You have a huge shovel. You make substantially more than the median income here in America. And what that affords you is the ability to be a little bit sloppy with how you make your decisions.

29:43Jonah:What happens though, when we see this time and time again, we'll see someone who comes in and their potential client, they reach out and they say, hey, I want to, I'm thinking about retirement. I'm ready to retire. And we'll look at their account state and we're like, okay, man, you've got a million dollars saved up. That's great. A million dollars. How much do you spend a month? And oh, well, we spend 15 ,000 a month, 20 ,000. Well, how much do you make? Oh, we make 400, 500. Wait, wait, you've been making that much money for that long and all you have to show for it is this, that's getting the priorities way out of whack.

30:14Jonah:And so when I see two young people sitting here with all the opportunity in the world, but a little sloppy, it makes me think, okay, it's time to recalibrate. A lot of times we tell people, hey, you got a budget. A lot of folks have to budget out of scarcity. There's just not enough money to be able to do the things that I need to be able to do. So I got to create a budget to stay inside that. At your income level, you guys are no longer operating from a scarcity perspective, but now you have to operate from a responsibility perspective. We have this big income, and it's going to be crazy because most of the times you don't have to tell someone who makes almost half a million dollars a year, hey, you got a budget, but you guys probably do need to put some of that work in to figure out where is my money going and how much of my money should be going there?

30:59Jonah:Because it doesn't sound to me that in the last 10 years, you guys have developed that muscle memory, to be able to move into the place where you can be on a cash management plan. You guys, you were afforded the opportunity to skip some steps because of how the career works, but that doesn't mean that you can skip those steps. Does that make sense?

31:17Money Guy Show Host:Well, I think this is an incomplete, is if I was grading your budget, because$15 ,000 times 12, that's 180 grand a year. You're basically saving 30 grand if you took out the employer side. So you add those, that's$210 ,000. Your income's$420 ,000. What's your net per month after all this? What is your pay stub that comes in per month? On average. Yeah.

31:44Caroline:On average, I budget off$20 ,000. It's oftentimes...

31:48Money Guy Show Host:But is that what hits in your account? Yeah. So you got$240 ,000. So there's still, even off that math, there's$30 ,000 that's just missing from these numbers. And we're trying to get you to somewhere around$100 ,000 a year. Which, by the way, let's just absorb that. 29-year-olds that can save$100 ,000 a year. And a lot of people are like, wow, why put such a high goal on there? The thing I worry about for you guys, I'm old enough that I've seen where airlines get themselves in some troubles. And you know things are good as long as they're good. but the economy can be cruel. And all of a sudden, what seems like can go on forever, the music stops.

32:37Money Guy Show Host:And that's what worries me at Joel's age is that you're basing your entire success off of a promise for these contributions from an employer in the future. And that's great. We all ought to have our Dave Grohl moment. If you're wondering what I'm talking about is Dave Grohl was in not only Nirvana, but he was also in Foo Fighters. and him and his father had a weird relationship, but he said the best thing his dad ever told him was when you get that first paycheck, you treat it like this is the, it's never going to keep going like this. And I wish when I worked with all these professional athletes and others who had huge money coming in while they were very young, I needed somebody to give them that moment too is because you have a responsibility to get it right in the beginning.

33:25Money Guy Show Host:So then, you know, if you do this long enough, five years, seven years, 10 years, you reach a critical mass where your assets get big. You can kind of then take a breathe in deep and go, you know what? I guess this system that is so lucrative in pay is going to stay together longer than I thought. But you can then do it out of a place of abundance and flexibility versus, you know, because nobody knows how long their career is going to be. And I think you have to have a scarcity mindset until it actually lasts. Because in a lot of ways, your income coming in this big, this young, and so lucrative, you need to be a little nervous of it.

34:01Money Guy Show Host:Because you have a big income. You don't have a big net worth. So you're rich, but you're not wealthy. And there is a huge difference. And it ought to scare you because there's one thing to come from not having money than becoming rich, meaning you have a big, strong income. But if all of a sudden the music stopped and now you have, it's worse because now you have a wife, you have two children who are counting on this and you go back to being poor because you didn't make good decisions with it. There's a weight that should be with that. And I worry because I mean, you're not the first person I've seen this.

34:39Money Guy Show Host:I remember back where my hometown was, I remember I got a prospect and he was a very prominent attorney in the community. I was so excited this guy wanted to be a prospect.

34:49Jonah:Because he was a known entity.

34:50Money Guy Show Host:Known entity making really good money, really good money. And then I remember when he sent me his, you know, by the way, he came to me. He wasn't a young person at this point. And I was like, oh.

35:01Jonah:How do you not have more savings?

35:02Money Guy Show Host:Yeah, I mean, it makes me sad for people when I see them come to me in their 40s when they've made$400 ,000 plus for decades, and then they don't even have a million bucks saved up. You're like, what are you doing? Now, I know you would have, assuming this employer keeps dumping money in there, but that's a big assumption. And that's why I took away everybody in the comments section. Why is this guy not let people count the employer match? And I was like, well, because when you make over$200 ,000 a year, you're counting on somebody else when you shouldn't have to. And you ought to carry that responsibility because it's exactly what Bo said earlier is that what stinks is if you don't pay attention to this margin, You're going to wake up one day and you're going to be like, where's our money going?

35:48Money Guy Show Host:We're supposed to, because you're going to hire a financial planner and they're going to say the same, what do you spend a month? And you're going to say, I spend 15 grand. Malarkey. You don't spend 15 grand. We can show you definitively based upon just backing into what you pay in taxes and what's coming out net. There's more coming out and you just don't have a grasp on it right now. And I'm not trying to be harsh. It's just, but I just get so excited for somebody in y 'all's age and y 'all's income. Let's do something because y 'all can, you get, you get it all. You get to do memories. You get to do awesome things with the kids and you get to, at the end of the rainbow, get this pot of gold.

36:27Money Guy Show Host:That's not something that's given. Believe me, your comment section is going to be like, these people got everything. And I know that they're going, y 'all have your own struggle too, but I'm just telling you that I want you to be energized when you leave here to actually save and build this wealth.

36:42Caroline:Yeah, it's really nice to have you guys say something and to help us be aware, because we only talk to each other about it. So, thank you.

36:50Money Guy Show Host:Now, Bo, by the way, I talked to Bo this morning. He goes, oh no, Brian, you've overprepared. You've got mindsets. He goes, give these people a break because they're 29 years old. They're 29.

37:00Jonah:And that's why a lot of us, again, a lot of people are afforded the opportunity that we're young and they make bad choices. They make bad choices with small sums of money. You guys have been young, and you've been able to make less than ideal choices with large sums of money. The good news is, is if you can rein that in, and if you can fix that, and you can right the ship, then the future looks bright. I mean, I think mandatory retirement age for most airlines is age 65. Do you see yourself likely flying all the way out until age 65? I do. You do? Okay. Because a lot of folks say, hey, if I'm really doing this well at 29, there's a good chance that By the time I get to 40s, 50s, I might decide I want to do something else.

37:41Jonah:Well, that sort of flexibility and those sort of options are only available if you make the decisions now. And right now, you guys riding the ship will not require a lot of hard decisions. It will require a lot of discipline, but easy decisions. The longer you wait to fix that, the more difficult the decisions become to get the ship righted. Does that make sense? Absolutely. Walk me through just one last question I had as we're looking at your expenses. You have a Telluride lease and a Tesla lease. Those are actual leases, not auto payments? They're leases, yeah.

38:15Caroline:So I thought, well, instead of these negative equities and whatnot, which we haven't ever rolled in any negative equities. We'll just turn into rent payments.

38:25Jonah:Instead of having any equity at all, let's –

38:28Money Guy Show Host:We will have negative equity, but we'll just pay rent forever.

38:32Caroline:At the time, I thought it was a good idea. Since listening to y 'all's content, I have realized very quickly that that's not a good idea. The Tesla, I enjoy it, but I don't think I'll keep it at the end of the lease. The Telluride, we will. So the plan is to pay cash for it at the end of the lease.

38:54Money Guy Show Host:I would be curious because this does bring back to the goal number one of having a plan. If we could go back and look at the net worth statement. because I want to give you guys an opportunity because when I was looking at this, it caught me off guard a little bit. I see a brokerage account with$3 ,900 in it. Because I was like, man, at this level of income, they probably should be setting up automatic savings not only into the retirement accounts, but probably into that after-tax brokerage account. But then I see the kids' savings accounts. Also, they're right at$1 ,000.

39:23Caroline:Yeah, so the child's savings accounts, that's something that just auto pulls$100 a month. And then the brokerage was also, I was doing$500 a paycheck into the brokerage until the whole house situation. So to go back to the, I really want to automate because I think that's going to take the process of moving out of it. And it just, it happens. That was a, that's a big goal for us for 2026. We said 2026 is our year to get ourselves right because I feel like we're playing with dynamite because we have the tools. Sure. And we need to utilize the tools the way that it's going to help us.

40:11Jonah:I love it. All right. I've got some homework for you guys. You ready? Obviously, we're going to go back to the drawing board. We're going to put together a plan. And I'm already so excited because we are familiar with your employer. We know how the benefits work. And so it's, I'm super excited. But I do think there's some work that you guys ought to do. Number one, together, collectively, because when I ask you, hey, what do you spend a month? You're like, it's crickets. I'm like, ah, it's totally okay if one of you is the finance person and the other one is not the finance person. But in these early stages, it does matter that you're on the same page.

40:43Jonah:While you may not be in the app and you may not be coding transactions, you guys should have a monthly come together where you're like, hey, how'd the last month look? And y 'all should be on the same page about that. So I think you should both get on the same page about budgeting, both get on the same page about tracking, figuring out where your money's going. One of the things that we're going to do for you, and you guys can go and start this work, is we're going to retriage the financial order of operations. If the goal for our next dollar is to figure out where we are in the FU, okay, if I'm in this step, what do I need to do today to move through this step and then on to the next one and then on to the next one and then on to the next one?

41:16Jonah:So we're going to do some of that work for you, and we're going to put a timeline based on what we know to be true for you guys. There are also some opportunities you're missing out on that we didn't even really get a chance to talk about, but we'll put in the plan. You have a rollover IRA with$1 ,400, and all that thing is doing there is just being real annoying and preventing you from doing back to a Roth contribution. So we're going to talk about opportunity that might exist there. Your employer also has a really unique thing where not only can you do pre-tax contributions or Roth contributions, you can also do after-tax contributions.

41:49Jonah:And there's a really unique thing about your employer where if you do those after-tax contributions and you fill up your 415 limit, you don't crowd out the employer. So the homework I want you to do is read a little bit on the pilot forum around the strategies that are involved there because there's some really exciting stuff that you can be doing. And the big thing is I think you guys should sit down and talk about, okay, what do we want our future to look like? Right now, we're making decisions that make today look good and enjoy today, but we don't want to make sure we're sacrificing all of tomorrow for enjoying today.

42:22Jonah:How do we strike that balance and carry the responsibility of this big shovel really, really well so that we can give ourselves future flexibility and options?

42:30Money Guy Show Host:I find myself sitting here because I couldn't. I was like, Brian, put the calculator down. It's because, I mean, I sit there. What's going to be frustrating for you guys, and you have to promise me you'll just finish the drill because it's going to take us a few months to get you fixed, is because immediately I can go – I'm just going ahead and laying out some – just call them like shadows of what will be coming or foreshadowing. We're going to be – you're going to have to boost up your emergency reserves. We're going to be able to tackle some of this debt. So it's just going to be frustrating to me because I see such an opportunity with the mega backdoor Roth.

43:06Money Guy Show Host:I see some opportunities where let's start loading up this Roth account. Let's even start doing something for the kids. But we're not going to be able to do any of that for a number of months because we're going to just hold. You know, just hold until you see the whites of their eyes because we have to get through unwinding some of these other decisions first. And that's going to be somewhat frustrating because with your level of income, we're going to want to go rip out of the starting line. And we can't, we have to go back and do remedial stuff to fix the bones of your financial situation. So hang in there with us.

43:39Money Guy Show Host:We'll have a plan for you. And then what I look forward, though, is that, man, oh, man, we get you on the right path with this thing. It really is going to be automatic for the people at that point. It's because this thing is just going to start growing. And you're going to wake up one day and be like, how did we get here? And you're going to have all the flexibility and opportunity of the world.

43:58Caroline:Awesome. Very good.

44:00Jonah:Any final questions for us before we get to work? No.

44:04Caroline:The only thing I do, I'm expecting another$20 ,000 check that I didn't have in the next few days. Awesome.

44:15Money Guy Show Host:Well, that's why the order of operations is going to be so helpful for you because it's things like that that will speed this process up. You'll know what to do with your next dollar. Yeah. So it's not going to be like, well, what are we going to do with that$20 ,000 that showed? No, we'll have a place. You're like, oh, yeah, that just cut off. Think of that. Maybe that's sped it up two months for us. And that's going to be really cool from the implementation or triaging of your financial life. Awesome. Very good. All right. We're going to get to work.

44:40Jonah:Awesome. Thanks, guys. Brian, what a fantastic conversation with Jonah and Caroline.

44:47Money Guy Show Host:Yeah, I loved it. I mean, how often do you have somebody come to you in their late 20s? Just crushing it. With the income potential. It's not even potential. It's what they actually have. making over$400 ,000 a year. The only thing that kind of, there's a few things that I did want to kind of full stop on. First of all, their investment assets are about half of where their income is, and they're about to cross into 30. We got to get that up. We'll cover more on that.

45:11Jonah:The income has come along lately, right? The income has come along the whole time. Because I do want to say that, you know, we talk about wealth creation and the three ingredients, right? They've certainly got time on their side at 29. It certainly seems like there should be a lot of margin based on the shovel. So I think the one that we need to tweak and the one that we need to sort of maybe double down on is the discipline. That's where I think they need to really focus their attention right now.

45:35Money Guy Show Host:I did. We got a few updates that I want to make sure that we bring the audience up on the journey with us. You know, they have twins, baby twins. We found out, you know, look, Jonah has life insurance through work, but we think that he ought to go buy more term life insurance outside of work. And especially while young, healthy, and term insurance is going to be cheap, going to be able to do that so we can level set and bring that up to a much better way. And then we also found they don't have wills yet.

46:03Jonah:Which is a big thing that needs to change.

46:05Money Guy Show Host:We've got to make sure all parents who watch this content, look, even if you think that the money will take care of itself, whether it's through beneficiary designations or something else like that, if you want to know who's going to take care of your kids, make sure it's stated in a legal document. And that's what a will is going to help cover that.

46:20Jonah:And the good news is when you have young kids, it doesn't have to be overly complicated. You just get it in place. You pay whatever the cost is for the documents. You kind of set it and forget it until it's time to revisit. So it's just a box that they ought to check. So once they knock out the life insurance, get the wills in place, then we can start focusing on the fun stuff. And what we really wanted to figure out is, okay, how much margin do they actually have to work with? And so as we kind of went back and forth thinking about their budget, they said that realistically, they could live on about$11 ,000 a month.

46:50Jonah:The income that he has coming in after taxes was$22 ,000 a month. So we have 22 coming in and 11. Crazy. That means that we have$11 ,000 a month that we get to do something exciting.

47:03Money Guy Show Host:Now, we immediately were like, good, we're going to finally be able to get rid of that crazy 401k loan. But once again, we have another update that we found out. We reached out to them after the show recorded. We found out they had a big tax refund as well as they did take some of our cash reserves. Sure. I don't know if I exactly love that idea. I love it. Get rid of that 401k loan. But they were able to completely wipe out the 401k loan. It's gone.

47:27Jonah:So now that that's gone, that would be the high interest debt. It's satisfied. Now we get to continue moving along in the financial order of operations. And one of the things that you just said is they ended up taking some out of their emergency fund in order to be able to satisfy that 401k loan. So in my opinion, I think what they need to do is they got to build back up the emergency fund. They got to get back to a fully funded. And since he is the primary income earner, and since it is a large income, I'm going to argue that they need six months of living expenses inside of liquid cash available.

47:57Jonah:So if we know that it costs them$11 ,000 a month to live, they need at least$66 ,000 to have a fully funded emergency fund.

48:04Money Guy Show Host:And based upon what's kind of left over still, here's the crazy part with the big shovel. Probably a little over four months. Yeah. Right at it. They're going to be able to knock that out. So that's like a hiccup more than anything.

48:14Jonah:So once they get there, once they knock out the emergency fund, now we get to start saving. Now we get to start building for the future. And just because they're young and just because they have a high income and just because they have a lot of opportunity doesn't mean that the food doesn't apply. I love that even in their situation, we get to begin talking through the financial order of operations, and it still applies even to someone in their situation.

48:37Money Guy Show Host:Well, this is the part where I get excited because I don't want to just have only retirement assets like 401k. how about step number five? I mean, tax-free accounts. And we found out, Caroline, you know, we could do a spousal Roth IRA immediately for her if we were doing a backdoor conversion process. That's right. It would be really powerful. And then he, because he has a great 401k. We work with a lot of the pilots that work at the airline he works at. They have a great 401k that's got index funds, slow costs. So we could roll his IRA up into that 401k. And then he too could do backdoor Roth contributions.

49:13Jonah:That's exactly right. As soon as he cleans up his account structure, he can put in$7 ,500 and do a backdoor Roth, and then she can put in$7 ,500 and do a backdoor Roth. They've already noted they're doing the health savings account. So, when they're maxing that out, that's another$8 ,750. Once they've done that, they've checked off step five of the financial order of operations. Now, he gets to go to step six. And step six is now maxing out his 401k. Remember, the rules just increased to where now you can do 24 ,500. What's interesting is even when he maxes out at 24 ,500 and maxes out his Roth and maxes out her Roth and does the HSA, they're still only at 11.5 % savings rate.

49:52Jonah:They've not even hit the 25%. So if we want to then kind of fill in the blank, fill in the gap, in order to hit a 25 % savings rate, we think that in an after-tax regular brokerage account, they ought to start saving $4 ,730 a month. And that would get them to a 25 % savings rate.

50:11Money Guy Show Host:And I want them to be at 25 % because I know a lot of people think the easy button is take advantage because the employer is loading it up. But we've been around the block for a while. And I think to just assume that you're going to be able to get 18 % from your employer forever, and maybe it will, maybe it works out. But when you're so young with such a big income, I think you take that responsibility serious and you front end load it with your own money. And that way you're pleasantly surprised. You can always, it's easier to come off the gas than it is to try to catch it up later on. If just assuming everything's going to be okay, just because of the employer.

50:45Jonah:What I think is amazing is that if they can begin doing this and they can really exercise this discipline muscle starting now at age 29, look at what happens. If they can start right now, they have$240 ,000 saved, but saving 25 % of his gross income, about$100 ,000 a year, by the time they get to 45, their portfolio is worth over$4.7 million. By 55, 13.3. And this is astounding. By the time they get to 65, if nothing else changed, and they just stayed on this current trajectory, assuming that they made a 9 % rate of return based on their age, $34 million retirement portfolio.

51:24Money Guy Show Host:Now look, before I start shaking because that's such a huge sum of money, we do need to kind of ground it in the fact that part of this is because they're so young. I mean, these are people who are in their 20s. Inflation will have an impact. That's why we did bring this back to present value of what the purchasing power. I thought it was interesting at 45, they're going to have the potential to not even count in the employer portion, close to 120 grand a year. $10 ,000 a month. $10 ,000 a month,$55 ,000, close to a quarter of a million dollars, age 65, a little less than half a million dollars in today's purchasing power.

51:58Money Guy Show Host:So that's the part that's exciting to me. Yes, those numbers, but I think it's hard to know when you go in 20, 30 years in the future. We don't know what these numbers really will be, and that's why you have to be careful. But looking at the purchasing power and the cash flow, that's really exciting.

52:13Jonah:Now, you have already alluded to this. This does ignore, this does not pay attention to the fact that he does work for an incredibly generous employer. And that employer is doing a huge match. And so if we look at the numbers and we factor in the employer match, not only is he saving 25%, but then you get the 18 % for the employer. Well, now you can see the numbers get even more astronomical. By 45, the portfolio could be worth$7.5 million. By 55, over 21 million. and then by 65, almost$55 million. And so one of the questions that somebody would probably say, well, guys, why on earth are you projecting a 50 million?

52:54Jonah:Surely he doesn't need to be saving at this clip. Surely they could back down. And the answer may be that they could, but not yet. Because I want to remind you, even though this projection shows that they are on the path for a$55 million portfolio, as it stands right now today, they have 240 ,000. $240 ,000 today is not$55 million tomorrow.

53:17Money Guy Show Host:It's not even one times income.

53:18Jonah:That's not. They need to begin progressing on this journey. And then as they do that, they may arrive at a conclusion. Okay, maybe we can do some other stuff. Maybe we can back down our savings rate. Or maybe we can take advantage of the mega backdoor Roth, where we can start really front-end loading the Roth dollars. We're building up to the 401k. But I think they have to get a little bit further down the line before they get to start making those kinds of assessments.

53:40Money Guy Show Host:Because we do work with a lot of pilots from this airline. There's a lot of them we race to get the money into the 401k. Yep. Because we've discovered the cash balance plan. Yep. That they get to – it's amazing.

53:54Jonah:Even if you crowd out the employer, you still get the money. It's insane.

53:58Money Guy Show Host:But I do think we need to come back and remind everybody, because a lot of people watching this might go, well, wait a minute. When do I know if I get to count my employer match or not? Remember, if you're a married couple, it's over$200 ,000. If you have that type of income, we don't want you counting the employer match. And the reason is, is because with that type of income, there's a great responsibility. It's because you are beyond the social safety net of Social Security and beyond. You're beyond the pension benefit guarantee corporation and all that it can do for you. Your benefit is so much that we just want to make sure that you're being responsible with that big shovel.

54:33Jonah:Now, Jonah and Caroline are a prime example of someone who right now, I think that they just need sort of a simple plan to move him along the path. But they are rapidly going to get to the place to where life becomes more complicated. They might not know what they might not know. And they're going to be prime candidates for folks that potentially should take their relations to the next level, should figure out how to get a personal plan built for them. But we just said, hey, let's think of an example of something that could likely happen for them. Like maybe they want to do a coast fire thing.

55:02Jonah:and he has a high enough income that they could even do like a coast fire that turns into fat fire. So it's like coast, fat, fine fire potentially. If they were to do that, we said, okay, what if they just save aggressively 25 % until age 45? And then at age 45, maybe they'd pull off the savings and they just let the employer match, continue to fall into the portfolio. Even at that level, by 45, again, saving that 25%, they get to that$7.5 million. But then if they're able to just coach from that point, that$7.5 turns into$19 million by 55 with the employer match and still has the ability to turn into$48 million by retirement, which if you back it into today's dollars, could create an income of over$600 ,000 a year.

55:49Jonah:They are going to be in the driver's seat where they get to choose what they want their life to look like. Assuming they get further down the path, they're just not quite there yet.

56:01Money Guy Show Host:Yeah, I mean, before we let these illustrations amp it up too much, I still want to focus. The next five years are important. That's right. But here's the good news. They are going to be able to, because I know they had a big goal if they wanted to make sure that they could fund the kids 529s and other things. You know, for a lot of people, Well, you have to defer it because we have to make sure you put on your oxygen mask before you can start finding it. They're going to be able to do it all. And that's a really powerful and exciting planning thing that we're going to be able to do for them. We don't have to say, hey, be the bad guys.

56:30Money Guy Show Host:Don't save for the kids' college. They can actually do it all.

56:33Jonah:I'm so excited that they came on. Let us take a peek behind their finances. And, man, they have a bright future. I'm so excited to see what they end up doing and where they are three, five, ten years in the future.

56:46Money Guy Show Host:Yeah, and this is, I mean, like I said, they're in their 20s. So when you run illustrations, because there's so much time, they get big. I get excited because people with this type of income, this much potential, you've already alluded to it. But this is what, for financial planning clients, I love these annual meetings. Because instead of this being a projection where we run it 5, 10, 15 years in the future, we actually get to spot check this every year, reshape the direction. It's powerful and it's fun. This is why it's kind of like every year my own, you know, your home renovation tour financial edition.

57:23Money Guy Show Host:That's what we're, you know, we get to do with people like Jonah and Caroline. And I just thank them for coming on. Bo, if others want to come on Making a Millionaire, what do they need to do to check it out?

57:32Jonah:Yeah, if you'd like to be a guest on Making a Millionaire, you can go to moneyguide.com slash apply. Or if you want to check out any of our free resources, any of our free tools, go to moneyguide.com slash resources.

57:42Money Guy Show Host:Guys, I'm your host, Brian, joined by Mr. Bo. Money Guy team, out.

58:34Caroline:Thank you.

58:42Caroline:and 40-plus grams of protein into something hearty, satisfying, and built for life on the go. From craveable sauces to satisfying textures, they're designed to keep you going without

58:52Jonah:slowing you down. So put that fork down. Try the new wraps today in app or at order.sweetgreen.com.

59:00Caroline:Available at participating locations only.